DIRECTOR(S), COMPANY MANAGEMENT,

MEETINGS AND WINDING UP OF

COMPANIES
THIS IS HOW IT GOES
 WHAT'S THE RELATIONSHIP ?

Shareholders Board of Directors

Company
Management Regulator, Society
 RELATIONSHIP BETWEEN COMPANY
AND ITS STAKEHOLDERS

Regulator Society Shareholders

Company Board of Directors
Managemen
t
 WHAT DO DIRECTORS DO ?

• Directors refer to the part of the collective body known as the Board of Directors, that is responsible for
controlling, managing and directing the affairs of a company.
• Directors are considered the trustees of company’s property and money, and they also act as the agents in
transactions which are entered into by them on behalf of the company.
• Directors are expected to perform their duties and obligations as a rationally diligent person with skill,
knowledge, and experience as the person carrying out functions of a director and of that himself.
• Hence, a director plays several roles in a company, as an agent, as an employee, as an officer and as a trustee of
the company.
 BOARD OF COMPANIES

• A company acts through two bodies of people – its shareholders and its board of directors.
• The directors are effectively the agents of the company, appointed by the shareholders to manage its day-to-day
affairs., especially Executive Directors on the board.
• The basic rule is that the directors should act together as a board but typically the board may also delegate certain
powers to individual directors or to a committee of the board.
• The board of directors are in charge of the management of the company’s business; they make the strategic and
operational decisions of the company and are responsible for ensuring that the company meets its statutory obligations.
• The role as an individual director is to participate in board meetings to enable the board to reach these decisions and
make sure that the company’s obligations are fulfilled.
 KOTAK COMMITTEE

The following points were enumerated by Kotak committee to highlight main contributors towards good corporate
governance:
 composition of boards, especially their independence in law and in spirit from the company’s management;
 expertise of the directors on the boards;
 the composition and independence of key board committees such as the audit committee and the nomination and
remuneration committee;
 independence of the companies’ auditors and the quality of audit of its financial statements;
 the quality of disclosures by the company; and
 careful balancing of the interests of controlling shareholders vis-à-vis minority shareholders.
 WHO ARE DIRECTORS ?

• According to Section 2 (34) of The Companies Act, 2013, “director” means a director appointed to the Board of a
company.
• This is not an exhaustive definition of the term “director”.
• It means that a person may be designated as a Director but till he/she is not appointed to the Board of the company,
he/she will not be a board member and hence not a Director of the company.
• These individuals can be directors of a management division, For e.g. Executive Director Marketing, Executive
Director Finance, Executive Director Operations, etc., so a mere designation of a director is not a director of a
company and not a representation of the board.
 M I N I M U M A N D M A X I M U M N U M BE R O F D I R E C TO R S
I N A C O M PA N Y

• The law requires that every company must have at least 3 directors in case of public limited companies,
minimum 2 directors in case of private limited companies and minimum 1 director in case of one person
companies.
• A company can have maximum 15 directors.
• The company could appoint more directors by passing the special resolution in its general meeting.
 TYPES OF DIRECTORS

• A Board of a company is ordinarily divided into two types of directors:

1. Executive Directors
2. Non- Executive Directors
 Legally there is no difference between the executive and non-executive board members and provision on duties of
Directors (Sec 166 of The Companies Act, 2013) is equally applicable to both type of directors.
• If it a private company, then the entire board can be executive directors but if it a public listed company or a
public company as per Rule 4 of the Companies (Appointment and Qualification of Director) Rules, 2014, at least
2 directors should be independent directors (Non-Executive directors).
• These companies are public companies with a paid-up share capital of Rs 10 crores or more; public companies
with turnover of Rs 100 crores or more; public companies with aggregate outstanding loans, debentures and
deposits, exceeding Rs 50 crores or more.
 EXECUTIVE DIRECTORS

