Nasik 04022017

VARIOUS ISSUES OF COMPANIES ACT,
2013
CS ANSHUL KUMAR JAIN
Partner
Disclaimer: This presentation is based on our internal research. It is notified that neither the presenter nor organization to which he belongs nor any other person
related to him shall be responsible for any damage or loss of any action taken based on this presentation. It is suggested to seek professional advice before
initiating any action. This Presentation is property of Mehta & Mehta. Copyright © 2017, Mehta & Mehta, All Rights Reserved.

ABOUT NASIK
Known for its various temples
India's one of big SEZ project is under
development in this district
Trimbakeshwar One of the twelve
Jyotirlingas
Nashik district is the third largest district in
Maharashtra in terms of area occupying an
area
It’s known for its links to the “Ramayana”.
Nasik Dhol

A CITY ASSOCIATED WITH
Father of Indian Film Industry
• Shri Dada Saheb Falke
Great Freedom Fighter
• Shri Vinayak Damodar Savarkar
T
r
i
b
u
t
e

EASE OF DOING OF BUSINESS IN
INDIA AND MAKE IN INDIA

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

SCOPE OF THE PRESENTATION
Various new/modified definitions

Raising of Capital
by Private
Companies

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

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;

HOW TO ISSUE SECURITIES
Public
Compan
y
Public Offer
Private Placement
Right Issue
Bonus Issue
Private
Compan
y
Right Issue
Bonus Issue
Private Placement
Public
Offer
• Initial Public Offer
• Further Public
Offer
• Offer for Sale
Section23

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

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
company (other than by way of
public offer) through issue of a
private placement offer letter
which satisfies the conditions
specified in this section
Section42

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

PROCEDURAL ASPECTS
Board Meeting – Power to
issue securities – Form MGT
14
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

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

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 offer
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

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

RIGHT ISSUE
Open 15-30 days
Early Closure Possible?
Right to
Renounce
Receipt of Offer
Letter
Receipt of
Amount

RIGHT ISSUE
Allotment
Updation of
Register &
Authentication
Form PAS – 3 Stamp Duty Share
Certificat

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

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

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

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;

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;

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

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 or 30
days in advance
Manner of
Accounting for
Non-cash
consideration

PREFERENCE SHARES
which carries or would carry a preferential
with respect to payment of dividend, either as
fixed amount or an amount calculated at a
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
capital paid-up or deemed to have been paid-
up, whether or not, there is a preferential
to the payment of any fixed premium or
premium on any fixed scale, specified in the
memorandum or articles of the company;

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

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

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

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

“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

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 ten years - Possible
Redemption Period – Maximum 10 years – Infrastructure – 30 years

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

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

Exception List containing 14 items
Deposit includes any receipt of money by way of
Deposit Loan Any other form
Deposit Defined under the Companies (Acceptance of
Deposit) Rules, 2014
Companies
(Acceptance
of Deposits)
Rules, 2014
Sections
73-76A
Chapter
V

DEPOSIT
Section
2(31)
“deposit” includes any receipt of money by way of deposit or loan or in
other form by a company, but does not include such categories of amount
may be prescribed in consultation with the Reserve Bank of India.

Amount Received From
• the Central Government; or
• a State Government; or
• any amount received from
any other source whose
repayment is guaranteed by
the Central Government or a
State Government; or
• any amount received from a
local authority; or
• any amount received from a
statutory authority
constituted under an Act of
Parliament or a State
Legislature;
• foreign governments;
• foreign or international banks;
• multilateral financial institutions (including,
but not limited to, International Finance
Corporation, Asian Development Bank,
Commonwealth Development
and International Bank for Industrial and
Financial Reconstruction);
• foreign Governments owned
financial institutions;
• foreign export credit agencies;
• foreign collaborators;
• foreign bodies corporate and foreign
citizens;
• foreign authorities or persons resident
outside India subject to the provisions of
Foreign Exchange Management Act, 1999
(42 of 1999) and rules and regulations
made there under;
Exceptions

