Meetings – Notices, Resolutions and Minutes under the Companies Act, 2013

Contents at a glance About the author. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi How to use this book. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix Chapter 1

An introduction to decision-making mechanism in Companies . . . . . 1.1

Chapter 2

Meetings of Board/Committees of Board . . . . . . . . . . . . . . . . . . . . . . 2.1

Chapter 3

General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1

Chapter 4

Postal Ballot & Voting through Electronic Means. . . . . . . . . . . . . . . . 4.1

4A

Postal Ballot. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3

4B

Voting through Electronic Means . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.19

Chapter 5

Incorporation of Company – Private, Public, One Person Company, Company with Charitable Objects & Restoration of name of struck off company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1

5A

Incorporation of Company – Private, Public, One Person Company, Company with Charitable Objects. . . . . . . . . . . . . . . . . . . 5.3

5B

Restoration of name of struck off company. . . . . . . . . . . . . . . . . . . . 5.15

Chapter 6

Alteration of Articles of Association. . . . . . . . . . . . . . . . . . . . . . . . . . 6.1

Chapter 7

Change in name clause in Memorandum of Association. . . . . . . . . . . 7.1

Chapter 8

Rectification of name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1

Chapter 9

Change in capital clause in Memorandum of Association. . . . . . . . . . 9.1

Chapter 10

Change of objects clause in Memorandum of Association . . . . . . . . 10.1

Chapter 11

Shifting of registered office of the company and change in Domicile clause/Registered Office clause in Memorandum of Association. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1

Chapter 12

Conversion of a Private Limited Company to One Person Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1

Chapter 13

Conversion of a company from a Private Limited to Public Limited Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1

Chapter 14

Conversion of a Company from a Public Limited to Private Limited Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1

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Chapter 15

Conversion of a Company with the Charitable Objects (Sec. 8 company) to a Private Limited or a Public Limited Company. . . . 15.1

Chapter 16

Conversion of a Private Limited or a Public Limited Company to a Company registered under Sec. 8 (company with the Charitable Objects) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.1

Chapter 17

Conversion of a One Person Company into a Private/Public Limited Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.1

Chapter 18

Public issue of Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.1

Chapter 19

Issue of shares on private placement basis. . . . . . . . . . . . . . . . . . . . 19.1

Chapter 20

Issue of shares on preferential offer basis. . . . . . . . . . . . . . . . . . . . . 20.1

Chapter 21

Rights issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.1

Chapter 22

Issue of Bonus Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.1

Chapter 23

Issue of sweat equity shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.1

Chapter 24

Preference Shares – Issue & Redemption . . . . . . . . . . . . . . . . . . . . . 24.1

Chapter 25

Allotment of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.1

Chapter 26

Transfer and Transmission of Shares. . . . . . . . . . . . . . . . . . . . . . . . . 26.1

Chapter 27

Buy Back of Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.1

Chapter 28

Aceptance of Deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.1

Chapter 29

Repayment of Pre-matured Deposits. . . . . . . . . . . . . . . . . . . . . . . . . 29.1

Chapter 30

Creation, modification and satisfaction of charges . . . . . . . . . . . . . . 30.1

Chapter 31

Declaration of Beneficial Interest and Significant Beneficial Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.1

Chapter 32

Registers (Books, Documents, Records) & Returns to be maintained by Companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.1

Chapter 33

Types of resolutions (General meeting approvals) under the Companies Act, 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.1

Chapter 34

General meetings: AGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.1

Chapter 35

Meeting to be called on Requisition . . . . . . . . . . . . . . . . . . . . . . . . . 35.1

Chapter 36

Postal Ballot & Voting through Electronic Means. . . . . . . . . . . . . . . 36.1

Chapter 37

Dividend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.1

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Contents at a glance

Chapter 38

Books of Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.1

38A

Maintenance and disposal of Books of Accounts . . . . . . . . . . . . . . . 38.3

38B

Approval and signing of Financial Statements and Board’s report.38.10

Chapter 39

Corporate social responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.1

Chapter 40

Appointment of Internal Auditor. . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.1

Chapter 41

Appointment of Auditor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.1

Chapter 42

Cost Auditor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.1

Chapter 43

Appointment of Secretarial Auditor. . . . . . . . . . . . . . . . . . . . . . . . . . 43.1