• The Companies Act, 2013 unlike the erstwhile Companies Act, 1956 brought in a clear definition of an executive director of
a company. As per Rule 2(1)(k) of the Companies (Specification of definitions details) Rules, 2014 “Executive Director”
means a Whole Time Director as defined in clause (94) of section 2 of the Act”. According to Clause 2(94) of Companies
Act, 2013 “whole-time director” includes a Director in the whole-time employment of the company. Hence by way of
appointment an executive director should be a whole time employee of the company.
• Another type of executive director is a Managing Director. According to Section 2(54) of the Companies Act, 2013 “(54)
―managing director‖ means a director who, by virtue of the articles of a company or an agreement with the company or a
resolution passed in its general meeting, or by its Board of Directors, is entrusted with substantial powers of management of
the affairs of the company and includes a director occupying the position of managing director, by whatever name called.
• Explanation.—For the purposes of this clause, the power to do administrative acts of a routine nature when so authorised by
the Board such as the power to affix the common seal of the company to any document or to draw and endorse any cheque
on the account of the company in any bank or to draw and endorse any negotiable instrument or to sign any certificate of
share or to direct registration of transfer of any share, shall not be deemed to be included within the substantial powers of
management;:
 CONT…

• Generally, in a start-up type of a business entity the company may have only a whole-time-director as a chief executive
officer and as the business scales up or diversifies into various verticals the position of MD is likely to be created.
• Sometimes a company may have corporate structures of holding, subsidiary, joint ventures and associate companies. In
that case each of the operation entity may be headed by a whole-time-director and they would collectively report to the
MD of the holding (parent) company.
• It depends on how the company would like to strategize its corporate structure and create a reporting matrix.
• From statutory reporting purposes of any of these individuals in appointed on the board then they will be assuming the
role of an executive director.
• The role and responsibility of executive directors is to control and monitor the overall management of the company by
appointing executives, procuring and allocation of resource, making business decisions, entering into contracts on
behalf of the company, cooperating with auditors to ensure they give true and fair audit observations.
ROLES OF DIRECTOR

Managing Director

Key Managerial Personnel

Whole time Director

Officer who is in Default

 MANAGING DIRECTOR

Managing Director

Director

By

Articles Agreements Shareholdings

+
Entrusted with substantial powers of management

+
Occupying position of managing director by whatever name
called
 MANAGER

Manager
Individual

Subject to

Superintendence Direction of the BoD

Control

Having Management of whole of affairs of the Company

and

Includes director occupying position of manager by whatever name called

 KEY MANAGERIAL PERSONNEL

Key Managerial
Personnel

CEO OR Managing Director

Company Secretary + CFO + Whole time Director

OR

Such other officer as may be prescribed

 OFFICER WHO IS IN DEFAULT
Earlier
- MD/ WTD/ Manager/Person in accordance with
whose directions the Board is accustomed to act
- No provision to impose liability on all directors - Where there is no specific authorisation by the
- External parties not counted in the definition for
Officer in Default
Now
- WTD/KMP/ Directors specified by the Board – in
the absence of such specification, all Directors
Board all directors would be held liable. Most
importantly, every director who is AWARE of
such contravention by virtue of receipt of any
proceedings or PARTICIPATION in such
proceedings without objecting to the same
would be held liable
- Share transfer agents, Registrar to an Issue and
Merchant Bankers to Issue to be held liable in
the event of default in respect of issue or
transfer of shares of a company (shares used and
not securities)
 OFFICER IN DEFAULT

KMPs & Whole time Director

If no KMPs

Directors appointed as OD Or All Directors if no one appointed

Any Person Authorized by Board Any Person who advices, directs or Every Director who is aware of
or KMPs instructs BoD Contravention

For Issue or transfer of Shares

Share Transfer Agent Registrar to Issue Merchant Banker

 NON-EXECUTIVE DIRECTOR(S)

• There is no specific definition of non-executive directors in the Companies Act, 2013 but it can be derived at from the
provision on executive director.
• The directors on the board who are not executive directors are by default non-executive directors i.e. apart from ‘Whole
Time Director’ and “Managing Director’ all other types of directors are Non- Executive Directors.
• They are not regular employees of the company and not engaged in day to day business discussions or decisions of the
company.
• They are appointed either because they have a particular interest to monitor and supervise the management or are
appointed for their professional expertise and experience to provide an outside perspective to the board.
 NON EXECUTIVE DIRECTORS- TYPES

2 Types of Non Executive Directors :

1. Interested directors
2. Non interested directors (though there is no such term in law, this is to signify whether a person has conflict of
interest or not while being on the board of a company or not)
 According to Sec 2(49) of the Companies Act, 2013 ‘an interested director means a director who is in any way,
whether by himself or through any of his relatives or firm, body corporate or other association of individuals in which
he or any of his relatives is a partner, director or a member, interested in a contract or arrangement, or proposed
contract or arrangement, entered into or to be entered into by or on behalf of a company;’.
 Further, as per section 184 of Companies Act, a director is considered to be interested in a matter if such matter is in
respect of another company where the director in question (either singly or along with other fellow directors) holds
more than 2% of the shareholding of such another company.
 Examples: nominee director, small shareholders’ directors, promoter director, etc.
 NON EXECUTIVE – INDEPENDENT
DIRECTORS

• Independent Directors are the cornerstone of corporate governance.