Any amount received as a loan of facility from
• any banking company; or
• the State Bank of India or any of its
subsidiary banks; or
• a banking institution notified by the
Central Government under section 51 of
the Banking Regulation Act, 1949 (10 of
1949); or
• a corresponding new bank as defined in
clause (d) of section 2 of the Banking
Companies (Acquisition and Transfer of
Undertakings) Act, 1970 (5 of 1970) or in
clause (b) of section (2) of the Banking
Companies (Acquisition and Transfer of
Undertakings) Act, 1980 (40 of 1980); or
• a co-operative bank as defined in clause
(b-ii) of section 2 of the Reserve Bank of
India Act, 1934 (2 of 1934);
• Public Financial Institutions notified
by the Central Government in this
behalf in consultation with the
Reserve Bank of India; or
• any regional financial institutions;
or
• Insurance Companies; or
• Scheduled Banks as defined in the
Reserve Bank of India Act, 1934 (2
of 1934);
Exceptions

• any amount received in
accordance with the
guidelines or
notification issued by
the Reserve Bank of
India
• against issue of
commercial paper;
or
• any other
instruments
issued;
• any amount received
by a company from
any other company
• any amount received and held pursuant
to an offer made towards
• subscription to any securities,
including share application money;
or
• advance towards allotment of
securities pending allotment, so long
as such amount is appropriated only
against the amount due on
allotment of the securities applied
for;
• allotment has to be competed within
60 days otherwise money is to be
refunded back within 15 days after
the expiry of 60 days. If no refund is
made then it will be treated as
deposit from 76th day.
• Application money for shares, bonds,
stock or debenture as on 31.03.2014
– repaid or allotted 01.06.2015
Exceptions

• any amount received
from a person who, at
the time of the receipt of
the amount, was a
director of the company
• A declaration from
the director is to be
taken that the
money given is out
if his owned funds
and he has not
borrowed the
money
• any amount raised by the company by way
of
a) issue of bonds; or
b) debentures; or
c) bonds; or debentures compulsorily
convertible into shares of the company
within ten years
For (a) and (b),
the bonds or debenture has to be secured by a
first charge or a charge ranking pari-passu with
the first charge on any assets referred to in
Schedule III of the Act excluding intangible
assets of the company.
The market value of security shall not be less
than the amount of bonds or debenture.
Any unsecured not compulsory convertible
bonds or debenture shall be treated as deposit
Exceptions

• any amount received from an employee of the
company in the nature of non-interest bearing
security deposit not exceeding his annual salary under
contract of employment
• any non-interest bearing amount received
and held in trust
Exceptions
• any amount received in the course of, or for the purposes of, the business of the company
a) as an advance for the supply of goods or provision of services accounted for in any manner
whatsoever;
b) as advance, accounted for in any manner whatsoever, received in connection with consideration of
an immovable property under an agreement or arrangement;
c) as security deposit for the performance of the contract for supply of goods or provision of services;
d) as advance received under long term projects for supply of capital goods except covered under item
(b) above;
e) as an advance towards consideration for providing future services in the form of a warranty or
maintenance contract as per written agreement or arrangement, if the period for providing such
services does not exceed the period prevalent as per common business practice or five years, from
the date of acceptance of such service whichever is less;
f) as an advance received and as allowed by any sectoral regulator or in accordance with directions of
Central or State Government;
g) as an advance for subscription towards publication, whether in print or in electronic to be adjusted
against receipt of such publications;
• For (a), (b) and (d): permission or approval to deal in the goods or properties or services for which
the money is taken, should be there.

Point (a)
Such advance has to be appropriated against supply of goods or
provision of services within a period of three hundred and sixty five
days from the date of acceptance of such advance. Otherwise it will
be treated as deemed to be deposit on the expiry of 15 days from
the date it become due for refund.
If such advance is under legal dispute in any court of law then it will
not be treated as deposit even after 365 days.
Point (b)
If such advance is not adjusted against the property in accordance
with the terms of agreement or arrangement then it will be deposit
DeemedDeposit

