INSIGHTS INTO THE NEW COMPANY LAW
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INSIGHTS INTO THE NEW COMPANY LAW

INSIGHTS INTO THE NEW COMPANY LAW

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INSIGHTS INTO THE NEW COMPANY LAW
Details
ISBN 9789351430063
Edition 2013
Author PRACHI MANEKAR
Description
Publisher
Publication Year 2013
Pages
Binding PB
Language English
Table of Contents
Table Of Contents Details:Table of Content:"Contents CHAPTER PAGE I. THE COMPANIES ACT, 2013?THE DAWN OF A NEW ERA 1 Introduction 1 Background 1 Second generation reform 2 Features of the Companies Act, 2013 2 Increased ambit 2 Deregulation 2 Mandate deterrence to over-regulation 2 Efficacious remedies 2 Flexibility 3 International dimension 3 Regulatory framework 3 Protection against frauds 4 Public funds 4 Corporate governance 4 More business forms 4 Selective application 4 Role of company management 4 Changing role of consultants and advisors 5 Information technology 5 Sectoral Impact 5 Supports wave of corporatisation 5 Challenges 5 Interplay between statutes 5 Uncertainty 6 Transition 6 Challenges faced by professionals 6 Challenges faced by the board 6 Looking Forward 7 Rules and clarifications 7 Judiciary pronouncement 7 Effective of new framework 7 Enforcement strategy 7 Appendix A?History of the Companies Act, 2013 7 CHAPTER PAGE II. NATURE AND SCOPE OF THE COMPANIES ACT, 2013 9 Ambit of Company Law 9 Impact of extended applicability 9 Sources of new Company Law 10 The Companies Act, 2013 and other regulations 10 Rules and regulations 11 Clarifications by Ministry of Corporate Affairs (MCA) 11 Notifications by government 11 Orders issued by government 12 Meaning and nature of company 12 Features of company the light of new Act 13 Distinct legal entity 13 Limited liability 13 Property distinguished from members 14 Suing and being sued 14 Perpetual succession 14 Transferable shares 15 Management under a board structure 15 Classes of companies 15 Size of a company 16 Number of members 16 Access to capital 16 Sectoral classification 16 Body corporate 16 III. KINDS OF COMPANIES 17 Introduction 17 Overview of changes 17 Different business forms 17 Different norms 17 Listed companies 17 Unlisted Public Companies 18 One person company (OPC) 18 Meaning and definition 18 Who can incorporate one person company? 18 Features and advantages of one person company 18 Disadvantages of one person company 19 Small companies 20 Meaning and definition 20 Advantages of a small company 21 Disadvantage of a small company 21 CHAPTER PAGE Private companies 22 Meaning and definition 22 Advantages of a Private company 23 Disadvantages of a Private Company 23 Public companies 23 Meaning and definition 23 Advantages of a public company 24 Disadvantages of a public company 25 Government Companies 26 Meaning and Definition 26 Changes brought by the new Act 27 Charitable companies - (Section 8 companies) 28 Incorporation 28 Advantages of a charitable company 29 Disadvantages of a charitable company 29 Foreign Companies 30 Meaning and definition 30 Broader Scope 31 Deemed Indian company 31 Jurisdiction 32 Additional disclosures 32 Dormant companies 32 Meaning and definition 32 Rationale 32 Features of a dormant company 32 Producer Companies 33 Holding and Subsidiary Company 33 Definition: 34 Analysis of definition of subsidiary 34 Points of Similarity 34 Points of Distinction 35 Features 36 New subsidiaries 36 Exemptions 36 Layers of Subsidiaries 36 Greater Compliances 36 Disqualification 36 Deemed Public Company 37 Associate Company 37 Analysis of the definition 37 Features 38 CHAPTER PAGE Transactions 38 Consolidation 38 Disqualification 39 Appendix A?Private Companies 39 Appendix B?Listed Companies 42 IV. INCORPORATION ET AL 46 Overview of changes 46 Effect of registration 46 Vanishing companies 46 Commencement of business 47 Conversion 47 Memorandum of Association (MOA) and Articles of Association (AOA) 47 Incorporation 47 Decision to incorporate a company 47 Difference between Company and Limited Liability Partnership 48 Kinds of company 53 Formalities in incorporating any company 53 Documents as required under old Act 53 Additional Documents 53 Additional formalities in case of one person company 54 Condition subsequent to incorporation 54 Care while incorporating companies 54 De-registration 54 Nature of Application 55 When can an application be filed? 