• They represent the small shareholders on the boards where promoter shareholdings are concentrated and all other
directors have a direct interest on the board of company.
• They are expected to have impartial and objective judgment for the proper functioning of the company.
• According to Sec 2(47) of the Companies Act 2013 “independent director” means an independent director referred
to in sub-section (6) of section 149.
• The erstwhile Companies Act, 1956 did not have a provision on definition of an Independent Director.
• The Clause 49 of the listing agreement provided the definition of an independent director which is now replaced
with Listing Obligations and Disclosure Requirements, 2015.
 DEFINITION OF INDEPENDENT DIRECTOR(S)

According to ‘Sec 149 (6) An independent director in relation to a company, means a director other than a managing
director or a whole-time director or a nominee director,—
(a) who, in the opinion of the Board, is a person of integrity and possesses relevant expertise and experience;
(b) (i) who is or was not a promoter 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 with the company, its holding, subsidiary or associate company, or their
promoters, or directors, during the two immediately preceding financial years or during the current financial year;
(d) none of whose relatives has or had pecuniary relationship or transaction with the company, its holding, subsidiary or
associate company, or their promoters, or directors, amounting to two per cent. or more of its gross turnover or total income
or fifty lakh rupees or such higher amount as may be prescribed, whichever is lower, during the two immediately preceding
financial years or during the current financial year;
 CONT…

(e) who, neither himself nor any of his relatives—

(i) holds or has held the position of a key managerial personnel or is or has been employee of the company or its holding, subsidiary
or associate company in any of the three financial years immediately preceding the financial year in which he is proposed to be
appointed;
(ii) is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial year
in which he is proposed to be appointed, of—
(A) a firm of auditors or company secretaries in practice or cost auditors of the company or its holding, subsidiary or associate
company; 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 ten per cent. or more of the gross turnover of such firm;
(iii) holds together with his relatives two per cent. or more of the total voting power of the company; or
(iv) is a Chief Executive or director, by whatever name called, of any nonprofit organisation that receives twenty-five per cent. or
more of its receipts from the company, any of its promoters, directors or its holding, subsidiary or associate company or that holds
two per cent. or more of the total voting power of the company; or (f) who possesses such other qualifications as may be prescribed.’
 BASIC THREE POINTS TO ESTABLISH
INDEPENDENCE

1. Familial
2. Professional
3. Pecuniary
 An independent director holds office for a term of five years on the Board.
 He is also eligible for being reappointed after passing a special resolution, but no independent
director is to hold the office for more than two consecutive terms.
 LISTED COMPANIES

• The Chapter XI on Appointment and qualifications of Directors u/s 149 (4)- Every listed public company shall have at
least one-third of the total number of directors as independent directors and the Central Government may prescribe the
minimum number of independent directors in case of any class or classes of public companies.
• Explanation. — For the purposes of this sub-section, any fraction contained in such one-third number shall be rounded off
as one.
 
 REQUIREMENT OF INDEPENDENT
DIRECTOR(S)

Para II. A of revised clause 49 of the listing agreement, mandates a higher number of independent directors, for listed companies as
below:
i. The Board of directors of the company shall have an optimum combination of executive and non-executive directors with at least one
woman director and not less than fifty percent of the Board of directors comprising non-executive directors.
ii. Where the Chairman of the Board is a non-executive director, at least one-third of the Board should comprise of independent
directors and in case the company does not have a regular nonexecutive chairman, at least half of the Board should comprise of
independent directors.
Provided that where the regular non-executive Chairman is a promoter of the company or is related to any promoter or person
occupying management positions at the Board level or at one level below the Board, at least one-half of the Board of the company shall
consist of independent directors.
The explanation to the clause explains the term “Related to any Promoter” to mean
a. If the promoter is a listed entity, its directors other than the independent directors, its employees or its nominees shall be deemed to be
related to it
b. If the promoter is an unlisted entity, its directors, its employees or its nominees shall be deemed to be related to it.
 WOMAN DIRECTOR