• any unsecured loan is
brought by the
promoters of the
Company or their relative
or both;
 It will not be treated as
deposit only if loan is
brought in pursuance of
the stipulation by
lending financial
institution till the time
loan of the financial
institution or a bank is
not repaid.
 After repayment, it will
be treated as deposit.
• amount is accepted by Nidhi Company as
per the Companies Act, 2013.
The following will be treated as deposit: -
a) amount is received by the company
 in the form of installments or otherwise;
 from a person;
 with promise or offer to give returns,
 in cash or in kind;
 on completion of the period specified in
the promise or offer, or earlier;
 accounted for in any manner
whatsoever;
b) any additional contributions, over and
above, made by the company as part of
such promise or offer;
Exceptions

• any amount raised by
issue of non-convertible
debenture not
constituting a charge on
the assets of the
company and listed on a
recognised stock
exchange as per
applicable regulations
made by Securities and
Exchange Board of India.
• Chit Fund Company
• CIS
• Start-up
• amount is accepted by Nidhi Company as
per the Companies Act, 2013.
The following will be treated as deposit: -
a) amount is received by the company
 in the form of installments or otherwise;
 from a person;
 with promise or offer to give returns,
 in cash or in kind;
 on completion of the period specified in
the promise or offer, or earlier;
 accounted for in any manner
whatsoever;
b) any additional contributions, over and
above, made by the company as part of
such promise or offer;
Exceptions

• Related Party
Transactions
• Restrictions on the
powers of the
Board
• Loans and
Investments
• Loans to Directors
etc.
• Power of the
Board

POWERS OF THE BOARD
What a Board
can do?
All such acts
which a
company can
do
Subject to the
Act, MoA, AoA

ONLY AT THE MEETING OF THE
BOARD
Authority for buy-back of
shares - Section 68 (2) (ii)
Filling up the casual
vacancies by the Board -
Section 161 (4)
to make calls on
shareholders in respect of
money unpaid on their
shares;
to authorize buy-back of
securities under section 68:
to issues securities,
including debentures,
whether in or outside India;
to borrow monies;
to invest the funds of the
company;
to grant loans or give
guarantee or provide
security in respect of loans;
to approve financial
statement and the Board's
report;
to diversify the business of
the company;
to approve amalgamation,
merger of reconstruction;
to take over a company or
acquire a controlling or
substantial stake in another
company;

ONLY AT THE MEETING OF THE
BOARD
to make political contributions
to appoint or remove Key
Managerial Personnel (KMP)
to appoint internal auditors and
secretarial auditor
Consent of all the Directors present
at the meeting Section 186 (5)
•To make investments
•To give loan or guarantee or security with the
prior approval of the public financial
institution.
Approval of Related Party
Transaction Section 188 (1) Along
with Rule 15 of Companies
(Meeting of Board and its Powers)
Rules, 2014
Appointment of Key Managerial
Personnel i.e. appointment of
managing director or manager in
more than one company Section
203 (3)
Declaration of solvency in case of
proposal to wind up the company
voluntarily.

to sell, lease or otherwise dispose of the whole or substantially the whole of the undertaking of the
company
to invest otherwise in trust securities the amount of compensation received by it as a result of any merger or amalgamation
To borrow
money
paid up capital, free reserve
Temporary Loan loans repayable on demand or within six months from the date of the loan such as short-term, cash credit
arrangements, the discounting of bills and the issue of other short-term loans of a seasonal character, but does not
include loans raised for the purpose of financial expenditure of a capital nature
to remit, or give time for the repayment of, any debt due from a director
RESTRICTIONS ON POWERS OF THE
BOARD – SECTION 180

LOAN TO DIRECTORS, ETC. SECTION
185
No Company shall directly or indirectly
Advance any loan (including any loan represented by a book debts)
• To
• Any of its director
• To any other person in whom the director is interested
Also Give any guarantee
provide any security in connection with any loan taken by him or such other person

A Limited
•Lending Company
H Limited
•Holding of A Limited
Mr. A
•Director of A Limited
Mr. H
•Director of H Limited
Mr. PA
•Partner of Mr. A
Mr. PH
•Partner of Mr. H
Mr. RA
•Relative of Mr. A
Mr. RH
•Relative of Mr. H