55 Can registration of companies under the old Act be questioned? 55 Speed of Registration 55 Memorandum of Association 56 Contents of Memorandum of Association 56 Alteration of Memorandum of Association 56 Articles of Association 57 Existing companies 57 Features of Articles of Association in the new Act 58 Appendix A?A comparison of Table A of the Companies Act, 1956 with Table F of the Companies Act, 2013 59 Appendix B?Vanishing Companies 62 Criteria for identification of a vanishing company 62 Observations 63 Findings of and actions taken by the Government 63 CHAPTER PAGE V. FINANCIAL INSTRUMENTS 64 Introduction 64 Overview of changes 65 Extending norms to securities 65 Greater role of central government 65 Civil and criminal remedies 65 Regulatory gaps / overlaps 65 Greater disclosures 66 Shares at discount / premium 66 Preference shares of longer tenure 67 Transfer and transmission 67 Securities issued by body corporate / companies 67 Scope of governance 67 Meaning of security 68 Provisions extended to all securities 68 Share Capital 70 What is a share? 70 Kinds of share capital 70 a. Equity Share Capital 70 b. Preference share capital 70 Preference Shares 71 Conditions for Issue of Preference Shares 71 Conditions to issue preference Shares 71 Voting Rights - Section 47 73 Variation of shareholders rights - Section 48 73 Conditions: 73 Safeguards 73 New safeguard for other shareholders 73 Minority interests 74 Analysis of the new safeguard 74 Other implications 75 Issue of shares at a premium - Section 52 75 Usage of Securities Premium Account 75 Other conditions 76 Conditions applicable to class of companies 76 Prohibition on issue of shares at discount - Section 53 76 Observation 76 Power to alter share capital - Section 61 77 Application to Tribunal in case of consolidation 77 Debentures 77 Analysis of the definition 77 Types of Debentures 77 CHAPTER PAGE Conditions for issuance of debentures - Section 71 78 Other conditions 79 Power to prescribe terms and conditions 79 Observations on deleted provisions 80 Global Depository Receipts (GDR) 80 Meaning and definition 80 Indian Depository Receipts (IDR) 80 Meaning of Indian Depository Receipt 81 Transfer and transmission of securities - Section 56 81 Meaning and definition 81 Provision on transfer 81 Additional Compliances for Transfer 81 Delivery of certificates 81 Refusal to transfer of shares 82 Major changes in provisions relating to transfer and its impact 82 Rectification of register of members 82 Conclusion 83 Appendix A?Can preference shares be listed? 83 Appendix B 84 Non-convertible debentures 84 Foreign currency convertible bonds (FCCB) 84 VI. CORPORATE ACTIONS 86 Public issue 86 Overview of changes 86 Norms extended to securities 86 Increased punishment 86 Shelf prospectus 86 Contracts and objects 87 Restrictions on Securities and Exchange Board of India (SEBI) 87 Offer of Securities 87 Power of SEBI - Section 24 87 Prospectus 88 Analysis of the definition 88 Matters to be stated in prospectus 88 Expert opinion in prospectus 88 Less disclosures in certain cases 89 Formalities in issuance of prospectus 89 Registration of prospectus 89 Date of publication of prospectus 89 Validity of prospectus 89 Additional disclosures in prospectus 89 Advertisement of prospectus 89 CHAPTER PAGE Other conditions in public offer 90 Application to stock exchange 90 Issue of application forms for issue of securities 90 Issue of