• According Rule 3 of Companies (Appointment and Qualifications of Directors) Rules 2014 casts responsibility
on following companies to have at least one woman director.
• (i) every listed company;
• (ii) every other public company having –
• (a) paid–up share capital of one hundred crore rupees or more; or
• (b) turnover of three hundred crore rupees or more:
• Provided that a company, which has been incorporated under the Act and is covered under provisions of second
proviso to sub-section (1) of section 149 shall comply with such provisions within a period of six months from the
date of its incorporation:
• Provided further that any intermittent vacancy of a woman director shall be filled-up by the Board at the earliest but
not later than immediate next Board meeting or three months from the date of such vacancy whichever is later.
• Explanation.– For the purposes of this rule, it is hereby clarified that the paid up share capital or turnover, as the
case may be, as on the last date of latest audited financial statements shall be taken into account.
NUMBER OF DIRECTORSHIPS
(SECTION 165)

Director in maximum 20 companies

Directorship to include alternate directorship

Of these 20 companies, cannot be a Director in more than 10

public companies (including private companies which are
holding or subsidiary companies of public companies)

No. of members specify lesser number by passing special

resolution

Penalty for contravention: Minimum Rs. 5,000, and Maximum Rs.

25,000 for every day during which the default continues
 INSIDER TRADING

• Directors/ KMP shall not enter into insider trading

• Insider trading defined – act of subscribing, buying, selling, dealing or agreeing to subscribe to the
securities of the company by any director if he/ she has access to non-public sensitive information
OR an act of counseling about procuring or communicating non-public price-sensitive information
to any person

• Price sensitive information – any information which published could materially affect the price of
the securities of the company

• Loose ends – not defining ‘non-public’/ ‘materially affect the price of the securities’
COMMITTEES OF THE BOARD

CA 2013 envisages 4 (four) types of committees to be constituted by the board- But these committees are required
only for some specified companies-
 BOARD COMPOSITION
SMALL
RESIDENT
TYPE OF COMPANY INDEPENDENT DIRECTOR WOMAN DIRECTOR SHAREHOLDER
DIRECTOR
DIRECTOR

Rule 11.1
1 Independent Director on Corporate Required if paid-up share Section 151
Private Company Social Responsibility (CSR) Committee capital > INR 100 crores Rule 11.5
if CSR requirement is triggered (to be appointed within 5
years) from the Not applicable
commencement of the Act

1/3rd of the Board to be Independent if

the Company has: 1 director required to
Required if paid-up share be resident in India
• Paid-up share capital of INR 100 crores capital > INR 100 crores for at least 182 days in
Public Unlisted Company or more; or (to be appointed within 5 Not applicable a calendar year
• Aggregate outstanding loans, years) from the
commencement of the Act Section 149(3)
borrowings, debentures or deposits
exceeding INR 200 crores
Mandatory? Suo motu
• All listed companies to have 1/3rd of
All listed companies to option
the Board comprised of Independent
Director have a woman director (to Request of 1/10th the
Listed Company be appointed within 1 number of small
• Requirement increases to half of the year) from the shareholders or 500 small
Board if there is an executive chairman commencement of the Act shareholders (whichever is
[Clause 49, Listing Agreement]
lower)
 BOARD COMMITTEES: APPLICABILITY
NOMINATION & STAKEHOLDER
TYPE OF COMPANY AUDIT COMMITTEE REMUNERATION CSR COMMITTEE RELATIONSHIP
COMMITTEE COMMITTEE