M/s ABC
• firm in which Mr. A or Mr. RA is partner
M/s XYZ
• firm in which Mr. H or Mr. RH is partner
PQR Private Limited
• in which Mr. A or Mr. RA is member or director
HIJ Private Limited
• in which Mr. H or Mr. HA is member or director
SRT Limited
• where total voting power of Mr. A or Mr. His more than 25%
Accustom to Act

EXCEPTIONS
Loan utilisation by
such subsidiary
company for its
principal business
activities
Any guarantee given
or security provided
by a holding company
in respect of loan
made by any bank or
financial institution to
its subsidiary
company;
Any loan made by a
holding company to
its wholly owned
subsidiary company
or any guarantee
given or security
provided by a holding
company in respect of
any loan made to its
wholly owned
subsidiary company is
exempted from the
requirements under
this section;
a company which in
the ordinary course of
its business provides
loan, guarantee,
security and interest
in respect of such loan
is not less than bank
rate declared by RBI
Loan to Managing or
Whole-time Director
•Part of Service Condition
extended to all
employees;
•Pursuant to any scheme
approved by members by
a special resolution;

LOAN AND INVESTMENT BY
COMPANY
Two layers
of
investment
companies
Person
(not only
inter-
corporate)
Limit –
Board
Unanimous
Resolution
Special
Resolution
PFI
Approval
Rate of
Interest
Previous
Default
Register

LOAN AND INVESTMENT BY
COMPANY - EXCEPTIONS
to a loan made,
guarantee given or
security provided by
a banking company
an insurance company
a housing finance company
a company engaged
in the business of
financing of companies
providing infrastructural facilities
to any
acquisition
made by a non-banking financial company and whose principal business is
acquisition of securities:
its investment and lending activities;
made by a company whose principal business is the acquisition of securities;
of shares allotted in pursuance of clause (a) of sub-section (1) of section 62.
Wholly owned subsidiary

Related
Party
Section
188
LODR
Reg. 23
RELATED PARTY REFERENCE

DEFINITIONS
Related Party
Section 2(76) of the
Companies Act, 2013
Regulation 23 of LODR
Section 2(76)
Applicable Accounting
Standard AS 18

VARIOUS ASPECTS
Identification of Related Parties;
Identification of Related Party Transactions;
Procedural Requirements;
Exemptions;
Ideal Process within an organisation;
RPT Policy;

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;

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;

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;

IDENTIFICATION OF RELATED PARTY
TRANSACTIONS
As prescribed under section 188(1) of the Companies
Act, 2013;
no company shall enter into any contract or
arrangement with a related party with respect to: -
• sale, purchase or supply of any goods or materials;
• selling or otherwise disposing of, or buying, property of
any kind;
• leasing of property of any kind;
• availing or rendering of any services;
• appointment of any agent for purchase or sale of
goods, materials, services or property;
• such related party's appointment to any office or place
of profit in the company, its subsidiary company or
associate company;
• underwriting the subscription of any securities or
derivatives thereof, of the company;

IDENTIFICATION OF RELATED PARTY
TRANSACTIONS
Transaction between a company and a
related party pertaining to:
• Transfer of Resources;
• Transfer of Obligations;
• Transfer of Services;
Regardless of Price

PROCEDURAL ASPECTS
Audit Committee
Approval;
Agenda of Board
Meeting;
Adequate
Deliberation by IDs;
Board Approval;
Members Approval –
Listed/Unlisted;
Entry in Register;
Signature of All
Directors;
Placing of Register
before AGM;
Board Report – AOC
2
Omnibus Resolution;
Voting by Related
Parties;

WHEN MEMBER’ APPROVAL
Aforesaid contract
or arrangement
shall not be
entered except
prior approval of
the shareholders
by way of special
resolution in
following cases:
For (a) and (e) above, 10% of turnover or Rs. 100 Crores, whichever is lower;
For (b) and (e) above, if value of transactions exceeds 10% of the net worth or Rs.100 Crores, whichever is lower;
For (c) above, if value of transaction exceeds 10% of turnover or net worth or Rs.100 Crores, whichever is lower;
For (d) and (e) above, if value of transactions exceeds 10% of the turnover or Rs. 50 Crore, whichever is lower;
For (f) above, if monthly remuneration exceeds Rs. 2.5 lakhs;
For (g) above, if remuneration of underwriters exceeds 1% of net worth;