securities in dematerialised form 90 Allotment of securities by company 90 Minimum amount paid-up on securities 90 Return of application money 90 Separate bank accounts 90 Commission to issue securities 90 Variation in terms of a contract or in objects of a prospectus 90 Dissenting shareholders 91 Other modes of making public offer 91 Offer of sale by certain members 91 Shelf prospectus 91 Red-herring prospectus 91 Liabilities as regards prospectus 92 Non fulfilment of conditions for issue 92 Criminal liability for misstatements in prospectus 92 Civil liabilities for misstatements in prospectus 92 Other frauds 92 Private placement 93 Definition of private placement 93 Analysis of definition 93 Conditions for private placement 95 Offer letter 95 Maximum offering in a financial year 95 Deemed public offer 96 Observation 96 Conditions for making private placements 96 Restrictions on fresh offer 96 Bar on advertisement and publicity 96 Process of offering securities 96 Allotment process 97 Records and disclosures 97 Persons responsible 97 Consequence of contravention 97 Rights issue - Section 62 98 Overview of Changes 98 Provision for Rights Issue 98 Exception to the Rule 98 Condition / Procedure for issue of shares on Rights basis 99 CHAPTER PAGE Employee stock options (ESOPs) - Section 62 99 Overview of changes 99 Meaning and nature 100 To whom can an ESOP be offered? 100 Can ESOPs be offered to Promoters? 100 Who can offer Employee Stock Options? 101 Conditions for offering Employee Stock Options 101 Types of ESOPs and their permissibility under new Act 101 Sweat equity - Section 54 102 Overview of changes 102 Whom can sweat equity shares be issued? 102 Can a dormant company issue sweat equity? 102 Can one person company issue sweat equity shares? 103 Can sweat equity shares be issued for consideration other than cash to director? 103 Can sweat equity shares be issued to promoters? 103 Can sweat equity shares be issued at discount? 103 When can sweat equity shares be issued? 103 Conditions for issue of sweat equity 104 Bonus shares - Section 63 104 Meaning and nature of bonus shares 104 Power to issue bonus shares 105 Manner of issuing shares 105 Sources of issuing bonus shares 105 Condition for issue 105 Other provisions 106 Reduction of share capital - Section 66 106 Overview of changes 106 Meaning and mode of reduction 107 Other provisions 109 Buyback - Sections 68 to 70 111 Overview of changes 111 Bar on subsequent buy back 111 Defaults 111 Contraventions 111 Declaration of solvency 111 Buy back of odd lots 111 Nature of buyback 111 Who can authorise buy back? 112 Sources for making buy-back 112 From whom can buy back be made? 112 Conditions for Buy Back 112 CHAPTER PAGE Bar on further buy back 113 Observations 113 Restrictions on buy back 113 Restrictions on further issue of Shares / specified securities 114 Procedural requirements 114 Deposits 114 Overview of changes 115 Definition of ?deposit? 115 Permissibility to raise deposits 116 Conditions for acceptance of deposits from members 116 Conditions from acceptance of deposits from public 116 Deposits accepted before commencement of the new Act 117 Deposits remaining unpaid at the time of commencement 118 Remedies for depositors 118 Appendix A?Sahara and Private Placement 119 Appendix B?Saradha Chit Fund Scam 121 VII. COMPROMISES AND ARRANGEMENTS 122 Introduction 122 Overview of changes 122 From Court to Tribunal 122 Contractual mergers 122 Deemed approval 123 Cross border mergers 123 Scope of powers 123 Intimation to authorities 123 Valuation of shares 123 Squeeze out rights 123 Merger of a listed company with unlisted company 123 Disclosure requirements 124 Dispensation of meeting 124 Definition of company 124 Compromise and arrangement 124 Common procedure 124 Different types of schemes 125 Where to apply? 125 What are the disclosures in application? 