OVERVIEW OF COMPANIES Act,

2013
Module 1
 Company:

Definition:
• As per the Companies Act, 2013, Section
2(20) “company” means a company
incorporated under this Act or under any
previous company law;
 Features of a Company:

1. Separate legal entity

2. Separate property
3. Perpetual succession
4. Limited liability
5. Common seal
6. Transferability of shares
7. Capacity to sue and be sued
 Lifting the Corporate Veil:
1. Common Law Exceptions
1. Determination of a character
2. Where the company is a shame
3. Prevention of fraud or improper conduct
4. Where the company is the acting agent of shareholders
5. Protection of revenue
6. Avoidance of welfare legislation

2. Statutory Exceptions
1. Number of member below statutory minimum
2. Failure to refund application money
3. Company name not mentioned in the Bill of Exchange
4. Group Accounts
5. Investigation into related companies
6. Fraudulent trading
 Legislative Back drop of Companies Act:

• The World War 2 resulted in the boom of industrialization leading to

the Revision of companies Act.
• Committee constituting 12 experts in various fields under the
chairmanship of H.C. BHABA was appointed in 1950.
• Committee submitted its report in 1952, thoroughly revising the
Amendments to the Act of 1913.
• Bill was passed by the legislature in November 1955.
• The Act came into effect from 1st April 1956, replacing all the earlier
Acts and amendments.
• The 1956 Act was based on the English Companies’ Act of 1948.
• It contained 658 sections and 15 schedules.
• There were various amendments from time to time.
WHY A NEW COMPANY ACT WAS NEEDED?

• Changing national and international

economic environment
• Exponential growth
• Changes in stakeholders’ expectations.
• To enable Indian corporate sector to adopt
the best international practices
• Nurturing a positive environment for
investment and growth
• Manifold Increase in Number of
Companies
 EVENTS IN COMPANIES ACT, 2013
Passed in Lok-sabha December 18, 2012

Passed in Rajya-Sabha August 08, 2013

President’s assent August 29, 2013

Total number of sections 470

Total number of chapters 29

Total number of schedules 7

Number of sections notifies (282) Section 1 on August 29, 2013

98 sections on September 12, 2013
183 sections on April 01, 2014
Total number of rules notified Rules under 21 chapters notified
Structure of the old and new Companies
Act : A statistical snapshot

COMPANIES ACT, 1956 COMPANIES ACT, 2013

13 Parts 29 Chapters

658 Sections 470 Sections

15 Schedules 7 Schedules
 Meaning of Company Law:

Company law is that branch of law which deals

with the various aspects of the company such as:
Incorporation of companies
Allotment of shares and share capital
Membership of company
Management & administration of company
Winding up of a company
 Extent of Company Law:

As per the Companies Act, 2013, CHAPTER I, Sec.1.(1)

This Act may be called the Companies Act, 2013.
(2) It extends to the whole of India.
(3) This section shall come into force at once and the
remaining provisions of this Act shall come into force on
such date as the Central Government may, by
notification in the Official Gazette, appoint and different
dates may be appointed for different provisions of this.
 Applicability of Companies Act

Applicable Non-Applicable

 Co.’s registered under this Act &  Statutory companies

previous Acts

 Limited companies  Partnership firm

 Unlimited companies  Co-operative societies

 Foreign companies  Trusts

 Banking, insurance and electricity • Societies not engaged in trade and commerce.
companies

 Limited Liability Partnerships

 One man company

 Government companies

 Nidhi’s and mutual benefit societies

 Objectives of Company Law

1. Protect the interests of investors & creditors.

2. Ensure proper performance of duties of persons
managing the company.
3. Prevent misconduct & malpractice from companies.
4. Promote healthy growth of companies.
5. To ensure activities of companies are on par with
economic and social policies of the country.
6. To empower the government to interface &
investigate into the affairs of the companies.
 Administrative authorities under the Companies Act:

Implementation
 Ministry of Corporate Affairs
 The Zonal Offices (Headed by Regional Directors)
 Field Offices (Registrar of Companies for each state)
Procedure and Legal
 *National Company Law Tribunal
 National Company Law Appellate Tribunal
 Supreme Court
*The National Company Law Tribunal has been constituted w.e.f. 1st June,2016 and by virtue of
Section 466(1) of Companies Act,2013, the Company Law Board stands dissolved.

Financial and Securities Related Issues

 SEBI
 Ministry of Corporate Affairs

• The Ministry is primarily concerned with administration of the Companies Act 2013,
the Companies Act 1956, the Limited Liability Partnership Act, 2008 & other allied
Acts and rules & regulations framed there-under mainly for regulating the functioning
of the corporate sector in accordance with law.
• The Ministry is also responsible for administering the Competition Act, 2002 to
prevent practices having adverse effect on competition, to promote and sustain
competition in markets, to protect the interests of consumers through the commission
set up under the Act.
• Besides, it exercises supervision over the three professional bodies, namely, Institute
of Chartered Accountants of India(ICAI), Institute of Company Secretaries of
India(ICSI) and the Institute of Cost Accountants of India (ICAI) which are constituted
under three separate Acts of the Parliament for proper and orderly growth of the
professions concerned.
• The Ministry also has the responsibility of carrying out the functions of the Central
Government relating to administration of Partnership Act, 1932, the Companies
(Donations to National Funds) Act, 1951 and Societies Registration Act, 1980.
 The Zonal Offices (Headed by
Regional Directors)
• Central government has set up 4 regional offices with head
quarters at Mumbai, Kolkata, Kanpur and Chennai.
• Each regional office is under a regional director.
Functions of Regional Director:
1. Supervision, control & co-ordinate the activities of the offices of
Registrar of Companies.
2. To advice and guide the Registrar on Technical & administration
matters.
3. To report to government on important events and trends in the
region.
4. To function as a link between centre and state.
 The Zonal Offices (Headed by
Regional Directors)
Current Regional Directors Offices in India
Regional Director (Eastern Region) Kolkata