OTHER ISSUES
Explanation: turnover or net
worth shall be on the basis of
audited financial statement of
preceding financial year;
Member should not vote on
resolution if such member is
related party;
Ordinary Course of Business;
Arms Length Transactions;
• a transaction between two related
parties that is conducted as if they were
unrelated, so that there is no conflict of
interest.
Subjective Terms;

ISSUES – PRIVATE COMPANIES
Whether applicable to
private companies
What can be paid
Whether central government
approval is necessary
What is schedule V
What is rule 7(2)-Chapter XIII

GOVERNING PART
Section
101;
Secretarial
Standard;
Listing
Agreement

TO BE SENT TO
every Member of the company
the Directors of the company
to Auditor of the company
to the Secretarial Auditor
to Debenture Trustees, if any,
wherever applicable or so required, to other
specified persons

NOTICE: ADDRESS
Notice shall be given at
the address registered
with the Company or
depository;
Joint holder: to first
holder;
Others: address provided
by them;

NOTICE: ADDRESS
Death:
Single holder:
Nominee
Joint holder:
surviving holder
All joint holder
dies: nominee
No nominee: legal
representative
Insolvency:
Assignee
Company under
winding up
Liquidator

MODE OF SENDING NOTICE
by hand by ordinary post by speed post
by registered
post
by courier by facsimile
by e-mail
by any other
electronic means

MODE OF SENDING NOTICE
E-Voting and
Postal Ballot
Registered
Post
Speed Post Courier Email

‘ELECTRONIC MEANS’
Any communication sent by a company through its authorised and secured computer
programme which is capable of producing confirmation and keeping record of such
communication addressed to the person entitled to receive such communication at the
last electronic mail address provided by the Member.
A notice may be sent through e-mail as a text or as an attachment to e-mail or as a
notification providing electronic link or Uniform Resource Locator for accessing such
notice.

E-MAIL
The subject line in e-mail shall state the name of the company, notice of the type of meeting, place and the date on which the meeting is
scheduled.
If notice is sent in the form of a non-editable attachment to e-mail, such attachment shall be in the Portable Document Format or in a non-editable
format together with a 'link or instructions' for recipient for downloading relevant version of the software.
When notice or notifications of availability of notice are sent by e-mail, the company should ensure that it uses a system which produces
confirmation of the total number of recipients e-mailed and a record of each recipient to whom the notice has been sent and copy of such record
and any notices of any failed transmissions and subsequent re-sending shall be retained by or on behalf of the company as ‘‘proof of sending’’.
The company’s obligation shall be satisfied when it transmits the e-mail and the company shall not be held responsible for a failure in transmission
beyond its control.

E-MAIL
If a member entitled to receive notice fails to provide or update relevant e-mail address to the company, or to the depository participant as the case may be,
the company shall not be in default for not delivering notice via e-mail.
The company may send e-mail through in-house facility or its registrar and transfer agent or authorise any third party agency providing bulk e-mail facility.
The notice made available on the electronic link or Uniform Resource Locator has to be readable, and the recipient should be able to obtain and retain copies
and the company shall give the complete Uniform Resource Locator or address of the website and full details of how to access the document or information.
The notice of the general meeting of the company shall be simultaneously placed on the website of the company if any and on the website as may be notified
by the Central Government.
•For the purpose of this rule, it is hereby declared that the extra ordinary general meeting shall be held at a place within India.

PARTICULAR MODE
If a Member requests for delivery of Notice through a particular mode, other than one of those listed above, he shall
pay such fees as may be determined by the company in its Annual General Meeting and the Notice shall be sent to
him in such mode.
In case of companies having a website, the Notice shall be hosted on the website.
Notice shall specify the day, date, time and full address of the venue of the Meeting.