125 Power to dispense meeting 126 Order of Tribunal 126 Notice of meetings 126 Copies of documents 127 Procedure of meeting 127 CHAPTER PAGE Objections by stakeholders 127 Approval of the scheme 128 Auditor?s certificate 128 Sanction of scheme 128 Powers while sanctioning the scheme 128 Procedures post sanctioning of scheme 129 Power of Tribunal to enforce the scheme 129 Mergers / Demergers 129 Which arrangements are included under section 232? 129 Mergers and amalgamations 130 Demergers 130 Distinction 130 The scheme 130 Appointed date in the scheme 130 Draft scheme 131 Procedure post application 131 Application to Tribunal 131 Notices calling meeting 131 Notices and meetings 131 Sanction of Scheme 131 Sanction of the scheme 131 Powers of Tribunal 132 Effect of sanctioning of the scheme 133 Post sanction compliances 133 Fast track mergers 133 Which types of compromise or arrangement? 133 Which companies can opt for this route? 133 Procedure for fast track merger 134 Procedure where there are no objections 134 Tribunal to hear objection 135 Effect of registration of scheme 135 Other procedures 136 Cross border mergers 136 Minority interest 136 Power to acquire shares of dissenting shareholders - Section 235 136 Squeeze out provision - Section 236 136 Comparison between the Companies Act, 2013 and the Companies Act, 1956 137 VIII. ACCOUNTS, ANNUAL REPORTING AND AUDIT 138 Disclosure remains the bed rock of Company Law 138 Overview of Changes 138 Scope and manner of annual reporting 138 CHAPTER PAGE Consolidated statement 139 Electronic Form 139 Revision and reopening 139 Liabilities for misstatements 139 Relaxations 139 Financial year 139 Annual records 139 Accounting records 139 Branch records 140 Place of keeping records 140 Alternate place 140 Preservation of books of accounts 140 Electronic record keeping 140 Who is responsible for maintenance of books of accounts? 140 Internal controls 141 Who can inspect books and papers? 141 Financial Year 142 Uniform financial year 142 Changing financial year 142 Annual Accounts 143 Individual Financial Statement 143 Form of financial statement: 143 Contents of financial statement 143 Exemptions from disclosures 143 Accounting standards 144 Group Accounts 144 Form and content of consolidated financial statement 144 Other provisions 144 Issues in preparation of group accounts 144 Responsibility for annual accounts 145 Inspection of documents 145 Board Report 146 Scope of Board Report 146 Features of Board Report 146 Contents of Board Report 147 Reopening and revision of Annual Report 152 Bar on reopening 152 Voluntary revision 152 Finality 152 Reporting 153 Impact of this provision 153 CHAPTER PAGE Reopening of accounts on Courts or Tribunals orders 153 Who can order for reopening of accounts? 153 Who can apply for reopening of accounts? 153 In what event can one apply for reopening of accounts? 153 Notice for reopening of accounts? 154 Order for reopening of accounts 154 Audit 154 Internal audit 154 External audit 155 Annual Reports by government companies 155 Central government 155 State government 155 Liability for misstatements 155 Financial misstatement: nature and type 155 Safeguards 156 IX. AUDITOR 157 Changing role, responsibility and liability of auditor 157 Ambit 157 From watchdog to bloodhound 157 Scope of responsibility 158 Deterrent provisions 158 Class action 159 Extent of liability 159 Multiple regulators 160 Greater disqualifications 160 Sarbanes Oxley Act (SOX) and the new Act 161 Safeguarding the Auditors 161 Rationale 161 Appointment of Auditor 162 Need for an Auditor 162 Term of appointment 162 Condition precedent to appointment 162 Condition subsequent to appointment 163 Reappointment 163 Appointment of Auditors for government companies 163 Qualifications and disqualifications for Auditor 164 Qualifications 164 Disqualifications 164 Rotation of Auditors 165 Vacation of office 166 Causal vacancy 167 CHAPTER PAGE Causal vacancy in Government