| |
|
|
Corporate Compliance |
| Statutory Requirements |
| Indian companies are governed by Companies Act 1956 and company has
to comply with various statutory provisions as per
different sections of Companies Act 1956. Services
offered by us include: |
1. |
Incorporation
of company |
2. |
Filing of documents with
Registrar of Companies |
3. |
Conducting Statutory
Audit at the year end. |
4. |
Assistance in drafting
Director's Report covering statutory
points to be covered. |
5. |
Assistance covering Annual
General Meeting and Statutory Compliance
thereof. |
|
6. |
Statutory
provisions relating to various meetings
like Board Meetings, Statutory Meetings,
their due dates and documents to be filed
with Registrar of Companies. |
|
7.
|
Consultancy for other different provisions as applicable to company. |
|
|
| Company Law |
|
Forms of commercial organizations
A company is one which is registered under the provisions of the Companies Act 1956 (Companies Act). A
company may be either a private company which by its constitutional
documents, restricts the right of its members to transfer their shares
in the company, prohibits invitation to the public to subscribe to its
shares, debentures or other securities or to invite deposits from the
public and which limits the total number of its members to 50 or a
public company which does not have prohibition as to transfer of shares
or restriction on number of shareholders.
The Companies (Amendment) Act, 1999
introduced provisions relating to buy-back of specified securities by a
company (Companies Act, sec 77A, 77 AA and 77B). Regulations have been
laid down by the Securities and Exchange Board of India (SEBI) in
relation to the buy-back of shares by listed companies and by the
Central Government in relation to other companies. A company may also
issue sweat equity shares of a class of shares already issued under
certain conditions specified under the newly inserted sec 79 A. Section
372A has been inserted to provide for the regulation of inter-corporate
loans and investments. Companies may give loans, invest monies or
provide guarantees or securities of up to 60% of aggregate of its
paid-up share capital and free reserves or up to 100% of its free
reserves, whichever is more, without shareholder approval. A higher
amount is permitted with shareholders approval.
Minimum paid-up capital
All private and public companies are
required to have a minimum paid-up capital of INR 100,000 and INR
500,000 respectively. Incase certain key words like manufacturing,
India, etc, are to be used, then there are additional minimum paid-up
capital requirements.
Two kinds of share capital
The share capital of a company may be of two
types, namely, equity share capital and preference share capital. The
equity share capital may be issued with voting rights or with
differential rights as to dividend, voting or otherwise in accordance
with the rules and subject to such conditions prescribed by the
Companies (Issue of shares with Differential Voting Rights) Rules, 2001.
The preference share capital enjoys a preferential right in the payment
of dividends during the lifetime of the company and repayment of
capital when the company is wound up. The preference share can be of the
following types: |
| * |
Cumulative and Non-cumulative preference shares. |
| * |
Convertible and Non-convertible preference shares; |
| * |
Participating and Non-participating preference shares; or |
| * |
Redeemable and Irredeemable preference shares. |
|
New issues of equity share capital with different voting rights
A public company
may issue equity shares with differential rights as to dividends, voting
or otherwise in accordance with the rules made in that behalf. This
amendment would help management to raise capital without diluting
control by issuing shares without voting rights. At the same time,
investors would have the benefit of receiving dividends and bonus
shares.
Shifting of registered office
A company proposing
to shift its registered office from one state to another is required to
pass a special resolution (resolution passed with three-fourths
majority) at a meeting of its shareholders in addition to obtaining the
confirmation of the Central Government to that effect. A company
proposing to change the place of its registered office from the
jurisdiction of one Registrar of Companies to the jurisdiction of
another Registrar of Companies (RoC) within a state will have to obtain
confirmation from the Regional Director. The Regional Director is
required to confirm the change within four weeks of receipt of the
application. The company is required to file with RoC, the certified
copy of the order of the Central Government or, as the case may be,
certified copy of the confirmation of the Regional Director. The RoC is
required to register the same and certify the registration within one
month from the date of filing the documents.
Buy back of securities
Subject to the
provisions of sec 77A, a company may buy back its own securities up to a
maximum extent of 25% of its paid-up share capital in any financial
year, subject to fulfilling certain conditions. A company may also issue
sweat equity shares of a class of shares already issued subject to
certain conditions specified under sec 79A. |
Directors |
| a |
Every
public company is required to have at least three directors and every
private company to have at least two directors, subject to a maximum of
12 directors.
A listed public company in India is
required to comply with the corporate governance requirements.
Accordingly, such a company is mandatorily required to have not less
than 50% of the total strength of the board of directors comprising
non-executive directors. Depending on whether or not the Chairman is
executive or non-executive, the total number of independent directors
that it shall appoint will vary between half or one third respectively.
Independent directors have been defined to mean directors, who apart
from receiving director’s remuneration, do not have any other material
pecuniary relationship or transaction with the company, its promoters,
its management or its subsidiaries which in the judgment of the board,
may affect the independence of judgment of the director.
|
| b |
(No person can
hold office of director in more than 15 companies at a time. This number
excludes directorship in private companies and alternate directorship |
| c |
A director of a
public company which has failed to file annual accounts or annual
returns for a period of three consecutive financial years commencing on
or after 1 April 1999 or has failed to repay its deposits or interest
thereon on due date or redeem its debentures on due date or pay dividend
and such failure continues for one year or more, will not be eligible
to be appointed as a director of a public company for a period of five
years. |
| d |
The board of
directors are required to meet at least once in three months and at
least four such meetings shall be held in a year. No such meetings need
be held compulsory in India and can be held anywhere in the world.
For a listed public company, in
accordance with the provisions ensuring corporate governance, the board
of directors are required to meet at least four times a year, with a
maximum time gap of four months between any two meetings.
|
|
Corporate Governance
As a step in the direction of corporate governance, the following provisions have been introduced in the Companies Act:
|
| a |
The
Directors Report to include a statement on the maintenance of accounts
by the company in accordance with standard accounting practice. |
| b |
In case of
companies with a paid-up share capital of INR 1,000,000 or more which
are not required to appoint a company secretary, are required to file a
secretarial compliance certificate with the Registrar of Companies and a
copy of such certificate should be attached to the Directors’ Report. A
company secretary in whole time practice should certify the secretarial
compliance certificate. |
| c |
Mandatory
requirement for setting up an Audit Committee in public companies having
a paid-up share capital of not less than INR 50,000,000. The Audit
Committee to comprise three and such number of other directors as may be
decided by the Board. Two-thirds of the total number of members shall
be directors other than the managing or whole time directors. |
|
Statutory accounts
At every annual
general meeting of a company, the company is required to lay a balance
sheet and a profit and loss account. The profit and loss account shall
relate to the financial year of the company and the balance sheet, as at
the end of the financial year. The financial year cannot exceed 15
months. However, it can be extended to 18 months with the special
permission of the RoC.
Annual return
An Indian company
with a share capital must, within 60 days of its annual general meeting,
file with the Registrar a return containing the required particulars
pertaining to:
| * |
its registered office. |
| * |
the register of its members and debenture holders; |
| * |
its shares and debentures; |
| * |
its indebtedness; |
| * |
its members and debenture holders (past and present); and |
| * |
its director and managing directors (past and present). | | |
 |
| |
|
|
|
|
|