Chapter 44

Appointment, Cessation, and Removal of Directors. . . . . . . . . . . . . 44.1

44A

Appointment of Directors at Board Meetings. . . . . . . . . . . . . . . . . . 44.3

44B

Appointment of Directors at General Meeting . . . . . . . . . . . . . . . . 44.29

44C

Appointment of Independent Director. . . . . . . . . . . . . . . . . . . . . . . 44.37

44D

Cessation of a Director due to Resignation. . . . . . . . . . . . . . . . . . . 44.54

44E

Removal of Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.70

Chapter 45

Remuneration to Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.1

Chapter 46

Committees of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46.1

Chapter 47

Board Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47.1

Chapter 48

Contributions to charitable and other funds, political parties, and defence funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.1

Chapter 49

Disclosure of Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49.1

Chapter 50

Loans to Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.1

Chapter 51

Related party Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.1

Chapter 52

Loans and Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.1

Chapter 53

Non cash transactions involving Directors . . . . . . . . . . . . . . . . . . . . 53.1

Chapter 54

Appointment and Remuneration of Managerial Personnel MD, WTD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.1

Chapter 55

Compensation for loss of office of Managing Director, Whole Time Director or Manager. . . . . . . . . . . . . . . . . . . . . . . . . . . 55.1

Chapter 56

Appointment of KMP (Other than Managerial Personnel) . . . . . . . . 56.1

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Chapter 57

Appointment of Company Secretary (Other than KMP). . . . . . . . . . 57.1

Chapter 58

Dormant Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58.1

Chapter 59

Conversion of Company to Limited Liability Partnership . . . . . . . . 59.1

Chapter 60

Offences, compounding, penalties, and legal representation. . . . . . . 60.1

60A

Compounding of Offences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.3

60B

Adjudication of Penalties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.36

60C

Replies to notices, representations before authorities, and Legal Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.52

Chapter 61

Borrowing money from various Persons and creation of Charges for securing the amount borrowed. . . . . . . . . . . . . . . . . . . . 61.1

xxiv

Detailed table of contents About the author. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi How to use this book. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix Contents at a glance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxi Chapter 1 An introduction to decision-making mechanism in Companies . . 1.1 1.1 Advantages of ‘company’ as a form of business. . . . . . . . . . . . . . . . . . . . . . . 1.2 1.2 Company legislations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 1.3 Types of Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 1.4 Stakeholders in the company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.14 1.5 Overview of the provisions of the Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.19 Decision-making mechanisms under the Companies Act, 2013. . . . . . . . . . 1.21 1.6 Chapter 2 Meetings of Board/Committees of Board . . . . . . . . . . . . . . . . . . . . 2.1 2.1 Referencer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 2.1.1 Powers exercisable by board at the meeting of the board of directors by passing a board resolution. . . . . . . . . . . . . . . . . . . . . . . 2.2 2.1.2 Checkpoints. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 2.1.3 Action points. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8 2.1.4 Procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.28 2.1.5 Checklist on MGT 14 (filing of resolutions and agreements to the registrar under Section 117). . . . . . . . . . . . . . . . . . . . . . . . . . 2.37 Chapter 3 General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 3.1 Referencer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Chapter 4 Postal Ballot & Voting through Electronic Means. . . . . . . . . . . . . . . . 4.1 4A Postal Ballot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 4A.1 Referencer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Annexure I: Items of business which shall be passed only by Postal Ballot.4.15 Annexure II: Calendar of Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.16 4B Voting through Electronic Means. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.19 4B.1 Referencer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.19 Annexure I: Calendar of Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.31 Annexure II: Duties of Scrutinizer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.32