Company 167 Resignation of the Auditor 167 Removal of Auditor 167 Removal by members 168 Procedure for removal 168 Removal by Tribunal: 169 Cause of action 169 Order of the Tribunal 169 Additional disqualification on removal 170 Powers of an auditor 170 Access to books 170 a. Right to inquire 171 b. Attend general meetings 171 c. To be heard 171 d. Audit committee meetings 171 e. Documents 171 f. Access to records of subsidiary 171 Duties of Auditor 172 Nature of inquiry 172 Whistleblower 172 Reporting 173 Signing Audit report 173 Attending general meeting 173 Audit Report 173 Contents of Auditor?s Report 173 Non audit services 174 Which services can Auditor provide? 175 Remuneration of an Auditor 175 Conclusion 176 At a Glance?AUDIT & AUDITORS (Sections 139 to 148) 176 Appendix A?Scope for multi disciplinary firms 177 Appendix B?Audit failures leading to corporate scams 177 Appendix C?Responsibilities of an Audit Firm 178 X. THE BOARD 180 Overview of changes 180 Changing equation 180 Collective responsibility 180 Disclosures and their responsibility 181 Comply or explain 181 Consultative role 181 Peer review 181 CHAPTER PAGE Restriction on powers of the board 181 Widened powers to sell undertaking 181 Woman director 182 Minimum number of directors 182 Maximum number of directors 182 Resident director 182 Greater interference of shareholders 182 Role of the Board of Directors 182 Board and corporate governance 183 Composition of the Board of Directors 183 The Board of Directors 183 Power of the Board of Directors 184 Source of power 184 Nature of power 184 Validity of prior Acts: 185 Additional powers of the Board 185 Restrictions on powers of the Board 186 Sale of undertaking 186 Scope of the restriction 187 Other restrictions on powers 189 Appendix A 190 Definition of Undertaking under section 2(v) of the Monopolies and Restrictive Trade Practices Act, 1969 190 Definition of ?enterprise? under section 2(h) of the Competition Act, 2002 190 XI. COMPANY MANAGEMENT 192 Overview of changes 192 Role of Director 192 Ambit of company management 193 Mandatory appointments 193 Independent Director 193 Performance appraisal 193 Resignation 193 Additional disclosures 193 Remuneration 194 Liability of Directors 194 Limitation of liability 194 Directors 194 Types of Directors 195 Appointment of directors and incidental matters 195 Who can appoint a Director? 195 Condition precedent to appointment 195 CHAPTER PAGE Disqualifications of Directors 196 Disqualifications of Directors of defaulting companies 196 Additional disqualifications by private companies 196 Triggers 196 Observations: 197 Additional Director 197 Who can be appointed as an Additional Director? 197 Observation 197 Alternate Director 197 Qualifications of an Alternate Director: 197 Term of office 198 Nominee Director 198 Period of compliance 199 Observation: 199 Causal vacancy 199 By the Board: 199 By a Promoter: 199 By general meeting: 199 Resignation of a Director 199 Removal of Director 200 Removal by Shareholders 200 Removal by the Tribunal 200 Duties of Directors 200 Rationale 201 Observations 201 To whom is the duty owed? 202 Other Duties: 202 Powers of Director 202 Remedies in the Act for breach of duties 203 Injunction 204 Compensation 204 Restoration of companies property 204 Disgorgement 204 Dismissal 204 Independent Directors 204 Rationale 204 Qualifications of independent Directors 205 Observation about the qualifications 206 Status of Independent director appointed under Clause 49 ? Will their seat be vacated? 