Regional Director(Northern Region) New Delhi

Regional Director (North Western Region) Ahmedabad
Regional Director(North East Region) Guwahati
Regional Director (Southern Region) Chennai
Regional Director (Western Region) Mumbai
Regional Director (South East Region) Hyderabad
Field Offices (Registrar of Companies for each state)
Field Offices (Registrar of Companies for each state)

• Central government has appointed a full time officer in each state

to be known as Registrar of Companies (ROC)
Functions of Registrar of Companies:
• To register companies and to issue the certificate of
incorporation on providing various documents.
• To receive documents, notices, & reports and file them as per
required by the companies Act.
• To issue the necessary notices, if default is made by any
company.
• To present a petition to the Tribunal for winding up of a
company under certain circumstances.
CURRENT
FIELD
OFFICES
Registrar of Companies (Andhra Pradesh & Hyderabad
Telangana)
Registrar of Companies(Kerala) Ernakulum
Registrar of Companies (Assam, Meghalaya, Manipur, Guwahati
Tripura, Mizoram, Nagaland & Arunachal Pradesh)

Registrar of Companies (Delhi & Haryana) New Delhi

Registrar of Companies (Gujarat) Ahmedabad
Registrar of Companies (Karnataka) Bangalore
Registrar of Companies (Madhya Pradesh) Gwalior
Registrar of Companies (Maharashtra) Mumbai
Registrar of Companies (Maharashtra) Pune
Registrar of Companies (Puducherry) Puducherry
Registrar of Companies (Punjab, Chandigarh) Chandigarh
Registrar of Companies (Tamil Nadu) Chennai
Registrar of Companies (Tamil Nadu) Coimbatore
Registrar of Companies (Uttar Pradesh) Kanpur
Registrar of Companies(West Bengal) Kolkata
ROC Central Registration Centre (CRC) Manesar
Procedural
and
Legal
 COMPETITION COMMISSION OF INDIA (CCI)
• The Commission which is a statutory body, administers
various responsibilities assigned to it under the Competition
Act, 2002. The composition of the Commission consists of a
Chairperson and not less than two and not more than six other
members.
 National Company Law Tribunal
(NCLT)
 The National Company Law Tribunal has been constituted w.e.f. 1st June,2016
and by virtue of Section 466(1) of Companies Act,2013, the Company Law Board
stands dissolved.

Features of NCLT:
 Relieving courts of mounting litigation.
 Faster disposal of cases
 Simpler and faster procedures and less formalities than courts

NCLT is a body composed of experts in corporate law. It consists of

president and such members of judicial and technical members not
exceeding 62, appointed by the central government.
 National Company Law Tribunal (NCLT)
• Constitution of NCLT has been notified under section 408 of
the Companies Act, 2013 w.e.f 1st June, 2016. Pending
proceedings as defined in section 434 (1) (a) and 434 (1) (b) of
the Companies Act, 2013 has been transferred to this body. 11
Benches of NCLT have been notified and made operational at
New Delhi (2 Benches), and one bench each at Ahmedabad,
Allahabad, Bengaluru, Chandigarh, Chennai, Guwahati,
Hyderabad, Kolkata and Mumbai.
 National Company Law Appellate
Tribunal:
• As per the Companies, 2013, Sec.410. The Central
Government shall, by notification, constitute, with effect from
such date as may be specified therein, an Appellate Tribunal to
be known as the National Company Law Appellate Tribunal
consisting of a chairperson and such number of Judicial and
Technical Members, not exceeding eleven, as the Central
Government may deem fit, to be appointed by it by
notification, for hearing appeals against the orders of the
Tribunal.
• NCLAT, which is appellate Body to NCLT has been notified
under section 410 of the Companies Act, 2013 w.e.f. 1st June,
2016.
 National Company Law Appellate
Tribunal:
• An appeal against any order or diction of the NCLT
will lie to the Appellate Tribunal.
• The chairperson of the Appellate Tribunal shall be a
person who has been a Judge of the Supreme Court
or Chief Justice of high court.
• Any person not satisfied by the decision of the
Appellate Tribunal can file an appeal to the Supreme
Court.
Securities Exchange Board of India (SEBI)

The securities and exchange board of India was set up

in the year 1988, April 12th. It was set up as a non-
statutory body. In 1992 it conferred statutory powers
financial institution.

Objectives of SEBI
• To protect the interest of investors so that there is steady flow of savings
into the market(capital)
• To regulate the securities market and ensure fair practices by the issue
of securities so that they can raise resources at minimum loss
• To promote efficient services by brokers, merchant bankers and other
intermediaries so that they become competitive and professional.
Securities Exchange Board of India (SEBI)

Functions of SEBI
1. Regulation of stock exchange and self-regulatory orgs
2. Registration and regulation of stock brokers, sub-
brokers, registrars to all issues, merchant bankers,
underwriters, etc, who are associated with securities
market.
3. Registration and regulation of collective investments
schemes including mutual funds.
4. Prohibition of insider trading in securities.
5. Regulating substantial acquisition of shares and
takeover of companies
Securities Exchange Board of India (SEBI)

Developmental Functions
1. Promote investors education
2. Conducting research and publish info useful to all
market participants.
3. Promotion of fair practices and code of conduct for
self-regulatory organizations
Securities Exchange Board of India (SEBI)

