Monthly Archives: August, 2014

MCA Updates 14th August 2014_ second amendment in Companies (Meeting of Board and its Powers) Rules 2014 ‘

Ministry of Corporate Affairs, on 14th August 2014 has made amendments in rules made under Chapter VII, of the Companies Act 2013, i.e. Companies (Meeting of Board and its Powers) Rules 2014

 

This is second amendment made by Ministry, and will come into effect from the date of its publication in official gazette.
Rule No. 3 , 4 and 15 were amended by this amendments the details are as below;

(1)  in rule 3,

  • in sub rule(6), the word and commas, “which shall be in India” shall be omitted.

(2)  in rule 4:

(a) in sub rule (1), for the brackets, figure and word “(1) The”, the word “The” shall be substituted;

(b) in clause (iv), for the words “consideration of accounts”, the words “consideration of financial statement including consolidated financial statement, if any, to be approved by the Board under sub-section (1) of section 134 of the Act” shall be substituted.

(3)  in rule 15, for sub-rule (3), the following sub rule shall be substituted, namely:-

“(3) For the purposes of first proviso to sub section (1) of section 188, except with the prior approval of the company by a special resolution, a company shall not enter into transaction or transactions, where the transaction or transactions to be entered into,-

(a)As contracts or arrangements with respect to clause (a) to (e) of sub section (1) of section 188, with criteria mentioned below-

  • Sale, purchase or supply of any goods or materials, directly or through appointment of agent, exceeding 10% of the turnover of the company or rupees 100 crore, (whichever is lower) as mentioned in clause (a) and clause (e) respectively of sub section (1) of section 188;
  • Selling or otherwise disposing of or buying property of any kind, directly or through appointment of agent, exceeding 10% of the net worth of the company or rupees 100 crore, (whichever is lower) as mentioned in clause (b) and clause (e) respectively of sub section (1) of section 188;
  • Leasing of property of any kind exceeding 10% of the net worth of the company or rupees 100 crore, (whichever is lower) as mentioned in clause (c) sub section (1) of section 188;
  • Availing or rendering of any services, directly or through appointment of agent, exceeding 10% of the turnover of the company or rupees 50 crore, (whichever is lower) as mentioned in clause (d) and clause (e) respectively of sub section (1) of section 188;

Explanation- it is hereby clarified that the limits specified in sub clauses (i) to (iv) shall apply for transaction or transactions to be entered into either individually or taken together with the previous transactions during a financial year.

(b)Is for appointment to any office or place of profit in the company, its subsidiary company or associate company at a monthly remuneration exceeding two and half lakh rupees as mentioned in clause (f) of sub section (1) of section 188; or

(c)Is for remuneration for underwriting the subscription of any securities or derivatives thereof, of the company exceeding 1% of the net worth as mentioned in clause (g) of sub section (1) of section 188.

Explanation-

  • The turnover or net worth referred in the above sub rules shall be computed on the basis of the Audited Financial statement of the preceding Financial year.
  • In case of a wholly owned subsidiary, the special resolution passed by the holding company shall be sufficient for the purpose of entering into the transactions between the wholly owned subsidiary and the holding company.
  • The explanatory statement to be annexed to the notice of a general meeting convened pursuant to section 101 shall contain following particulars, namely:-
    -Name of related party;
    -Name of the director or key managerial personnel who is related, if any;
    -Nature of relationship;
    -Nature, material terms, monetary value and particulars of the contract or arrangement;
    -Any other information relevant or important for the members to take a decision on the proposed resolution”

 

The amended rules can be downloaded from the following link
http://mca.gov.in/Ministry/pdf/NCA_Rules_16082014.pdf:

 

 

Thanks & Regards:

KASHIF ALI & ASSOCIATES
Company Secretaries

268, Business India Complex,
Uday Park, New Delhi-110049
Call us: +91 9718483209
Mail:  cs.kashifali@gmail.com

 

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IS SECRETARIAL AUDIT MANDATORY FOR FINANCIAL YEAR 2013-14 ?

 

SECRETARIAL AUDIT UNDER COMPANIES ACT, 2013

 

WHAT IS SECRETARIAL AUDIT?

‘Secretarial Audit’ has introduced by recently enacted Companies Act, 2013. It is compliance audit, by independent practicing company secretary. The purpose is to detect the non-compliances by companies under Companies Act 2013 and other allied Laws as applicable to the companies.

TO WHICH COMPANIES SECRETARIAL AUDIT IS MANDATORY?

