This document discusses the raising of funds and annual compliances under the Companies Act, 2013. It begins with an overview of key definitions related to securities and how private and unlisted companies can issue securities through methods like private placement, rights issue, bonus issue, and preferential issue. It then covers the procedural requirements for these methods of issuance like board resolutions, shareholder approvals, filing of forms. The document also discusses other annual compliance requirements like related party transactions, meetings of board and shareholders, adoption of financial statements, and disclosures required by directors and auditors.

1. RAISING OF FUNDS AND ANNUAL COMPLIANCES
UNDER THE COMPANIES ACT, 2013
CS ANSHUL KUMAR JAIN
Partner
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2. CONGRATULATION – ICSI,
VADODARA

3. COMPANIES ACT, 2013 IS NOT
EASY – POSSIBLE REASONS

4. EASE OF DOING OF BUSINESS IN
INDIA AND MAKE IN INDIA

5. Lot of scope of interpretation
and Discussion
Act – Rules – Circulars – RoDs
As may be prescribed

6. SCOPE OF THE PRESENTATION
Various new/modified definitions

7. Raising of Finance
by Private and
Unlisted
Companies

8. SECURITIES DEFINITION
Companies
Act, 2013
Section 2(81): the
securities as defined in
clause (h) of section 2 of
the Securities Contracts
(Regulation) Act, 1956;
SCRA, 1956

9. SECURITIES AS PER SECTION SCRA
Section
2(h):
“securities”
include -
(i) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable
securities of a like nature in or of any incorporated company or other body corporate;
(ia) derivative;
(ib) units or any other instrument issued by any collective investment scheme to the
investors in such schemes;
(ic)security receipt as defined in clause (zg) of section 2 of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
(id) units or any other such instrument issued to the investors under any mutual fund
scheme;]
(ii) Government securities;
(iia) such other instruments as may be declared by the Central Government to be
securities; and
(iii) rights or interest in securities;

10. Booke Bond India Limited
v/s U.B Limited and Ors.
(1994) 79 Com. Cases 346
(BHC)
Naresh K. Aggarwala &
Co. vs. Canbank Financial
Services Ltd. and Another
(2010) 6 SCC 178
Bhagwati Developers (P)
Ltd. v. Peerless General
Finance Investment Co.
Ltd., (2013) 5 SCC 455

11. HOW TO ISSUE SECURITIES
Public
Company
Public Offer
Private Placement
Right Issue
Bonus Issue
Private
Company
Right Issue
Bonus Issue
Private Placement
Public
Offer
• Initial Public Offer
• Further Public Offer
• Offer for Sale
Section23

12. ADMINISTRATION POWER TO SEBI
Section24
issue and
transfer of
securities
• by listed companies
• those companies which intend to get their
securities listed on any recognized stock
exchange in India
non-payment
of dividend
• by listed companies
• those companies which intend to get their
securities listed on any recognized stock
exchange in India
Chapter
III
Chapter
IV

13. OFFER OR INVITATION FOR SUBSCRIPTION
OF SECURITIES ON PRIVATE PLACEMENT
"private
placement"
means
•any offer of securities or
•invitation to subscribe securities
•to a select group of persons by a
company (other than by way of
public offer) through issue of a
private placement offer letter
and which satisfies the
conditions specified in this
section
Section42

14. BASIC CONDITIONS
No fresh offer or
invitation
unless the allotments with respect to any offer or invitation made earlier have been
completed or that offer or invitation has been withdrawn or abandoned by the company
Public Offer Any offer or invitation not in compliance with the provisions of this section shall be treated as
a public offer
Banking Channel Money to be received by way of cheque, DD or other banking channel and respective bank
account only
Bank Account In scheduled bank
Allotment To be done within 60 days else interest
Utilization For Allotment and/or Refund
Identification Offer to person who has been identified in advance

15. PROCEDURAL ASPECTS
Board Meeting –
Power to issue
securities – Form MGT
14 (private companies
exempted)
Member’s Meeting
•Special Resolution with
explanatory statement for
each offer
•Form MGT 14 (Section 117)
Offer to be made in
private placement
offer document
Form prescribed – PAS
4
Application Form Serial Number
Specifically addressed
to identified person
Within 30 days from
recording the name