Powers of SEBI
1. Power to issue rules, regulations, directives, guide lines.
2. Empowered to register any agency or intermediary who may be
associated with the securities market.
3. SEBI Act lays down the civil and criminal penalties for
contravention(violate) of the Act
4. Can conduct inquiries into the working of stock exchanges which have to
submit their annual reports to the SEBI.
5. Empowered to demand explanations.
6. SEBI has also been empowered to file complaints in court.
7. Power to compel listing of securities by public companies
8. Power to make or amend bye-laws of recognized stock exchanges
9. Power to call periodical returns from stock exchange.
10. Power to grant approval to the bye-laws
Highlights of Companies Act, 2013
 One Person Company (OPC) - One Person Company of sole-proprietor and
company form of business has been provided with concessional /relaxed requirements
under the Companies Act, 2013. With the implementation of the Companies Act, 2013, a
single national person can constitute a Company, under the One Person Company (OPC)
concept. OPC may be registered as a private Company with one member and may also
have at least one director. Letters ‘OPC’ to be suffixed with the name of One Person
Companies to distinguish it from other companies.”
 Key Managerial Personnel
 Auditing standards & Secretarial Standards made mandatory
 Participation of directors through video conferencing to count for
quorum
 Private company to have a maximum of 200 members (earlier limit
was upto 50). (Section 2(68))
 E-Governance – maintenance and allowing inspection of documents
by companies in electronic form. (Section 120)
 Vigil mechanism (whistle blowing) introduced. (Section 177 (10))
 Highlights of Companies Act, 2013

• In prescribed class or classes of companies, there should be at least 1

woman director. (Section 149 (1))
• Restrictions on layers of subsidiaries. (Section 2 (87))
• Concept of CSR introduced. (Section 135)
• Definition of Independent Directors introduced. (Section 149 (5))
• Condition and manner for issue of Bonus shares has been
introduced. (Section 63)
Key Managerial Personnel
 Related Acts for us to know:

• Depositories Act, 1996

• Sick Industrial Companies Act, 1985
 The Securities Contracts (Regulation) Act, 1956
COMPANY
SECRETAR
Y
 Originated from the Latin
word ‘secretarius’

COMPANY SECRETARY

A person to whom a SECRET is entrusted. It reflects the

confidentiality of the role and the trust placed on the
position.
 Secretary:

• A secretary is “one whose work is to work for

another, especially one who is employed to
conduct correspondence to keep records & to
translate various other businesses for another
person or for a society, corporation or public
body.
 Types of Secretaries:
1. Private secretaries
Duties performed-
a. Taking dictations
b. Handling mails
c. Filing and indexing
d. Keeping financial and personal records
e. Attending to callers
f. Making appointments
g. Handling the telephones
h. Collecting information

2. Secretary of an association or a club

3. Secretary of a Government department
4. Secretary of a co-operative society
5. Secretary of a local body
6. Company secretary
 Company Secretary:

• Companies Act, 2013, Sec.2(24) “company secretary” or

“secretary” means a company secretary as defined in
clause (c) of sub-section (1) of section 2 of the Company
Secretaries Act, 1980 who is appointed by a company to
perform the functions of a company secretary under this
Act;
• As per the Companies Act, 2013, Sec.2 (25) “company
secretary in practice” means a company secretary who is
deemed to be in practice under sub-section (2) of section
2 of the Company Secretaries Act, 1980.
 INVESTORS

GOVT &
BOARD
REGULATOR

COMPANY
SECRETARY

OTHER EMPLOYEES
STAKEHOLDERS

PUBLIC
 Qualifications of a Company Secretary:

 A whole-time Company Secretary as a KMP should be a

member of the institute of Company Secretaries of India

Other Qualifications:
1. Sound education
2. Proficiency in language
3. Knowledge of office organization and business methods
4. Knowledge of accountancy and taxation
5. Knowledge of mercantile law
6. Knowledge of Economics, Banking and Finance
7. Impressive personality
Appointment of Company Secretary
Section 204 of the Companies Act, 2013 read with the
Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, provides that:
1. Every Listed Company;
2. Every Public Company having a paid up share capital of
fifty crore rupees or more; and
3. Every public company having a turnover of two hundred
fifty crore rupees or more
 All companies seeking listing on Stock Exchange are

required to appoint a whole-time Company Secretary.

 Membership of the Institute is recognized for
appointment to superior posts and services under
Central Government
The Institute of Company Secretaries of India (ICSI)

• ICSI is a premier national professional body constituted

under an Act of Parliament (Company Secretaries Act,
1980).
 Functions under the jurisdiction of the Ministry of
Corporate Affairs
 ICSI has been set up to regulate and develop the
profession of Company Secretaries
 ICSI has its Headquarters at New Delhi and 4 Regional
Councils at Chennai, Kolkata, Mumbai & New Delhi and
70 Chapters spread all over India ( including 1 overseas
Chapter at Dubai).
 SCOPE FOR COMPANY SECRETARY

• A qualified company secretary, can find

good positions in both private as well as
public sectors. You can also look for
openings in stock exchanges, the Ministry
of Corporate Affairs, Company Law
Boards and various government
departments.
Role of Company Secretary
 Role of Company Secretary

A Company Secretary being multi- disciplinary

professional renders services in the following areas:
1. Corporate Governance and Secretarial Services
Corporate Governance Services
2. Corporate Secretarial Services
3. Secretarial / Compliance Audit and Certification
Services
 Role of Company Secretary
• It is a process to check compliances made by the
Company under Corporate Law & other laws, rules,
regulations, procedures etc. It is a mechanism to monitor
compliance with the requirements of stated laws and
processes.
• Periodically examination of work is necessary to point
out errors & mistakes and to make a robust compliance
mechanism system in an organization.
• A company secretary is a compliance officer of the
company as well as corporate planner and strategic
manager.
• Also looks after finance, accounts, legal, personnel and
administrative functions.
 Role of Company Secretary

• Company secretary is required to handle matters related

to central/state sales tax, excise laws, labour laws and
corporate law.
• A company secretary ensures that board procedures are
both followed and regularly reviewed.
• A company secretary provides guidance to chairman
and the directors on their responsibilities under various
laws.
 Role of Company Secretary