As per section 204 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, following companies are required to obtain ‘Secretarial Audit Report’ form independent practicing company secretary;

(1) Every listed company

(2) Every public company having a paid-up share capital of Fifty Crore rupees or more; or

(3) (b) Every public company having a turnover of Two Hundred Fifty Crore rupees or more.

WHO CAN BE APPOINTED AS SECRETARIAL AUDITOR?

Only a practicing company secretary be appointed as Secretarial Auditor of the Company.

SCOPE OF SECRETARIAL AUDIT

A secretarial auditor has to check compliances by the company under the following laws and rules made there-under;

i. The Companies Act, 2013 (the Act) and the rules made there-under;

ii. The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made there-under;

iii. The Depositories Act, 1996 and the Regulations and Bye-laws framed there-under;

iv. Foreign Exchange Management Act, 1999 and the rules and regulations made there-under to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings;

v. The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’):-

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;

vi. Secretarial Standards issued by The Institute of Company Secretaries of India.

vii. The Listing Agreements entered into by the Company with Stock Exchange(s), if applicable;

viii. Other laws as may be applicable specifically to the company

Thus the scope of Secretarial audit is not limited to the corporate laws applicable to company but it extent to all laws applicable to Company.

POWER TO SECRETARIAL AUDITOR

The Companies Act, 2013 has empowered secretarial auditor and has given him all rights and powers as given to statutory auditor. As per section 204 of the Companies Act, 2013, the secretarial auditor company shall be entitled to require from the officers of the company such information and explanation as he may consider necessary for the performance of his duties as auditor.

IS SECRETARIAL AUDIT MANDATORY FOR FINANCIAL YEAR 2013-14?

The secretarial audit report shall annex with its Board’s report made in terms of sub-section (3) of section 134, of the Companies Act, 2013.

Ministry of Corporate Affairs, vide its circular No. 08/2014, dated 4th April 2014, has clarified that Board Report of the Company relating to financial year that commenced before 1st April 2014, shall be made in accordance with the relevant provisions of the Companies Act, 1956.

As the secretarial audit report is an annexure to Board’ Report thus the secretarial audit is not mandatory for financial year ended on 31st March 2014.

PUNISHMENT FOR DEFAULT

Sub-Section 4 of Section 204 of the Companies Act, 2013, provides that if a company or any officer of the company or the company secretary in practice, contravenes the provisions of section 204 of the Act, the company, every officer of the company or the company secretary in practice, who is in default, shall be punishable with fine which shall not be less than 1 lakh rupees but which may extend to 5 lakh rupees.

Moreover as per sub section (15) of section 143 of the Companies Act, 2013, if a secretarial auditor, has reason to believe that an offense involving fraud is being or has been committed against the company by officers or employees of the company, he shall immediately report the matter to the Central Government within such time and in such manner as may be prescribed. Failure to do so shall attract a fine which shall not be less than 1 lakh rupees but which may extend to 25 lakh rupees.

 

 

Thanks & Regards:

KASHIF ALI & ASSOCIATES
Company Secretaries

268, Business India Complex,
Uday Park, New Delhi-110049
Call us: +91 9718483209
Mail:  cs.kashifali@gmail.com

 

 

Note: Kindly note that the entire contents of this article have been developed on the basis of relevant statutory provisions and as per the information existing at the time of preparation i.e. Act, notification, clarifications & circular issued by MCA. Though we have made upmost efforts to provide authentic information, however we do not undertake any liability in any way whatsoever, to any person in respect of anything arising by reliance upon the content of this article. It shall not be used as a legal opinion and not to be used for rendering any professional advice.

E-VOTING AS PER COMPANIES ACT 2013

E-VOTING AS PER COMPANIES ACT 2013

General meetings of companies are held at their registered offices and it is not possible for every member specially a members holding minor shares to travel upto the registered office of the company and participate in the general meeting of the company.

To eliminate this type of difficulty and to enhance the participation of minority members, concept of e-voting has been introduced by the Companies Act 2013. Now a member can cast his vote easily through his laptop or tablet or PC without physically attending the general meeting.

E-voting do not eliminate members right to physically attend and vote at the general meeting however member can cast his vote through one mode only. A member after casting his vote through e-voting can go and attend the general meeting but cannot cast vote in that general meeting.

WHICH COMPANIES NEED TO PROVIDE E-VOTING FACILITY?