207 Conditions for appointment of an independent Director 207 Qualifications of an independent Director 208 CHAPTER PAGE Process of appointment 208 Role of an Independent Director 208 Privileges of an independent director 209 Key managerial personal (KMP) 210 Concept of key managerial personal (KMP) 210 History of the term 211 Role of key managerial personal 211 Role of a Company Secretary as a key managerial personal 211 Other duties of Company Secretary 212 Appointment 212 Appointment of managerial personnel 212 Conditions 212 Qualifications 212 Appointment of KMP other than MD / WTD / Manager 213 Conditions of appointment 213 Other observations 214 Remuneration of Directors and KMP 214 Remuneration under new law 215 Scope of remuneration 215 Calculation of remuneration 215 Restricted modes of remuneration 216 Role in committee 216 Additional special circumstances 216 Increase in limits 216 Remuneration by a private company 216 Remunerations under Schedule V 216 Remuneration of Managerial Personnel 217 Applicability 217 Ceiling on remuneration 217 Schedule V 218 Pattern A 219 Pattern B 219 Conditions for availing benefit under Section II 219 Remuneration payable in special circumstances (Section III) 220 Other Conditions as regards remuneration 221 Conclusion 222 XII. RELATED PARTY TRANSACTIONS 223 A Paradigm Shift Towards Shareholders Democracy 223 Overview of Changes 224 Control to approval 224 Related party defined 224 CHAPTER PAGE Larger scope 224 Bar on loan to director 224 More disclosures 224 Non cash transactions 224 Office or place of profit 224 Related party 224 Definition: 224 Analysis of the Definition 225 Related party transactions -Section 188 226 Listed business transactions 227 Analysis of listed business transactions 227 Conditions / exemptions 228 Board approval 228 Prescribed conditions 228 Shareholder approval 228 Arm?s length transactions 229 Ex post facto approval 230 Disclosures 230 Loans to directors and other related parties - Section 185 230 Loans to Director and other officials 230 Loan to others related parties 231 Loans to Other employees 231 Non cash transactions - Section 192 231 Nature of restricted non-cash transactions 232 Shareholder approval 232 Transaction with holding company 232 Valuations 232 Disclosures 232 Effect of contravention 233 Impact on providing sweat equity shares 233 Disclosure of interest by Directors - Section 184 233 First disclosure 233 Periodic disclosure 233 Need based disclosure 233 Transactions in which directors are interested 233 Voidable contract 234 Exemptions 234 Contracts with sole member by OPC - Section 193 234 Register of contracts or arrangements in which directors are interested - Section 189 234 Information to be provided in registers 234 Placing in board meeting 235 CHAPTER PAGE Disclosures 235 Inspection during AGM 235 Inspection 235 Non-applicability 235 Food for Thought: 235 Does this Act fight abusive Related Party Transactions (RTP)? 235 Appendix A?Satyam-Maytas-Hideous Related Party Transactions 237 XIII. LOANS AND INVESTMENTS 239 Overview of changes 239 Threshold limit 239 Investment company 239 Exemptions withdrawn 239 New exemptions 239 Power to regulate 239 Non-compoundable offence 239 Power to accept loans 239 Threshold Limit 240 Who is included with the term ?person?? 240 Conditions for making investments 241 Approval of Board 241 Approval from public financial institution 241 Shareholder approval 242 Interest 242 Disclosures in financial statement 242 Registers 243 Investment in own name - Section 187 243 Restrictions / Prohibitions 243 Defaulting companies 243 Investment companies 243 Prohibition on accepting loans and deposits 244 Exempted transactions 245 Loans by banks and others 245 Investments by certain companies 246 XIV. EMPOWERMENT OF SHAREHOLDERS 247 The new age of investor protection 247 Overview of Changes 247 Additional powers 248 Disclosures 248 Effective participation 248 Additional rights 248 Additional remedies 249 CHAPTER PAGE Strong corporate governance framework 249 Additional norms 249 Rights of members 249 Explanation of the Table 250 Duties of a shareholder 250 Red flags for investors 251 Institutional shareholder 251 Appendix A?Corporate Transactions Requiring Special Resolution 253 Appendix B?Corporate transactions requiring ordinary resolution 255 Appendix C?10% Shareholding 257 Appendix D?Rights of Every Member 257 XV. KEY REMEDIES FOR INVESTORS 260 Oppression and mismanagement 260 Eligibility criteria 261 Can the Tribunal waive the conditions? 