Corporate Laws Advisory and Representation Services

 Corporate Laws Advisory Services
 Representation Services
 Arbitration & Conciliation Services

Financial Market Services

 Public Issue, listing and Securities Management
 Takeover Code, Mergers & Amalgamation
 Securities Compliance and Certification Services
 Finance & Accounting Services
 Taxation Services
 International Trade & WTO Services
 Role of Company Secretary

Management Services
 General/ Strategic Management
 Corporate Communication and Public Relations
 Human Resources Management
 Information Technology - ICT Usages

Human Resource
 Compliance of Labour Laws
 Appointment of Directors and Senior Management Personnel
 Motivation and Remuneration Strategies
 Organizational Change Management
 Performance Appraisal
 Industrial Safety and Working Conditions
 Industrial Relations
 Role of Company Secretary

Marketing
 Agreements with Customers
 Compliance of Packaging Rules
 Sales Tax Management
 Registration and Licensing of Trademarks
 Consumer Protection Act Cases
 Competition Act and Unfair Trade Practices
 Arbitration and Dispute Settlements with Customers
 Role of Company Secretary

Corporate Communication
Conducting high profile meetings
Agenda, Notice and Minutes
MIS and Follow-up
Effective Communication with all stakeholders
Board and Employees
Shareholders and Money Lenders
Investors and Stock Exchanges
Government and Regulators
Press and Electronic Media Liaison
General Public
 Role of Company Secretary

Information Technology:
 Development of Management Information System (MIS)
 Cyber Laws and Digital Signature
 Electronic Records and Online Filing
 Software Copyright and Licensing
 Information System Audit
 Control Policy and Internal Code of Conduct
 Information Risk Management
Termination of COMPANY SECRETARY:

 Convene Board Meeting

After giving notice to all directors, a Board Meeting
should be convened in order to take decisions of
removing the existing Company Secretary. If company
secretaries are named in the Articles of Association it
also needs to be altered.
 Intimate the Secretary
The Secretary to be removed shall be intimated
regarding Board decisions & should be asked to give
representation to the Board within 15 days of
intimation.
Termination of COMPANY SECRETARY:

 Convene Board Meeting 2nd Time

 For considering the representation, if any made by the
Secretary & to cancel the agreement being entered by the
company with the Secretary another Board Meeting
should be convened.
 Appoint another Secretary in the same Meeting.
 Inform the ROC
 File e-Form 32 with the ROC to intimate about the
removal of existing Company Secretary and
appointment of new Company Secretary within 30 days
of removal after payment of requisite fees.
SECRETARIAL
STANDARDS
Background-Section 205 of Companies Act, 2013

 Functions of Company Secretary

(a) To report the Board
(i) Compliance of Co. Act. 2013 and Rules.
(ii) Compliance of other law applicable.

(b) Ensure Compliance of Applicable Secretarial Standards.

(c) Discharge such other duties as may be prescribed.

 What is Secretarial Standard?

(i) Issued by ICSI

(ii) Approved by Central Government vide

 Thus Secretarial Standard are mandatory to all Companies

except One Person Company.
 ICSI constituted Secretarial Standard Board.
 ICSI has issued total 10 Secretarial Standards.
 MCA has notified SS-1 & SS-2 on 10.04.2015 and published in
Gazette. Effective from 01st July, 2015.
 SS-3 is effective from 1st Jan, 2018 & SS-4 is effective from 1st Oct,
2018.
 Scope of SS is to supplement such laws, rules and regulations.
 Secretarial Standard-1
(Meetings of the B.O.D.)

SS-1:CONVENING A MEETING

(1) Authority to convene Meeting:

Director, or Company Secretary OR if no CS any other

person.
In consultation with Chairman /MD /WTD/

Director/Secretary.
Unless AOA provides otherwise.
Chairman may adjourn the meeting unless objected by

the majority of director.

 SS-1(Meetings of the B.O.D.)

(2) GENERAL

 Time, Place, Mode & Serial No. of Meeting

 Every Meeting shall have serial no.
 Meeting/ adjourned Meeting not to be held on National holiday
 Participation through electronic mode (except banned under Act)
e.g. Approval of financial Statement, Board report, Prospectus,
Amalgamation etc..
 Discussion on Financial statement by audit committee (Unless

approved by Chairman)
 SS-1(Meetings of the B.O.D.)

(3) Notice [SSB-1.3]

 By hand or post or by facsimile or by e-mail or by Courier
(in writing)by CS or where no CS by any Director or
authorised person
 To specify: Time, day, date and place, Serial no and full
address of venue.
 At least 7 clear days (unless AOA provides longer period)
 To specify availability of electronic mode.
 Notice to all Directors including original Director and
alternate Director .
 Need not be given if adjourned (Except Sine Die.)
 SS-1(Meetings of the B.O.D.)

• No business to be transacted, if notice not given as per

SS-1.
• Agenda Notes to be given with Notice before 7 clear
days.
• AOA may provide longer period.
• Detail note, facts, scope and implications as well as
nature of concern/ interest along with Draft
resolution is also required.
• Each items to be serially numbered.
• The consent of shorter notice to be recorded in
minutes.
 SS-1(Meetings of the B.O.D.)

(4) Agenda [SSB-1.3.10]

• Agenda can be placed on table with consent of majority including ID.

• Shorter notice, Agenda and Notes may be given, if one ID is present.
• Permission of Chairman and Consent of majority present is required.
• If no ID present/ no ID, then decision taken should be ratified by
majority of the Director of the company.
• Supplementary agenda about significance items can be taken up
without consent.
• Item of unpublished price sensitive information can be taken up
without consent.
 SS-1(Meetings of the B.O.D.)