NOTICE
Notice shall contain
• complete particulars of the venue of
the Meeting
• route map
• prominent land mark for easy location.
• In case of companies having a website,
the route map shall be hosted along
with the Notice on the website.
Time 9 am to 6 pm and not on
national holiday

PROXY
Notice of a company which has a share capital or the Articles of which provide for voting at a Meeting by Proxy, shall
prominently contain a statement that a Member entitled to attend and vote is entitled to appoint a Proxy, or where
that is allowed, one or more proxies, to attend and vote instead of himself and that a Proxy need not be a Member.

NOTICE
No items of business other
than those specified in the
Notice and those specifically
permitted under the Act
shall be taken up at the
Meeting.
Notice shall be
accompanied, by an
attendance slip and a Proxy
form with clear instructions
for filling, stamping, signing
and/or depositing the Proxy
form.

NOTICE
Notice and accompanying documents shall be given at least
twenty-one clear days in advance of the Meeting.
Notice and accompanying documents may be given at a shorter
period of time if consent in writing is given thereto, by physical or
electronic means, by not less than ninety-five per cent of the
Members entitled to vote at such Meeting.
No business shall be transacted at a Meeting if Notice in
accordance with this Standard has not been given.

NOTICE
Notice shall clearly
specify
the nature of the Meeting and
the business to be transacted thereat.
In respect of items
of Special Business
each such item shall be in the form of
a Resolution
shall be accompanied by an
explanatory statement
• which shall set out all such facts as would
enable a Member to understand the meaning,
scope and implications of the item of business
and to take a decision thereon.
In respect of items
of Ordinary Business
Resolutions are not required to be
stated in the Notice except where the
Auditors or Directors to be
appointed are other than the retiring
Auditors or Directors, as the case
may be.

ORDINARY AND SPECIAL BUSINESS
• in the case of an annual general meeting, all the business to
be transacted thereat shall be deemed special, other than –
• the consideration of financial statements and the reports of the Board of Directors and
auditors;
• the declaration of any dividend;
• the appointment of directors in place of those retiring;
• the appointment of, and the fixing of the remuneration of, the auditors;
• Other Meetings
• All items are special business

• any item of special business to be transacted at a meeting
of the company
• relates to or affects any other company,
• the extent of shareholding interest in that other company of every promoter, director,
manager, if any, and of every other key managerial personnel of the first mentioned
company shall, if the extent of such shareholding is not less than two per cent. of the
paid-up share capital of that company, also be set out in the statement.

• any item of business refers to any document, which is to
be considered at the meeting, the time and place where
such document can be inspected shall be specified in the
statement.
• Details of Directors
• Details relating to IDs
• Shall hold benefit in trust – if insufficient disclosure is made.

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.

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

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

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.

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

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.

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.

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

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

Related Party
Section
188
LODR
RELATED PARTY

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

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

CONTENTS OF THE BOARD’S REPORT

Items Mentioned under Section 134

Details Remark
The extract of the annual return as
provided under sub-section (3) of section
92 i.e. Form MGT 9
An extract of Annual Return in Form MGT 9
is annexed herewith.
Number of meetings of the Board The Board has met four time during the
financial year as on ___.
Directors’ Responsibility Statement Statement prescribed under section 134(5),
it can be reproduced. Clause (e) is
applicable only for listed companies.
A statement on declaration given by
independent directors under sub-section
(6) of section 149
The Board has received the declaration
from all the independent directors as per
the requirement of section 149(7) and The
Board is satisfied that all the ID meets the
criterion of independence as mentioned in
section 149(6).