16. PROCEDURAL ASPECTS
Record of
Private
Placement Offer
in PAS 5
PAS 4 with PAS 5
to be filed with
ROC and SEBI,
within 30 days
Receive the
Form from
Investors with
money
Allot the Security
Update the
Statutory
Registers
Authenticate
the Entries
File Form PAS 3 Stamp Duty Share Certificate

17. OTHER CONDITIONS
Explanatory
statement
Justification of
Price
Maximum number
of person
Not more than 200
in aggregate in a
financial year
Except QIB and
ESOP
No public
advertisement
Minimum
investment
Rs.20,000 face
value
Penalty
the company, its
promoters and
directors
the amount
involved in the
offer or invitation or
two crore rupees,
whichever is higher
Refund

18. SECTION 62

19. RIGHT ISSUE
Board
Resolution
Form MGT 14
Member’s
Approval –
Articles
Date of Offer –
Record Date
Sending of
Offer Letter
•Registered Post
•Speed Post
•Electronic
Means
Opening
of Offer –
3 days
To existing members of the
Company

20. RIGHT ISSUE
Open 15-30
days
Early Closure Possible?
Right to
Renounce
Receipt of
Offer Letter
Receipt
of
Amount
Private Company
Notification dated 5th
June 2015

21. RIGHT ISSUE
Allotment
Updation of
Register &
Authentication
Form PAS – 3 Stamp Duty Share
Certificate

22. PREFERENTIAL ISSUE
To any person
Whether
existing
member or not
Can be
•for cash
•for consideration
other than cash
Valuation is
must
Conditions are
prescribed

23. PREFERENTIAL OFFER
‘Preferential
Offer’ means
an issue
shares
other securities
to any select
person or
group of
persons
on a
preferential
basis
does not
include shares
or other
securities
offered
a public issue, rights issue
ESOP/ESPS, Sweat Equity
Bonus Shares
Depository Receipt foreign securities;
Equity Shares
Fully Convertible Debenture
Partly Convertible Debenture
Any other Convertible Security which will
be converted into shares on any later date

24. PREFERENTIAL OFFER -
CONDITIONS
Compliance with
Section 42 –
Private Placement
Listed Company
•SEBI Regulations
Authority in
Articles
Special Resolution Fully Paid-up
Offer Letter in PAS 4 and Filing of PAS 4 and PAS
5 is not required, if issued to existing member
(amendment w.e.f. 18th March 2015

25. PREFERENTIAL OFFER – CONDITIONS –
EXPLANATORY STATEMENT
the objects of the issue;
the total number of shares or other securities to be issued;
the price or price band at/within which the allotment is
proposed;
basis on which the price has been arrived at along with
report of the registered valuer;
relevant date with reference to which the price has been
arrived at;

26. PREFERENTIAL OFFER – CONDITIONS –
EXPLANATORY STATEMENT
the class or classes of persons to whom the allotment is
proposed to be made;
intention of promoters, directors or key managerial
personnel to subscribe to the offer;
the proposed time within which the allotment shall be
completed;
the names of the proposed allottees and the percentage of
post preferential offer capital that may be held by them;
the change in control, if any, in the company that would
occur consequent to the preferential offer;

27. PREFERENTIAL OFFER – CONDITIONS –
EXPLANATORY STATEMENT
the number of persons to whom allotment on
preferential basis have already been made during the
year, in terms of number of securities as well as price;
the justification for the allotment proposed to be
made for consideration other than cash together with
valuation report of the registered valuer.
the pre issue and post issue shareholding pattern of
the company in the format prescribed

28. PREFERENTIAL OFFER -
CONDITIONS
Allotment to
be completed
within 12
months
Another
resolution, 12
months over
Valuation
Report of
Registered
Valuer/MB/CA
Convertible
Price for share
beforehand
Manner of
Accounting for
Non-cash
consideration

29. PREFERENCE SHARES
which carries or would carry a preferential
right with respect to payment of dividend,
either as a fixed amount or an amount
calculated at a fixed rate, which may
either be free of or subject to income-tax;
and
repayment, in the case of a winding up or
repayment of capital, of the amount of the
share capital paid-up or deemed to have
been paid-up, whether or not, there is a
preferential right to the payment of any
fixed premium or premium on any fixed
scale, specified in the memorandum or
articles of the company;