(5) Meetings

 Total four meeting with not less than 120 days gap.
 Committee to meet as decided by board.
 Statutory committee to meet as prescribed by authority.
 Adjourned Meeting: Interval period as per original
meeting.
 ID shall meet once in a year to review performance of the
Board, Chairman etc..
 CS to facilitate convening & holding ID Meeting if desired
by ID.
 SS-1(Meetings of the B.O.D.)

(6) Quorum [SSB-3]

 To present throughout the meeting.
 If interested director exceeds, the remaining director being not less than

two should be quorum.

 If directors are reduced, no business can be transacted.
 The Quorum is 1/3rd of total strength or 2 directors , whichever is higher.
 If the interested directors or 2/3rd or higher than remaining directors

present at the meeting, being not less TWO, shall be the Quorum for such
item during the meeting.
 If meeting is adjourned for want of quorum, the meeting shall held at the

next week at same time and place.

 If no quorum at adjourned meeting- meeting stands cancelled.
 SS-1(Meetings of the B.O.D.)

(7) Attendance at Meeting [SSB-4]

 To maintain separate register with present members at meeting..

 To grant leave of absence to directors, if requested.
 Place, time & address of the meeting must be mentioned.
 Signature of all Directors, CS, Invitee and person In attendance.
 If Electronic mode- roll call and to be recorded through any electronic

recording.
 To be maintained at Registered office or at a place as per Board approval.
 Open for inspection to PCS, SA and Auditor.
 Entries to be authenticated by CS or by Chairman.
 To be preserved for at least eight F.Y.
 To be kept in custody of CS or any other Director.
 SS-1(Meetings of the B.O.D.)

(8) Appointment of Chairman [SSB-5]

 Chairman of the Company should be Chairman of the Board.

 If no Chairman, Director shall elect.(unless AOA provides
otherwise)
 Chairman’s duty to see meeting is convened and constituted in
accordance with laws.
 Only item of agenda to be transacted.
 He should encourage deliberations.
 He should assess the sense of meeting.
 SS-1(Meetings of the B.O.D.)

 To ensure proceedings are correctly recorded.

 He may include or exclude any matter from minutes.
 If chairman is interested in any item, he should not act as
Chairman for the a item.
 The board may appoint Chairman of the Committees or
Chairman may be appointed as per
guidelines/rules/regulation.
 If meeting through electronic mode, CS & Chairman to
safeguard integrity.
 No person other than Director is allowed to assess
proceedings.
 SS-1(Meetings of the B.O.D.)

(9) Circular Resolution [SSB-6]

 Chairman or MD or WTD or any Director shall decide about CR.

 Draft resolution together with necessary papers individually to all directors.
 Draft resolution together with necessary papers individually to all committee members.
 It would be appropriate for urgent matter only.
 If one third of total director requires resolution at BoD, the same shall be placed at BoD.

(1/3rd have included interested directors)

 Proof of delivery to be maintained.
 The assent or dissent and date by which Director shall respond shall be mentioned.
 Not more than 7 days to be given to respond.
 Resolution will be deemed to be passed if approved by Majority of directors.
 The effective date of resolution is deemed to have been passed on the last date specified

for signifying assent or dissent or the date of assent of more than 2/3 red of director is
receive, whichever is earlier.
 Resolution to be noted at the next meeting.
 SS-1(Meetings of the B.O.D.)

(10) Minutes [SSB-7]

 In electronic form (with timestamp) or as may be decided

by Board
 Uniform practice to be followed

 Serially numbered

 To be finalized Within 15 days of meeting.

 Comments of the Directors within 7 Days.

 Signed minutes to be circulated within 15 days by CS or

Director.
 To be entered in minutes book within 30 days.
 SS-1(Meetings of the B.O.D.)

 Adjourned for Non-quorum- A statement to be recorded by the

Chairman/Director.
 Date of entry in minutes to be recorded by CS.
 Chairman to initial each page and sign last page with date.
 Auditor, Cost Auditor or Secretarial Auditor can inspect the
minutes.
 Member of Company has no right to inspect the minutes.
 ROC or any of the govt. officer can inspect during inspection
 Minutes can not be pasted or attached.
 Loose leaf form minutes should be bounded to co inside with the
F.Y.
 Minutes can not be altered.
 SS-1(Meetings of the B.O.D.)

• Extract of the minutes can be given only after minutes have

been signed.
• Certified copy of resolution can be given pending Signature
of Chairman, if draft resolution was approved.
• Minutes of earlier meeting should be noted at the next
meeting.
• Alteration (Other than grammatical/Minor Correction)
should be made by express approval at next meeting.
• Minutes of Committee should be noted at next Committee
meeting and Board Meeting.
 SS-1(Meetings of the B.O.D.)

(11) Specific Contents of Minutes [SSB-7.2.2]

 Election of Chairman
 Quorum
 Names of directors, invitees, In attendance (electronic/ physical)
 Brief about proposal and rationale of resolution should be recorded.
 Names of dissenting or abstained from decision to be recorded.
 Interested director did not participate to be recorded.
 Proper identification of papers place before meeting to be initialed by
Chairman/Director.
 Noting of Minutes of Board and Committees
 Circular Resolution
 Interested Director
 Views of Director
 SS-1(Meetings of the B.O.D.)

(12) Preservation of Minutes and other Records.

 To be preserved permanently.
 Amalgamation/Merger etc.- transferee company to preserve.
 Office copies of record should be preserve for 8 years and to be
destroyed under authority of board.
 Annual report & Annual return of company should disclose No. Of
Meetings/Committees and name of directors who attended each
meeting.
 Secretarial Standard-2
(Secretarial Standard on General Meetings)

(1) Authority [SSG-1.1]

 By Board.
 If failed to convene, member may approach Authority.

(2) Notice [SSG-1.2]

 Notice to be signed by Managing Director.