DIRECTORS’ RESPONSIBILITY
STATEMENT
in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to
give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;
the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for
safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
the directors had prepared the annual accounts on a going concern basis;

DIRECTORS’ RESPONSIBILITY
STATEMENT
the directors, in the case of a listed company,
had laid down internal financial controls to be
followed by the company and that such
internal financial controls are adequate and
were operating effectively.
the directors had devised proper systems to
ensure compliance with the provisions of all
applicable laws and that such systems were
adequate and operating effectively
Policies and Procedure for
orderly & efficient conduct of
business
Adherence to Company’s
policies
Safeguarding of Company’s
assets
Prevention and detection of
frauds and error
The accuracy and completeness
of accounting record
Timely preparation of reliable
financial information

Details Remark
company’s policy on directors’ appointment
and remuneration including criteria for
determining qualifications, positive attributes,
independence of a director and other matters
provided under sub-section (3) of section 178
This statement is to be given only if the
company is covered under section 178
explanations or comments by the Board on
every qualification, reservation or adverse
remark or disclaimer made
•by the auditor in his report; and
•by the company secretary in practice in his
secretarial audit report
Particulars of loans, guarantees or investments
under section 186
Loan and Investment by the Company, a
tabular representation may be given or
reference to accounts.
Particulars of contracts or arrangements with
related parties referred to in sub-section (1) of
section 188
Related Party Transactions [only those which
are mentioned under 188(1)(a) to (g)], Form
AOC 2 is prescribed

Details of contracts or
arrangements or
transactions not at arm’s
length basis
Details of material contracts or
arrangements or transactions at
arm’s length basis
Name(s) of the related party and nature of relationship;
Nature of contracts/ arrangements/transactions
Duration of the contracts / arrangements/transactions; Salient terms
of the contracts or arrangements or transactions including the
value, if any
Justification for entering into such contracts or
arrangements or transactions; Amount paid as advances, if
any
date(s) of approval by the Board
Date on which the special resolution was passed in general
meeting as required under first proviso to section 188
Form AOC 2

Details Remark
The state of the company’s affairs
As same as, it was there in the Companies
Act, 1956
The amounts, if any, which it proposes to carry
to any reserves
The amount, if any, which it recommends
should be paid by way of dividend
Material changes and commitments, if any,
affecting the financial position of the company
which have occurred between the end of the
financial year of the company to which the
financial statements relate and the date of the
report

Details Remark
The conservation of energy, technology
absorption, foreign exchange earnings and
outgo, in such manner as may be prescribed
Rule 8(3) of the Companies (Accounts) Rules,
2014
A statement indicating development and
implementation of a risk management policy
for the company including identification
therein of elements of risk, if any, which in the
opinion of the Board may threaten the
existence of the company
All Companies has to have its Risk
Management Policy???;
The details about the policy developed and
implemented by the company on corporate
social responsibility initiatives taken during
the year
Rule 8 of the Companies (Corporate Social
Responsibility Policy) Rules, 2014 read with its
Annexure and Rule 9 of the Companies
(Accounts) Rules, 2014

Details Remark
a statement indicating the manner in
which formal annual evaluation has been
made by the Board of its own
performance and that of its committees
and individual directors
In case of a listed company and every
other public company having such paid-
up share capital as may be prescribed;
For evaluation the criterion prescribed as
under: -
•Listed Company;
•other public company having a paid up share
capital of twenty five crore rupees or more
calculated at the end of the preceding financial
year
Rule 8(4) of the Companies (Accounts) Rules, 2014

Items Mentioned at Other Places in the Act

Section 67(3)
proviso
• Disclosures in respect of voting rights not exercised directly by the employees in respect
of shares;
Section 131(1)
third proviso
• If there is any revision in the Board’s Report or the Financial statement then the detailed
reasons for revision of such financial statement or report
Section 149(10)
• An independent director shall hold office for a term up to five consecutive years on the
Board of a company, but shall be eligible for reappointment on passing of a special
resolution by the company and disclosure of such appointment in the Board's report

Section 177(8)
• Disclosure of composition of the Audit committee and disclosure where
the Board had not accepted any recommendation of the Audit committee
Section 177(10)
proviso
• The details of establishment of vigil mechanism shall be disclosed in the
Boards report
Section 178 proviso
of sub section 4
• Disclosure of the policy formulated by the Nomination and Remuneration
committee shall be disclosed in the Boards report