As per section 108 read with rule 20 of the ‘Companies (Management and Administration) Rules, 2014’ following companies need to provide e-voting facility to their members to vote at general meetings.

  • every listed company and
  • every company having 1000 or more shareholders

MCA vide its circular No. 20/2014, dated 17th June 2014,  has clarified that the due to some practical difficulties the e-voting would not be mandatory till 31st Dec. 2014. 

http://mca.gov.in/Ministry/pdf/General_Circular_20_2014.pdf

However SEBI has clarified that listed companies shall have to provide e-voting facility to its members for all resolutions in general meetings.

Following are some of companies who are providing e-voting facility at their ensuing general meetings.

Sr. No.

Name of Company

Date of Meeting

Notice

i. 1

Bank of India

July 10 (AGM)

http://www.bankofindia.co.in/UserFiles/File/Notice_AGM_13062014.pdf

i. 2

Idea cellular

July 10 (EGM)

 

i.3

JSW Steel

July 10

 

i. 

L & T

Aug. 22

 

i. 

Bajaj Auto

July 17

 
HOW E-VOTING WORKS ?

a)      The Company desiring to use e-voting system has to avail services of any one of the following agencies:

 

Name of Co

Website

1

KARVY

https://evoting.karvy.com/

2

CDSL

http://www.evotingindia.com/

3

NSDL

https://www.evoting.nsdl.com/

b)     The agency will issue User- id’s and passwords having the maker , checker and scrutinizer privileges.

c)      The Company itself or through its Registrar and Transfer Agent [RTA] will setup the e – Voting schedule on the e – Voting website, upload the resolutions on which voting is required

d)     The company can then upload the Register of Members (ROM) , which contains the details of the security holders holding the securities in physical and demat mode across both depositories, as on the record date in the specified format .

e)      Agency  will then generate the password for security holders and forward the same to the Company / RTA.

f)       The company will then communicate the password, EVSN and the procedure for e-Voting, along with the notice of the resolution to all the security holders.

g)     The security holders should log on to website of agency during the duration of the Postal Ballot and cast their votes for all the resolutions on the e-Voting System.

h)     After the voting period is over, the e -Voting system will provide to the scrutinizer,

i)        Security holder wise details of the voting done in a report along with a summary , for the records of the company.

Scrutinizer’s report of some companies;

Reliance Industries Limited
https://evoting.karvy.com/Scrutinizer_Report_%20EVoting_instapoll.pdf

Nestle
https://www.evoting.nsdl.com/eVotingWeb/downloads/100188_NESTLE_Result.pdf

ICICI Bank Limited
https://www.evoting.nsdl.com/eVotingWeb/downloads/Scrutinizers_Report_final.pdf

PROCEDURE OF E-VOTING ?

A.APPOINTMENT OF E-VOTING AGENCY

The company desiring to offer e-voting facility to its members first takes e-voting platform of          any one of the e-voting service providers.

B.APPOINTMENT OF SCRUTINIZER

The Board of directors shall appoint one scrutinizer, who may be chartered Accountant in practice, Cost Accountant in practice, or Company Secretary in practice or an advocate, but not in employment of the company and is a person of repute who, in the opinion of the Board can scrutinize the e-voting process in a fair and transparent manner:

The scrutinizer so appointed may take assistance of a person who is not in employment of the company and who is well-versed with the e-voting system. The scrutinizer shall be willing to be appointed and be available for the purpose of ascertaining the requisite majority;

C.DISPATCH NOTICE TO SHAREHOLDERS

A notice shall be sent to all members, auditors of the company or directors, through;

         -Registered Post or Speed Post
         -Courier services
         -Electronic mean i.e. registered e-mail ids

The notice shall also be placed on the website of the company and website of the agency.
The notice of the meeting shall clearly mention that the business may be transacted through electronic voting system and the company is providing facility for voting by electronic means.

The notice shall clearly indicate the process and manner for voting by electronic means and the time schedule including the time period during which the votes may be cast and shall also provide the login ID and create a facility for generating password and for keeping security and casting of vote in a secure manner.