 Notice to be given to members, auditor, secretarial auditor, debenture trustee etc.
 To be sent by hand or by ordinary post or by speed post or by registered post or
by courier of by facsimile or by e-mail or by any other electronic means.
 In case of joint holder: To the person having first name.
 If Company have a website, notice shall be hosted on website.
 To specify: Time, day, date and place.
 SS-2 (General Meeting)

 Notice to contain nature of meeting and business to be transacted.

 In case of special business: draft resolution with explanatory statement.
 To be published in a news paper.
 At least 21 clear days in advance.
 Can be convened at shorter notice if consent of ninety-five percent.
 No business can be transacted if proper notice is not given.
 No business should be taken up if not mentioned in notice.
 Notice to contain attendance slip, proxy form with instructions.
 A meeting convened upon due notice should not be postponed or
cancelled.
 If meeting can not be held on date originally fixed, it can be reconvene
after giving three days intimation to the members.
 Intimation to be sent individually or in newspaper.
 SS-2 (General Meeting)

(3) Frequency of Meetings [SSG-2]

 Every company should hold an AGM in each calendar year.

 Items of business of an urgent nature which need to be
transacted before AGM should be considered at EGM.
 SS-2 (General Meeting)

(4) Quorum [SSG-3]

 To be present throughout the meeting.
 Quorum For public company: 5 (No. Of members Not more
than1000), 15 (No. of Members more than 1000 but up to
5000) and For private company: 2 Members
 Personally present and entitled to vote.
 A duly authorized representative of body corporate of the
representative of the president of India or the Governor of
India-considered to be member personally present.
 The stipulation of quorum does not apply in postal ballot
transaction.
 SS-2 (General Meeting)

(5) Presence of Directors and Auditors &

Secretarial Auditor [SSG-4]
 Any Director is unable to attend the meeting, the chairman shall
explain such absence.
 The Chairman of the Audit Committee should attend the AGM.
 If there are any reservations, qualifications or adverse remarks
in the
 Auditor’s Report, auditor has to present in AGM.
 Secretarial Auditor has to attend the AGM.
 SS-2 (General Meeting)

(6) Chairman [SSG-5]

 Where the Articles so provide, the Chairman of the Board should take
the chair and conduct the Meeting.
 If there is Chairman who is not present within 15 minutes, Directors
present should elect one of themselves to be the Chairman.
 Chairman’s duty to see meeting is convened and constituted in
accordance with laws and in impartial manner.
 Only item of agenda to be transacted.
 The Chairman should explain the objective and implications of each
Resolution.
 If chairman is interested in any item, he should not act as Chairman for
that item.
 SS-2 (General Meeting)
(7) Proxies [SSG-6]
 Articles of which provide, member has right to attend and vote at the meeting
has right to appoint proxy for the same.
 Proxy shall be Member in case of Companies with Charitable Objects.
 Proxy can act on behalf of Members not exceeding fifty and holding in the
aggregate not more than ten percent of total share capital of the company
carrying Voting Rights.
 Member holding more than ten percent of the total share capital of the
company carrying Voting Rights may appoint a single person as proxy for his
entire shareholding.
 If a proxy is appointed for more than fifty members, he shall choose any fifty
members.
 An instrument of Proxy duly filled, stamped and signed, is valid only for the
Meeting.
 A proxy holder shall prove his identity.
 Blank & Incomplete & undated proxies not to be considered valid.
 SS-2 (General Meeting)

Ifa company receives multiple Proxies for the same shareholding of member,
the proxy which is dated last shall be considered valid.
Proxies should be deposited with company before 48 hours of meeting.
A member who has not appointed proxy may appoint proxy for the adjourned
meeting of the same before 48 hours of such meeting.
A Proxy later in date revokes any Proxy/Proxies dated prior to such
Proxy.
A Proxy is valid until written notice of revocation has been received
by the company for relevant meeting.
Inspection of Proxies are permitted to member by application in 3 days before
commencement of meeting.
Proxies should be made available for inspection during the period beginning
twenty-four hours before Meeting.
All Proxies should be recorded Chronologically in a register, if rejected then
register it with reason.
 SS-2 (General Meeting)
(8) Voting [SSG-7]
 Every resolution to be proposed by one member and seconded by
another member.
 Every Company Listed on Recognized Stock Exchanges shall provide E-
Voting.
 Company which has provide e-voting, shall also put every Resolution
to vote through ballot process.
 Every Resolution should, in the first instance, be put to vote on a
 show of hands except for proxies.
 A member or proxy having differential voting rights has the right to
demand or join the demand for poll.
 A member who is related party is not entitled to vote on Resolution
relating to approval of Contract
 If the Articles so provide, the Chairman shall have a casting vote.
 SS-2 (General Meeting)
(9) Conduct of E-Voting (SSG-8)
 The Facility of Remote e-voting shall remain open for not less than three
days.
 The Board has to appoint CS, CA, Cost Accountant (All in Practice) or
advocate or other person of repute as a Scrutinizers for e voting or postal
ballot process
 The Board may decide the cut off date for reckoning the members who are
entitled to vote.
 Notice to be placed on the website of the company
 Notice shall inform the Members about procedure of Remote e-voting
 Chairman or any other authorised Director to countersign the Scrutinizers
Report and declare the Result.
 The Results to be placed at Registered office, Head office, Corporate office
and Website.
 The Scrutinizer's Report, registers and other related papers to be kept in
the custody of CS.
 SS-2 (General Meeting)
(10) Conduct of poll [SSG-9]
 If poll is demanded on any Resolution, the Chairman should get the validity of
the demand verified and should order the poll forthwith.
 If the question is related to appointment of Chairman or adjournment of the
meeting, within 48 hours of demand for poll.
 If not decided, the Chairman should announce the date, venue and time of
poll.
 Each Resolution on which a poll is demanded should be put to vote
separately.
 The Chairman should appoint such scrutinizers as he deems necessary to
ensure that the scrutiny of the votes is done fairly, accurately and properly.
 The Chairman should declare the result within 2 days of submission of report
by Scrutinizer.
 The result should be displayed at notice board of the company at its
Registered Office, placed on website and news paper.
 SS-2 (General Meeting)

(11) Resolutions [SSG-10,11,12]

 Resolutions which affects the market price of securities should not be
withdrawn.
 A Resolution passed at a Meeting should not be rescinded other than by a
Resolution passed at a subsequent Meeting.
 Modifications to any Resolution which do not change the purpose of the
Resolution materially may be adopted by the requisite majority at the
Meeting and, thereafter amended Resolution duly proposed, seconded and
put to vote.