Section 197 (12)
• Every Listed Company shall disclose in the Boards report , the ratio of remuneration of each director to the medians employees
remuneration and other details
Section 197(14)
• any Director who is in receipt of commission from the company and who is a managing or whole-time director of the company
shall not be disqualified from receiving any remuneration or commission from any holding company or subsidiary company of
such company subject to its disclosure by the company in the Board’s report
Section 204(1)
• Secretarial Audit Report – Form MR 3
Section 204(3)
• Explanation to any Qualification in Secretarial Audit Report

Section 168(1)
• The fact of resignation of director shall be stated in the directors report
Section 135(2)
• Composition of CSR Committee
Section 135(4)(a)
• The Board of every Company shall after taking into account the recommendations made by CSR
Committee , approve the CSR policy for the company and disclose contents on such policy in the
Boards report

Section 135(5)
second proviso)
• If the company fails to spend 2% of the average net profits of the company made
during the immediately preceding financial year in pursuance of CSR , reasons to be
disclosed
Section 188(2)
• Every contract or arrangement entered into under sub-section (1) shall be referred to in
the Board’s report to the shareholders along with the justification for entering into such
contract or arrangement (repetition, also mentioned in section 134)
Schedule V Part II
Section II point IV
• Disclosure with regard to Corporate Governance

Chapter IV, Rule
4(4)
• Details of Shares issued with differential rights
Chapter IV, Rule
16(4)
• Disclosures in respect of voting rights not exercised directly by the employees in respect of
shares to which the scheme relates (details mentioned in the Rules)
Chapter IV,
Rule8(13)
• Details of Sweat Equity Shares
Chapter IV, Rule
12(9)
• Details of the Employees Stock Option Scheme

the financial summary or highlights
the change in the nature of business,
if any
the details of directors or key
managerial personnel who were
appointed or have resigned during
the year
the names of companies which have
become or ceased to be its
Subsidiaries, joint ventures or
associate companies during the year
Details mentioned in
Rule 8(5)

the details relating to deposits,
covered under Chapter V of the Act
the details of deposits which are not
in compliance with the requirements
of Chapter V of the Act
the details of significant and material
orders passed by the regulators or
courts or tribunals impacting the
going concern status and company’s
operations in future
the details in respect of adequacy of
internal financial controls with
reference to the Financial Statements
Details mentioned in
Rule 8(5)

Clause 12 of SEBI
(ESOP) Guidelines,1999
• Disclosure as per the Guidelines – SEBI (Share Based Employee Benefit) Regulations,
2014 read with SEBI Circular dated 16th June 2015
Clause 19.1 of SEBI
(ESOP) Guidelines,1999
• Disclosure pertaining to issue of employee stock purchase
Clause 5(A)(I)(g) &
5(A)(II)(h) of LA
• Details as provided in the clause 5(A)(I)(g) & 5(A)(II)(h) of Listing Agreement
Clause 43(c) of LA
• If there are material variations between the projections and the actual
utilisation/profitability, the company shall furnish an explanation thereof

49(VIII)(E)(2) of LA
• Disclosure of relationship between directors inter-se
Fraud Reporting
• details in respect of frauds reported by auditors under sub-section (12) of section
143 other than those which are reportable to the Central Government
Trustee
• Details of Debenture Trustees in case Debt is listed (Debt Listing Agreement)

Reg. 32
LODR
• Statement of deviation(s) or variation(s)
`Sexual
Harassment
• Disclosure under Sexual Harassment of Women at Workplace (Prevention, Prohibition &
Redressal) Act, 2013
Reg.
14(6)(ii)(e)
• The investment in the other Indian downstream company by an Indian company already having
foreign investment is called downstream investment subject to conditions of ownership and
control.
Delisting
Regulations
• Details of Voluntary Delisting

Other Provisions related to Board’s Report

OTHER PROVISIONS
To be prepared based on stand alone financial statement of the company [Rule 8(1)
of the Companies Accounts Rules, 2014];
Contain a separate section on report on the performance and financial position of
each of the subsidiaries, associates and joint venture companies [Rule 8(1) of the
Companies Accounts Rules, 2014];
Signed by Chairperson, if authorized else by two directors, one of them should be
MD, if there is one [Section 134 (6)];
Penalty [Section 134 (8)] and other sections, rules, etc;

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

Nasik 04022017

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