30. PREFERENCE SHARES -
CONDITIONS
Only Redeemable
Maximum Term – 20 years
For Infrastructure – upto 30 years (redemption by 10% every year
after 21 year
Provision in Articles
No subsisting default
•Redemption
•Payment of Dividend

31. SPECIAL RESOLUTION SHOULD
CONTAIN
the priority with respect to payment of dividend or repayment of capital vis-a-vis
equity shares
the participation in surplus fund;
the participation in surplus assets and profits, on winding-up which may remain
after the entire
capital has been repaid;
the payment of dividend on cumulative or non-cumulative basis.
the conversion of preference shares into equity shares.
the voting rights;
the redemption of preference shares

32. EXPLANATORY STATEMENT
the size of the issue and number of preference shares to be issued and nominal value of
each share
the nature of such shares i.e. cumulative or non - cumulative, participating or non -
participating, convertible or non - convertible
the objectives of the issue
the manner of issue of shares
the price at which such shares are proposed to be issued
the basis on which the price has been arrived at

33. EXPLANATORY STATEMENT
the terms of issue, including terms and rate of dividend on each share, etc.
the terms of redemption, including the tenure of redemption, redemption of shares at
premium and if the preference shares are convertible, the terms of conversion
the manner and modes of redemption
the current shareholding pattern of the company
the expected dilution in equity share capital upon conversion of preference shares

34. “debenture” includes
debenture stock, bonds
or any other instrument of
a company evidencing a
debt, whether
constituting a charge on
the assets of the
company or not;
No voting right
DEBENTURES

35. TYPES AND POSSIBILITY
Type Irredeemable Redeemable
Secured Non-Convertible Not Possible Possible
Unsecured Non-Convertible Not Possible Not Possible
Secured Optionally-Convertible Not Possible Possible
Unsecured Optionally-Convertible Not Possible Not Possible
Secured Compulsory-Convertible Not Possible Possible
Unsecured Compulsory Convertible Debenture within five years - Possible
Redemption Period – Maximum 10 years – Infrastructure – 30 years

36. CONDITIONS
such an issue of
debentures shall be
secured by the
creation of a charge
on the
properties or
assets of the
company
having a value
which is
sufficient
for the due
repayment -
debentures &
interest
Appointment of
Trustee
Execution of Trust
Deed within 60 days
in Form SH-12
Charges on
Specific
movable
property
Specific
immovable
property
Conditions related to
debenture trustee
For NCD, special
resolution once a year

37. LISTED COMPANIES -
REGULATIONS
The Securities and Exchange Board of
India (Issue of Capital and Disclosure
Requirements) Regulations, 2009
The Securities and Exchange Board of
India (Issue and Listing of Debt
Securities) Regulations, 2008

38. Annual
Compliances

39. DISCLOSURE U/S 184(1)
It is a general notice of
disclosure given by every
director about his concern or
interest in any company (ies),
bodies corporate, firms or other
association of individuals, along
with shareholding.
At the first Board
Meeting in which he
participates as a
director; and
thereafter
At the first Board
Meeting held in
every financial year;
Whenever there is
any change in the
disclosure already
made, then at the
first Board Meeting
held after such
change.

40. CONSENT FOR SHORTER NOTICE IN
CASE OF UPSI
Shorter
Notice in
case of
UPSI
•Consent of Majority
•One Independent
General
Consent
•If taken
•Should be taken at the first
meeting of the FY
•If not taken
•before the concerned items
are taken up for
consideration at the Meeting
•To be recorded in minute

41. SECTION 149(7)
As per sub-section 7 of section 149, every independent director shall submit a certificate
of independence to the company giving declaration that he meets the criteria of
independence as provided in sub-section (6)
at the first board meeting in which he participates as a director
and thereafter at the first meeting of the board in every financial year or
in case of any change in the circumstances which may affect his status as an
independent director

42. CERTIFICATE OF COMPLIANCE OF
CODE OF CONDUCT BY DIRECTORS
Clause 49(II)(E)(2)
of Listing
Agreement
All Board members
and senior
management
personnel shall
affirm compliance
with the code on an
annual basis.