D.ADVERTISEMENT IN NEWSPAPERS

Not less than 5 days before the date of beginning of the voting period an advertisement is to be published, in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and having a wide circulation in that district, and at least once in English language in an English newspaper having a wide circulation in that district,

The advertisement must specify the following matters;

  1. statement that the business may be transacted by electronic voting;
  2. the date of completion of sending of notices
  3. the date and time of commencement of voting through electronic means;
  4. the date and time of end of voting through electronic means;
  5. the statement that voting shall not be allowed beyond the said date and time;
  6. website address of the company and agency, if any, where notice of the meeting is displayed; 
  7. contact details of the person responsible to address the grievances connected with the electronic voting;

E. VOTING

The e-voting shall remain open for not less than one day and not more than three days. Provided that in all such cases, such voting period shall be completed three days prior to the date of the general meeting.

During the e-voting period, shareholders of the company, holding shares either in physical form or in dematerialized form, as on the record date, may cast their vote electronically.

Once the vote on a resolution is cast by the shareholder, he shall not be allowed to change it subsequently.

At the end of the voting period, the portal where votes are cast shall forthwith be blocked.

F.SCRUTINIZER’S REPORT

The scrutinizer shall, within a period of not exceeding three working days from the date of conclusion of e-voting period, unblock the votes in the presence of at least two witnesses not in the employment of the company and make a scrutinizer’s report of the votes cast in favour or against, if any, forthwith to the Chairman.

The scrutinizer shall maintain a register either manually or electronically to record the assent or dissent, received, mentioning the particulars of name, address, folio number or client ID of the shareholders, number of shares held by them, nominal value of such shares and whether the shares have differential voting rights.
The register and all other papers relating to electronic voting shall remain in the safe custody of the scrutinizer until the chairman considers, approves and signs the minutes and thereafter, the scrutinizer shall return the register and other related papers to the company.

G.DECLARATION OF RESULTS

The results declared along with the scrutinizer’s report shall be placed on the website of the company and on the website of the agency within two days of passing of the resolution at the relevant general meeting of members. Subject to receipt of sufficient votes, the resolution shall be deemed to be passed on the date of the relevant general meeting of members.

___________________XXXXX_________________________

Thanks and regards:

KASHIF ALI & ASSOCIATES
Company Secretaries

268, Business India Complex,
Uday Park, New Delhi-110049
Call us : +91 9718483209
Mail us : cs.kashifali@gmail.com

Note: Kindly note that the entire contents of this article have been developed on the basis of relevant statutory provisions and as per the information existing at the time of preparation i.e.  Act, notification, clarifications & circular issued by MCA. Though we have made upmost efforts to provide authentic information, however we do not undertake any liability in any way whatsoever, to any person in respect of anything arising by reliance upon the content of this article.  It shall not be used as a legal opinion and not to be used for rendering any professional advice.

GREAT OPPORTUNITY FOR DEFAULTING COMPANIES

Company Law Settlement Scheme(CLSS), 2014

Dear All,

It’s great news for companies who have defaulted in filing their Annual Accounts due to be filed on or before 30th June 2014. MCA has announces Company Law Settlement Scheme 2014. Now the defaulting companies can file their annual accounts and enjoy the following benefits:

  • Only 25% of payable additional fees.
  • Immunity from persecution.
  • Director will not be disqualified under section 164(2) of the Companies, Act 2013.

Companies can enjoy this scheme by filing their annual accounts before 15th October 2014. Don’t wait file all pending annual accounts and enjoy the benefits of scheme.

 
Company Law Settlement Scheme (CLSS)  2014 , Companies Act 2013

Company Law Settlement Scheme (CLSS) 2014 , Companies Act 2013

Thanks and regards:

KASHIF ALI & ASSOCIATESCompany Secretaries

268, Business India Complex,
Uday Park, New Delhi-110049
Call us : +91 9718483209
Mail us : cs.kashifali@gmail.com

Amendment in list of activities which may be included by companies in their Corporate Social Responsibility Policies

AMENDMENT IN SCHEDULE VII OF COMPANIES ACT 2013
 

Dear,

Ministry of corporate affairs, vide its notification dates 6th August 2014, has amended the schedule VII of the Companies Act 2013, by inserting following entry after item (x);

 

“(xi) Slum area development,

 

Explanation.- For the purposes of this item, the term ‘slum area’ shall mean any area declared as such by the Central Government or any state government or any competent authority under any law for the time being in force”

This notification shall come into force on the date of its publication in the official gazette.

You can download the notification form the following link;

http://mca.gov.in/Ministry/pdf/Amendment_Notification_06082014.pdf

 

Thanks and regards:

KASHIF ALI & ASSOCIATES

Company Secretaries

268, Business India Complex,
Uday Park, New Delhi-110049
Call us : +91 9718483209
Mail us : cs.kashifali@gmail.com