Private Company Not applicable Not applicable Not applicable

Independent Director
required on CSR
Committee if:
Both committees required if the company has:
•Net worth ≥ INR 500 Applies if the company
Public Unlisted •Paid-up share capital of INR 100 crores or more; or Crores
has 1000 or more
Company •Aggregate outstanding loans, borrowings, •Turnover ≥ INR 1000 shareholders
debentures or deposits exceeding INR 200 crores Crores
•Net profit ≥ INR 5
crores Applies if the company
Public Listed Company Applicable has 1000 or more
shareholders
 TYPE OF COMMITTEE
Audit Committee [Section 177]
Nomination & Remuneration
Committee [Section 135]
CSR Committee [Section 178]
Stakeholder Relationship Committee
[Section 178]
COMPOSITION OTHER REQUIREMENTS
•Roles stipulated
•Decisions no longer binding on the
•3 Directors Board
•Majority Independent Directors •Whistle-blower policy required,
providing direct access to the chairman
of the Audit Committee
•3 Directors
•Majority Independent Directors
•3 Directors
•1 Independent Director
•Strength and composition determined by
the Board •Purpose – to solve the grievances of
security holders
•Chairman to be non-executive
 RELATED PARTY TRANSACTIONS
RELATED PARTY - DEFINITION

Director, key managerial personnel or relative of such person

Firm in which a director, manager or relative is a partner

Private company in which a director or manager is a member or director

A public company in which a director or manager is (a) a director; or (b) along with relatives holds more than 2%

Any body corporate whose Board, Managing Director or manager is accustomed to act in accordance with the advice, directions or instructions of a director or manager

Any person on whose advice, directions or instructions a director or manager is accustomed to act

a holding, subsidiary or an associate company of such company

Any

a subsidiary of a holding company to which it is also a subsidiary

MEETINGS AND WINDING UP OF
COMPANY
 DECISION MAKING BY DIRECTORS

DECISION MAKING BY DIRECTORS

 Board meeting
 Resolution by circulation
 Committee meetings
 MEETINGS OF THE BOARD

Frequency of Meeting:
First Meeting:
• First Meeting of Board of Directors within 30 (Thirty) days from the date of Incorporation of company.
• One person Company, Small company and Dormant company
• At least one meeting of Board of directors in each half of calendar year
• Minimum Gap B/W two meetings at least 90 days.
• Other than Companies mentioned above:
• Minimum No. of 4 meetings of Board of Director in a calendar year
• Maximum Gap B/W two meetings should not be more the 120 days.
 CALLING OF MEETING

Meeting of Board of Director should be called by giving 7 days notice to Directors at his
registered address through:
•By hand delivery
•By post
•By Electronic means

Meeting at shorter Notice:

A meeting of Board of Directors can be called by shorter notice subject to the
conditions:
•If the company is require to have independent director:
Presence of at least one Independent director is required. In case of absence, decision
taken at such meeting shall be circulated to all the directors, and shall be final only on
ratification thereof by at least one Independent Director.
If the company doesn’t require to have independent director: The meeting can be called
at a shorter notice without any conditions to be complied with.
 QUORUM OF BOARD MEETING

 1/3rd of total strength OR 2 (Two) Directors, whichever is higher.

 Where meeting of Board could not be held for want of quorum, the meeting
shall automatically adjourn to same time, same place at next week (Not
being national holiday).
 If number of directors reduced below quorum, then the remaining directors
may hold the meeting for the following purposes:
 To call a General meeting
 Increase the number of directors.
 Quorum in case of Interested Directors:
 If interested director exceed or equal to 2/3 of total strength the
remaining directors not being less than 2 (two) shall be the quorum.
 PARTICIPATION OF DIRECTORS IN
BOARD MEETINGS

 Directors may, apart from attending the meeting physically, participate in the
meeting by way of video conferencing & other audio visual means.

 Matter which can’t be dealt at a meeting held though Video conferencing:

 Approval of the annual financial statements;
 Approval of the Board’s report;
 Approval of the prospectus;
 Audit Committee Meetings for consideration of accounts; and
 Approval of the matter relating to amalgamation, merger, demerger,
acquisition and takeover.
 POST MEETINGS REQUIREMENTS:

 The minutes shall disclose the particulars of the directors who attended the meeting through video conferencing.
 CIRCULATION OF DRAFT MINUTES & COMMENTS THEREON: The draft minutes shall be circulated among all the
directors within fifteen days of the meeting either in writing or in electronic means.
 Every director who attended the meeting shall confirm or give his comments in writing, about the accuracy of recording of
the proceedings of the meeting in the draft minutes, within seven days or some reasonable time as decided by the Board. If
no confirmation or comments received within the stipulated period, approval shall be presumed.
 DUTIES OF COMPANY SECRETARY: To record proceedings and prepare the minutes of the meeting; To store for
safekeeping and marking the tape recording(s) as part of the records of the company at least before the time of completion
of audit of that particular year.
 POWER EXERCISABLE BY BOARD:

The Board of Directors of a company shall be entitled to exercise all such powers, and to do all such acts
and things, as the company is authorized to exercise and do.
In exercising such power or doing such act or thing, the Board shall be subject to the provisions of this Act,
or the memorandum or articles, or regulations made by the company in general meeting:
 Make calls on shareholders in respect of money unpaid on their shares;
 Authorize buy-back of securities under section 68;
 Issue securities, including debentures, whether in or outside India;
 Borrow monies;
 Invest the funds of the company;
 grant loans or give guarantee or provide security in respect of loans;
 Approve financial statement and the Board’s report;
 Diversify the business of the company;
 Approve amalgamation, merger or reconstruction;
 Take over a company or acquire a controlling or substantial stake in another company
 UNDER Companies RULES:

•Make political contributions;

•Appoint or remove key managerial personnel (KMP);
•Take note of appointment(s) or removal(s) of one level below the Key Management
Personnel;
•Appoint Internal auditors and secretarial auditor;
•Take note of the disclosure of director’s interest and shareholding;
•Buy, sell investments held by the company (other than trade investments),
constituting five percent or more of the paid up share capital and free reserves of the
investee company;
•Invite or accept or renew public deposits and related matters;
•Review or change the terms and conditions of public deposit;
•Approve quarterly, half yearly and annual financial statements or financial results as
the case may be.
 RESOLUTION

Sec 114.
(1) A resolution shall be an ordinary resolution if the notice required under this Act has been duly given and it is required to
be passed by the votes cast, whether on a show of hands, or electronically or on a poll, as the case may be, in favour of the
resolution, including the casting vote, if any, of the Chairman, by members who, being entitled so to do, vote in person, or
where proxies are allowed, by proxy or by postal ballot, exceed the votes,
if any, cast against the resolution by members, so entitled and voting.
(2) A resolution shall be a special resolution when—
(a) the intention to propose the resolution as a special resolution has been duly
specified in the notice calling the general meeting or other intimation given to the members of the resolution;
(b) the notice required under this Act has been duly given; and
(c) the votes cast in favour of the resolution, whether on a show of hands, or electronically or on a poll, as the case may be, by
members who, being entitled so to do, vote in person or by proxy or by postal ballot, are required to be not less than three
times the number of the votes, if any, cast against the resolution by members so entitled and voting.
 BOARD MEETING – SECTION 173

First Board Meeting to be held within 30 days of incorporation.

Notice of Board meeting shall be given to all directors, whether he is in India or outside India by hand
delivery or by post or by electronic means.

At least one independent director to be present at a Board Meeting called at shorter notice to transact
urgent business.

In case of absence of independent directors from board meeting, decisions taken at meeting shall be
circulated to all the directors and shall be final if ratified by a independent director.

Director can participate in the Board meeting through video conferencing or other audio visual mode as
may be prescribed.

Draft Rules provide for the procedure and manner of such process
BOARD MEETING – SECTION 173

At least 4 Board meetings should be held each year, with a gap of not more
than 120 days between two Board meetings

No requirement of holding the Board Meeting in every quarter

For One Person Company (OPC), small company and dormant company at
least 1 Board meeting must be held in each half of a calendar year with a gap
of not less than 90 days between two Board Meetings

In case of only One Director in OPC, requirement of holding meeting will not
apply

Resolution by circulation shall be approved if consented by majority of

Directors instead of the requirement of consent of all Directors present in
India or by majority of them (as was provided in the Companies Act 1956)
MATTERS TO BE DISCUSSED IN
BOARD MEETINGS ONLY (SECTION 179)

To issue securities whether in India or outside.

To grant loans or give guarantee or provide security in respect of loans;

To approve financial statement and the director’s report;

To diversify the business of the company;

To approve amalgamation, merger or reconstruction;

To take over a company or acquire a controlling or substantial stake in

another company
MATTERS TO BE DISCUSSED IN
BOARD MEETINGS ONLY (SECTION 179)

Other matters prescribed in Draft Rules-

To make political contributions; to fill a casual vacancy in the Board; to enter into a joint
venture or technical or financial collaboration or any collaboration agreement;

To commence a new business; to shift the location of a plant or factory or the registered
office;

To appoint or remove key managerial personnel (KMP) and senior management personnel
one level below the KMP;

To appoint internal auditors;

To adopt common seal;

MATTERS TO BE DISCUSSED IN
BOARD MEETINGS ONLY (SECTION 179)

To take note of the disclosure of director’s interest and shareholding;

To sell investments held by the company (other than trade investments),

constituting five percent or more of the paid – up share capital and free reserves
of the investee company;

To accept public deposits and related matters and;

To approve quarterly, half yearly and annual financial statements.