261 Powers of the Tribunal 261 Existing powers 261 New/Modified powers 261 Rationale 262 Limitation of this remedy - A case for class action 262 Class action 263 Concept 263 Class actions worldwide 264 Class action in India 264 What is the importance of class action suits in the Indian context? 264 Who can file a class action suit? 264 Class action under the new Act 264 Eligibility to file class action 264 When can the class action be filed? 265 Challenges 266 Future of class action 266 Exit option 267 Changing object of company 267 Changing terms of contract or object 267 Rationale 267 Historical triggers 267 Appendix A?Class Action Abroad 268 1. Enron 268 2. World Com 268 3. Tyco International 268 4. AOL Time Warner 268 CHAPTER PAGE XVI. FRAUDS 269 Overview of changes 269 Fraud defined 269 Heavy penalty 270 Cognizable offence 270 Special courts 270 Deemed frauds 270 What is a fraud? 270 Analysing the definition 270 In relation to company 270 Act or omission 270 Person committing fraud 271 Accessory 271 Intention 271 Gain or loss inconsequential 271 Certain acts deemed to be frauds 271 Old frauds, new Act 271 Falsification of books 272 Initial Public Offer scams 272 Multiple Demat accounts 272 Counter measures 273 Price manipulation and rigging scam 273 Counter measures 273 Frauds by financial intermediaries 274 Counter measures 274 Chit fund scams / Ponzi schemes 275 Counter measures 275 Frauds by auditors 275 Counter measures 276 Vanishing companies 276 Counter measures 276 Other frauds 276 Charitable companies 276 Duplicate share certificates 276 Fraud on creditors 276 Fraudulent conduct of business 276 Defunct company 277 Appendix A?Ponzi schemes 277 International Ponzi Case 278 Ponzi Schemes in India 278 Appendix B?NSEL Fiasco 279 CHAPTER PAGE XVII. MEETINGS 281 A. Board Meetings et al 281 Overview of changes 281 Virtual meeting 281 Number of board meetings 281 Notice of meeting 281 Change in quorum 281 Board meeting at shorter notice 282 Applicability to private companies 282 Board meetings 282 Items taken only at board meeting 282 Prescribed items 282 Delegation 282 No threshold 283 Exemptions 283 Formalities in case of board meetings 283 First board meeting 283 Minimum number of board meetings 283 Manner of conducting meetings 283 Notice of meeting 284 Board meeting at shorter notice 284 Quorum of board meeting 284 Quorum in certain cases 284 Adjournment 285 Passing of resolution by circulation 285 Which decisions can be passed by circulation? 285 Conditions 285 Observation 285 Other conditions for circular resolution 286 Director can insist for a meeting 286 Noting of circular resolution 286 Committee meetings 286 Registered address 286 B. General Meetings et al 287 Overview of changes 287 Electronic voting 287 Notice of meeting 287 AGM timings 287 Quorum 287 Relaxation for one person company 287 Private Company 287 CHAPTER PAGE General meetings 287 Business transacted 287 Types of meetings 288 Annual general meeting 288 Extra ordinary general meeting 289 Provisions relating to general meeting 289 Notice of meeting 289 Explanatory statement 290 General meeting at shorter notice 290 Quorum for meetings 290 Proxy 291 Distinction 291 Voting rights 291 Rules framed by the central government 291 Special provisions for one person company 291 Comparative analysis 291 XVIII. CORPORATE SOCIAL RESPONSIBILITY 293 Who must comply? 294 What must be the compliance? 294 Is there a maximum limit on corporate social responsibility spending? 295 Who will be held accountable? 295 What activities can be carried out under corporate social responsibility? 295 What will the corporate social responsibility committee do? 296 What will be the role of board of directors? 