(12) Reading of Report/Certificate [SSG-13]

 Auditor’s Report and Statement pursuant to CARO should be read at
AGM.
 The Secretarial Auditors Report should be read at AGM.
 SS-2 (General Meeting)

(13) Distribution of Gifts [SSG-14]

 No gifts, gift coupons, or cash in lieu of gifts should be distributed to members in
meeting.

(14) Adjournment of Meetings [SSG-15]

 Meeting should not be adjourned arbitrarily by the Chairman, except with the
decision of members or consent of the members taken.
 Adjourned for want of requisite Quorum.
 Chairman can adjourn meeting if disorder or other causes comes and impossible
to conduct and complete business.
 If a Meeting is adjourned sine-die or for a period of thirty days or
 more, a Notice of the adjourned Meeting should be given.
 If a Meeting is adjourned for less than thirty days, the company shall give not less
than 3 days Notice thereof specifying the day, date, time and venue of the
Meeting & should be published immediately in a newspaper.
 SS-2 (General Meeting)

 If meeting is adjourned for want of quorum, the meeting

shall held at the next week at same time and place.
 If quorum is not presented within half an hour, the Meeting
shall stand dissolved.
 At an adjourned Meeting, only the unfinished business of
the original meeting should be considered.
(15) Passing of Resolution by Postal Ballot [SSG-16]
 Every Company, except the company having less than or equal to
two hundred members, shall transact items of business as
prescribed through postal ballot instead of GM.
 Every Company Listed on Recognized Stock Exchanges shall
provide E-Voting
 SS-2 (General Meeting)

The Board shall:

 identify the business to be transacted through postal ballot
 Authorizes CS and if no CS then any other Director to conduct process
 appoint one scrutinizers
 Appoint Agency for e-voting
 decide the record date
 decide on calendar of Events
 Authorize the Chairman or if no chairman to any other Director to
receive scrutinizers Report, Register etc.
 SS-2 (General Meeting)
 Notice of postal ballot to be given to every member of the company.
 If Company has a website, then put notice on website
 Specify day, date, time and venue where results will be announced
 Notice shall specify the availability of E-voting
 Each items to be in the form of Resolution
 The postal ballot forms shall be accompanied by a postage prepaid
reply envelope.
 Postal ballot form shall contain instructions
 Based on the scrutinizer's report chairman to declare result
 The Resolution, if passed by requisite majority, shall be deemed to have
been passed on the last date specified by the company for receipt of
duly completed postal ballot forms for E-voting.
 SS-2 (General Meeting)

(16) Maintenance of Minutes [SSG-17]

 Minutes shall be recorded in books maintain for that purpose.

 A distinct Minutes Book shall be maintained for Meeting of the
Members of the Company, Creditors and others as may be required
under the Act.
 In electronic form (with timestamp) or as may be decided by Board
Uniform practice to be followed.
 To be entered in minutes book periodically depending size and volume.
 Minutes kept at the Register Office of the Company.
 Chairman to initial each page and sign last page with date.
 Minutes can not be altered.
SECRETARIAL
AUDIT
 Introduction
• Secretarial Audit is a process of checking and verifying the records
and documents of the company and to check whether the company
is in compliance with the provisions of Companies Act, 2013 and
other applicable laws.
• The Secretarial Audit Report aims at confirming compliance by the
company with all the applicable provisions of the applicable laws
and pointing out non-compliances and recommendations for
better compliance.
• The compliances are verified and checked by an independent
professional [a company secretary in practice] to ensure that the
company has complied with all the legal, secretarial and
procedural requirements as required under various applicable
laws.
 SECTION 204 - SECRETARIAL
AUDIT FOR BIGGER COMPANIES

Section 204 of the Companies Act, 2013 read with the

Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, provides that:
1. Every Listed Company;
2. Every Public Company having a paid up share capital of
fifty crore rupees or more; and
3. Every public company having a turnover of two hundred
fifty crore rupees or more

Shall annex with its Board’s Report, a Secretarial Audit

Report, given by a Company Secretary in Practice, in Form
MR- 3.
 PENALTY FOR NON-COMPLIANCE