ANNUAL RETURN - Contents
(Sec 92)

Registered office, Meeting of

principal business board and
activities Members and committees
debenture shares held by
holders or on behalf of
securities and Remuneration the FII’s
shareholding of directors and
pattern Promoters, KMP
directors, key
managerial other matters as
personnel Penalty or may be
Indebtedness punishment & prescribed.
details of
Meetings of compounding
members
 Quorum for Board meetings

The quorum for meeting of Participation is allowed through video conference

board is one third of total provided such participation is capable of recording
strength or two directors and recognizing and storing
whichever is higher

E commerce has been

Soft copy as an option for
keeping books of accounts
Financial statements on
companies website.
proposed for maintenance
and inspection of
documents, however the
MoM have to be taken in
hard copy, duly signed and
then can be kept in soft copy
for inspection
BOARD’S REPORT

Particulars of
Extract of contracts/arrang
Annual Return ements with
Directors’ related party Details of CSR
Responsibility policy developed
Statement and implemented
Material changes
No. of BMs from end of FY
Comments/
to date of Report BOD/Committees
explanation by
BOD on performance
Secretarial Audit evaluation
Declaration by Statement on risk
Report
Independent management
Director policy
Particulars of Other such
loan/guarantee/ matters
investment
BOARD’S REPORT:
OTHER MATTERS PRESCRIBED

financial
summary/highlight
s

Details of
Companies ceased directors or KMP Details of significant
to be Subsidiaries, and material orders
JVs or associate passed by the
companies; Regulators or courts
Details relating
to Deposits

change in the
nature of
business,
GENERAL MEETINGS

OPC not required to hold AGM

First AGM to be held within 9 months from

closure of first FY

AGM to be held on between business hours Notice of GM may be sent through electronic mode
i.e. 9 AM to 6 PM
To be sent to all Directors

21 clear days notice to be given

In case of AGM Shorter notice can be given by consent

of 95% of members who are entitled to vote (like for
EGM)

Secretarial Standards mandated

Report of AGM, prepared in prescribed manner, to

be filed with RoC
 AGM – Ordinary and special business

Ordinary Business in AGM

1. Consideration of financial statements and the reports of BoDs and auditors.
2. Declarations of any dividend
3. The appointment of Directors in place of those retiring
4. The appointment an fixing of the remuneration of auditors

Any discussion apart from the above 4 is a special business agenda for AGM. These matters can only be discussed in
the meeting but no decision can be taken on them in the AGM.
REPORT ON AGM
(Sec 121)

Every Listed Public Company to prepare a Report on each AGM.

Report to contain confirmation that the meeting was convened, held and
conducted as per the provisions of the Act / Rules.

The company to file the Report with the Registrar within 30 days of the conclusion
of the AGM.

Proceedings at the AGM of a listed co. thus becomes a public document.

QUORUM FOR MEETINGS

Public Company

5 members personally ≤ 1000 members

present

15 members personally > 1000 members but

present ≤ 5000 members

30 members personally
present > 5000 members

2 members personally
Private Company present
PROXIES… (SECTION 105)

Single person not to be proxy for more than 50 members

Proxy cannot vote by show of hands

Member of Private Limited company cannot appoint more than

1 proxy to attend on same occasion
STATEMENT TO BE ANNEXED WITH NOTICE – SEC 102

Explanatory Statement in case of special Liability in case of non-disclosure or insufficient

business to specify disclosure in Explanatory Statement
Non-
Nature of disclosure
interest/ /insufficient
concern disclosure

Financial Other
Benefit Profit
Interest Interest

Director Director
and KMP Relatives Promoter and KMP
Manager Manager

Explanatory statement to specify shareholding % Liable to compensate to Company to the

of Promoters/directors/manager/KMP whose extent of such profit/benefit
shareholding is not less than 2% of paid up
capital