296 How much will a company be required to spend on corporate social responsibility? 296 What does a company need to disclose in the annual report? 296 A critical look 296 Existing corporate social responsibility activities 297 International comparison 297 XIX. CONSULTANTS AND ADVISORS 299 Chartered accountants 299 Avenues for Chartered Accountants 300 Role of Company Secretary 301 Avenues for Company Secretaries 301 Certifications 302 Other roles 302 Role of cost accountant 302 Registered valuers 303 Role of Registered Valuer 303 CHAPTER PAGE Responsibility of a Registered Valuer 304 Civil and criminal sanctions 304 Merchant bankers 304 Financial intermediaries 305 Financial intermediaries 305 XX. REGULATORY AUTHORITIES 306 Introduction 306 Section I 306 Tribunals 306 Appeals 309 Appellate Tribunal 309 The Supreme Court 310 Appeal against National Company Law Appellate Tribunal orders 310 Powers of NCLT and NCLAT 310 Power to determine procedure 310 Power to punish for contempt 310 Powers of civil court 310 Power of grant adjournment 311 Limited power to review 311 Powers of courts 311 Execution of orders 311 Assistance of courts/authorities 311 Delegation of powers 312 Other important aspects 312 Serious Fraud Investigation Office (SFIO) 312 Organisation structure 313 Powers of Serious Fraud Investigation Office 315 Co-ordination 315 Police report 315 Obligation of company 315 Problem areas 316 Special Courts 316 Concept 316 Number of special courts 316 Constitution 316 Which offences are to be tried by Special Courts? 316 Who can apply to Special Courts? 316 Powers of Special Courts: 317 Nature of trials 317 Application of Code of Criminal Procedure 317 Pending matters 317 CHAPTER PAGE National Financial Reporting Authority 317 Constitution of National Financial Reporting Authority 317 Scope of National Financial Reporting Authority 317 Observation 318 Powers of National Financial Reporting Authority 318 (A) Impose penalty: 319 (B) Debar from practice as member of the ICAI: 319 Is there a conflict with the Chartered Accountant Act? 319 Mediation and conciliation panel 320 Section II 320 Role of the central government 320 Role of the Securities and Exchange Board of India 321 Forward dealings and insider trading 321 Nature of Power that can be exercised 322 Power that SEBI cannot exercise 322 Grey areas 322 Appendix A?Historical background of introduction of the Tribunal 323 Appendix B?Powers transferred from Court to National Company Law Tribunal 324 Appendix C?Powers Transferred from Company Law Board (CLB) to National Company Law Tribunal (NCLT) 328 Appendix D?New Powers of the National Company Law Tribunal 330 Appendix E?Powers transferred from Company 332 Law Board (CLB) to Central Government (CG) 332 Appendix F?New powers of Central Government 332 XXI. CORPORATE CRIMINAL LIABILITY 338 Overview of changes 338 Officer who is in default 338 Penalties 338 Adjudication mechanism 338 Trial of offence 338 Compounding procedure 338 Grace period 338 Corporate criminal liability 339 What is an offence? 339 Who is responsible for the offence? 339 What is the penalty? 341 Penalty levels 341 Penalties tied to damages 341 Enhanced imprisonment 342 New imprisonment 342 Non-executive director 342 CHAPTER PAGE Statutory limits 342 Distinct penalty for companies 342 Frauds 342 Provisions for reducing delays 342 Technical defaults 342 Disclosures of offences 343 Compulsory filing 343 Adjudication of penalty 343 Protection to whistle blowers 343 Trial of offenses 343 Appendix A 346 Penalties under the Old and New Provisions 346 New penalties under The Companies Act, 2013 367 Appendix B?Imprisonment Increased 370 Appendix C?New imprisonment provisions 373 ANNEXURE I. Commencement Notification of The Companies Act, 2013 379 II. The Companies (Removal of Difficulties) Order, 2013 382 "

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