If the company or any officer of the company

or the company secretary in practice,
contravenes any provisions of the Section 204
then the Company and every officer of the
Company or the Company Secretary in
practice who is default, shall be punishable
with fine which shall not be less than
1,00,000 (One Lakh Only) but which may
extend to 5,00,000 (Five Lakh Rupees).
 APPOINTMENT OF SECRETARIAL
AUDITOR
• The Secretarial Auditor would be required to be appointed
in the board meeting of the Company and the
remuneration of the Auditor will also be determined in the
aforementioned board meeting [Section 179(3)].
• Company is required to file the certified true copy of the
resolution passed in the aforementioned board meeting
with the Registrar of Companies as an attachment in e-
form MGT – 14.
• However, prior to the appointment, the Company would be
required to obtain the consent of the Secretarial Auditor.
 ACTS COVERED UNDER
SECRETARIAL AUDIT REPORT
1. The Companies Act, 2013 and the rules
made thereunder;
2. The Securities Contracts (Regulation) Act,
1956 and the rules made there under;
3. The Depositories Act, 1996 and the
Regulations and Bye laws framed there
under;
4. Foreign Exchange Management Act, 1999
 ACTS COVERED UNDER
SECRETARIAL AUDIT REPORT
The following regulations and guidelines prescribed under SEBI Act,
1992:
a) (The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations, 2011;
b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations,
1992;
c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2009;
d) The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999;
e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations,
2008;
f) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents)
Regulations, 1993 regarding the Companies Act and dealing with client;
g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009;
and
h) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998.
 ACTS COVERED UNDER
SECRETARIAL AUDIT REPORT
The Report also deals with examination of compliance with applicable
clauses of the following:
1. Secretarial Standards issued by the Institute of Company
Secretaries of India;
2. The Listing Agreements entered into by the Company with Stock
Exchange(s), if applicable.
3. Reporting on compliance of ‘Other laws as may be applicable
specifically to the company’ which shall include all the laws which
are applicable to specific industry for example for Banks- all laws
applicable to Banking Industry; for insurance company-all laws
applicable to insurance industry; likewise for a company in
petroleum sector- all laws applicable to petroleum industry;
similarly for companies in pharmaceutical sector, cement industry
etc.
 Related
Party
Transactions
RELATED PARTY TRANSACTIONS

A related-party transaction is a business deal or

arrangement between two parties who are joined
by a preexisting special relationship.
For example: A business transaction between a
major shareholder and a corporation, such as a
contract for the shareholder's company to perform
renovations to the corporation's offices, would be
deemed a related-party transaction.

Continued…..
 RELATED PARTY TRANSACTIONS

As per section 2(76) of Companies Act, 2013, read with rule 3 of

Companies (Specification of definitions details) Rules, 2014, the term
Related party transaction means-
1. A director or his relative
2. A key managerial personnel or his relative
3. A firm, in which a director, manager or his relative is a partner
4. A private company in which a director or manager is a member or
director
5. A public company in which a director or manager is a director or
holds along with his relative more than 2% of his paid up share
capital
6. Anybody corporate whose board of directors, managing director or
manager is accustomed to act In accordance with the advice,
directions or instructions of a director or manager
Continued…..
 RELATED PARTY TRANSACTIONS
As per section 2(76) of Companies Act, 2013, read with rule 3 of Companies
(Specification of definitions details) Rules, 2014, the term Related party
transaction means-
Continued…..
7. Any person on whose advice, directions or instructions a director or manager is
accustomed to act: provided that nothing in sub-clauses (vi) and (vii) shall apply to
advice, directions or instructions given in professional capacity
8. Any company which, is
1. A holding, subsidiary or an associate company of such company
2. A subsidiary of a holding company to which it is also a subsidiary
9. A director or key managerial personnel of the holding, subsidiary or associate
company of such company or his relative
10. Any person appointed in senior management in the company or its holding, subsidiary
or associate company i.e. personnel of the company or its holding, subsidiary or
associate company who are core management team excluding board of directors
comprising all members of management one level below the executive directors,
including functional heads.
Transactions which are deemed to be related party transaction

Following transactions between a company and its related party

relating to:
1. Sale, purchase or supply of any goods or materials
2. Selling or otherwise disposing of, or buying, property of any
kind
3. Leasing of property of any kind
4. Availing or rendering of any service
5. Appointment of any agent for purchase or sale of goods,
materials, service or property
6. Appointment to any office or place of profit in the co., its
subsidiary or associate
7. Company Underwriting the subscription of any securities or
derivatives thereof, of the company
 Exemption/Non-applicability

However, it is to be noted that the above-stated conditions

shall not be applicable in case of transactions entered into
by a company in its ordinary course of business which are
on arm`s length basis. An arm’s length transaction means a
transaction between two related parties that is conducted
as if they were unrelated, so that there is no conflict of
interest. In this case, it is to be noted that the onus of
responsibility lies with the parties entering into contract
that the said transactions come within the purview of
arm`s length basis.
 Nature of Approval Required

• As per the new act of 2013 every company irrespective of its

capital needs to seek the approval of BOARD OF DIRECTORS
before entering into any related party transactions. It is
necessary that such a resolution is obtained at a meeting
conducted by the board of directors. As per rule 15 of
Companies (meeting of board and its powers) Rules 2014, a
director who has `an interest` in the contract or arrangement
with such related party must not be present at the meeting
during the discussions pertaining to the subject matter of the
contract or arrangement.
 Nature of Approval Required

In following cases, in addition to the approval of board of directors, prior

approval of members by special resolution must be sought before entering
into related party transaction. All related party transaction in case of
companies having paid up share capital of Rupees 10 crores or more:
1. Sale, purchase or supply of any goods or materials directly or through
appointment of agents exceeding 25% of annual turnover
2. Selling or disposing of property of any kind directly or through
appointment of agents exceeding 10% of the net worth
3. Leasing property of any kind exceeding 10% of the net worth
4. Availing or rendering services directly or through appointment of agents
exceeding 10% of the net worth
5. Remuneration for underwriting the subscription of any securities or
derivatives thereof of company exceeding 1% of the net worth
Continued…..
 Nature of Approval Required

In following cases, in addition to the approval of board of directors,

prior approval of members by special resolution must be sought
before entering into related party transaction. All related party
transaction in case of companies having paid up share capital of
Rupees 10 crores or more:
Continued…..
6. In case of a Special Resolution in an extraordinary general meeting, no
member of the company who is a related party shall cast a vote on such
a special resolutions which aim at approving any contract or
arrangement which may be entered into by the company. In case of
wholly owned subsidiary the special resolution passed by the holding
company shall be considered sufficient for entering into transactions
between wholly owned subsidiary and the holding company.