43. APPOINTMENT/ RATIFICATION/ REMUNERATION
OF STATUTORY AUDITOR
Audit
Committee
Board of
Director
Shareholder

44. ADOPTION OF ANNUAL FINANCIAL
STATEMENTS
Section 129
The Financial Statements of the
Company shall be laid by the
Board of Directors before the
shareholders at the Annual
General Meeting for each
financial year.
The Company in
addition to the
financial statements
shall also attach a
separate statement
containing the salient
features of the
financial statements
of the subsidiaries.

45. ANNUAL GENERAL MEETING
• It is mandatory on every
company to hold an
annual general meeting in
every calendar year.
• A newly incorporated
Company is required to
hold its First Annual General
Meeting within a period of
nine months from the date
of closing of the first
financial year of the
company and subsequent
meeting within six months
• If a company holds its first
annual general meeting as
aforesaid, it shall not be
necessary for the company
to hold any annual general
meeting in the year of its
incorporation.

46. APPROVAL OF DRAFT BOARD’S
REPORT
Board’s Report shall
be attached to the
financial statement
laid before the
company in general
meeting.

47. The CSR
Committee shall
place the CSR
Policy and
Budget for
financial year
before the Board
for approval.
Further, the Board
shall be
authorized to
approve the CSR
Budget for FY and
modalities of
execution of the
same

48. Related Party
Section
188
Clause
49
RELATED PARTY REFERENCE

49. DEFINITIONS
Related Party
Section 2(76) of
the Companies
Act, 2013
Clause 49(VII)(B)
of Listing
Agreement
Section 2(76)
Applicable
Accounting
Standard AS 18

50. IDENTIFICATION OF RELATED
PARTIES
Prepare
a
detailed
form
covering
all
related
parties: -
A director or his relative;
KMP or his relative;
A firm, in which a director, manager or his relative is partner;
A private company in which a director or manager is a member or director;
A public company in which a director or manager is a director or holds along with his relative,
more than two percent of its paid-up share capital;
any body 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;

51. IDENTIFICATION OF RELATED
PARTIES
any company which is a holding, subsidiary or an associate
company of such company; or a subsidiary of a holding company
to which it is also a subsidiary;
any person on whose advice, directions or instructions a director
or manager is accustomed to act – exception professional
capacity;
A director or KMP of the holding company or his relative with
reference to a company shall be deemed to be a related party;

52. CASE STUDY
• Mr. A is director of A Limited which is a subsidiary of B Limited and he is also director of
two private company, partner of a firm: -
• 1 Mr. A;
• 9 relatives;
• 2 private companies;
• 1 firm;
• 1 holding company;
• 7 directors and 3 KMP of B Limited;
• 90 other relative of above;
• 3 other KMP of A Limited and 27 relatives;
• 6 other directors of A Limited and 54 other relatives;
• Total 204

53. ANNUAL RETURN•MGT-7, MGT-8, MGT-9
Annual return in the
prescribed form
containing the
particulars as they
stood on the close
of the financial year
•Listed Companies
•Paid-up capital of Rs.10
crores or more
•Turnover of Rs.50 crores
Certification of
Annual Return
•If there is no company
secretary, by a company
secretary in practice
Signing of Annual
Return
End of Financial Year
Sixty days from the date of
AGM

54. OTHER MATTERS
Annual Performance
Evaluation of the Board
Meeting of Independent
Director
Calculation of RbR
Filing of Various Forms like
AOC-4, MGT-7, MGT-8,
MGT-9, MGT-14, MGT-15
Annual Listing Fee and
Annual Custodial fees to
NSDL/CDSL
Secretarial Audit MR-3
Disclosure as per PIT
Regulation, 2015 and
Information as per Reg.
8(3) SAST
Updating website
Review of criterion based
provisions every year

56. This
Presentation
is hosted on
SlideShare

57. CS ANSHUL KUMAR JAIN
Partner
Mehta and Mehta, Company Secretaries,
anshul@mehta-mehta.com
www.mehta-mehta.com
+91-96999 72119
anshulkumarjain csanshul