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Chapter 5

5A

5B

Incorporation of Company – Private, Public, One Person Company, Company with Charitable Objects & Restoration of name of struck off company . . . . . . . . . . . . . . . . . . 5.1 Incorporation of Company – Private, Public, One Person Company, Company with Charitable Objects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 Part I: Board resolution at the time of incorporation of Company. . . . . . . . 5.4 5A.1 Checkpoints to be observed before and while submitting the resolutions at the time of incorporation of a Company. . . . . . . . 5.4 5A.2 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . 5.5 5A.3 Specimen 2: Board resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7 5A.4 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . 5.9 Part II: Board resolution by the Foreign company/ Parent company at the time of Incorporation of a Company. . . . . . . . . . . . . . . . . . . 5.13 5A.5 Checkpoints to be observed before and while submitting the resolution by the Foreign company/Parent company/ s at the time of Incorporation of a Company. . . . . . . . . . . . . . . . . . . 5.13 5A.6 Specimen 1: Draft resolution for incorporating a wholly owned subsidiary company in India . . . . . . . . . . . . . . . . . . . . . . . . 5.14 Restoration of name of struck off company . . . . . . . . . . . . . . . . . . . . . . . . . 5.15 Part I: Board Resolution for reply to notice of striking off, and authorising appeal or application. . . . . . . . . . . . . . . . . . . . . . . . . . . 5.15 5B.1 Checkpoints to be observed before and while passing board resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.15 5B.2 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . 5.16 5B.3 Specimen 2: Board resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.18 5B.4 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . 5.19

Alteration of Articles of Association. . . . . . . . . . . . . . . . . . . . . . . . . 6.1 Chapter 6 Part I: Board Resolution for alteration of articles of association and calling of General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 6.1 Checkpoints to be observed before and while passing Board Resolution. . . . 6.2 6.2 Specimen 1: Notice and Agenda of Board Meeting . . . . . . . . . . . . . . . . . . . . 6.3 6.3 Specimen 2: Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5 6.4 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6 Part II: General Meeting Resolution for alteration of Articles of Association . . . . . . 6.8 6.5 Specimen 1: Notice of extra ordinary general meeting for the purpose of Alteration of Articles of Association. . . . . . . . . . . . . . . . . . . . . . . 6.9 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11 Specimen 2: Special Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12 6.6 6.7 Specimen 3: Minutes of Extra Ordinary General Meeting. . . . . . . . . . . . . . 6.13

xxvi

Detailed table of contents

Chapter 7 Change in name clause in Memorandum of Association. . . . . . . . 7.1 Part I: Board Resolution for change in name clause in Memorandum of Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 7.1 Checkpoints to be observed before and while passing Board Resolution. . . . 7.2 7.2 Specimen 1: Notice and Agenda of Board Meeting . . . . . . . . . . . . . . . . . . . . 7.3 7.3 Specimen 2: Board Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6 7.4 Part II: Special Resolution for change in name clause in Memorandum of Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.9 7.5 Checkpoints to be observed before and while passing Special Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.9 7.6 Specimen 1: Notice of extra ordinary general meeting for the purpose of obtaining approval of members for alteration in name clause of the Memorandum of Association. . . . . . . . . . . . . . . . . . . . . . . . . . 7.10 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.12 7.7 Specimen 2: Special Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.14 7.8 Specimen 3: Minutes of Extra Ordinary General Meeting. . . . . . . . . . . . . . 7.14 Chapter 8 Rectification of name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1 Part I: Board resolution for application by aggrieved company for rectification of name of some other company [Sec.16(1) of the Companies Act, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 8.1 Checkpoints to be observed before and while passing board resolution. . . . . 8.2 8.2 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . . . 8.3 8.3 Specimen 2 Board Resolutions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5 8.4 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6 Part II: Board Resolution for Rectification of name clause in Memorandum of Association. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8 8.5 Checkpoints to be observed before and while passing Board Resolution. . . . 8.8 8.6 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . . . 8.9 8.7 Specimen 2: Board Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.11 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.12 8.8 Part III: Special resolution for change in name clause in memorandum of association. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.15 8.9 Checkpoints to be observed before and while passing Special Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.15 8.10 Specimen 1: Notice of extra ordinary general meeting for the purpose of obtaining approval of members for alteration in name clause of the memorandum of association . . . . . . . . . . . . . . . . . . . . . . . . . . 8.16 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.19

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8.11 8.12

Specimen 2: Special Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.20 Specimen 3: Minutes of extra ordinary general meeting . . . . . . . . . . . . . . . 8.21

Chapter 9 Change in capital clause in Memorandum of Association. . . . . . . 9.1 Part I: Board Resolution for Change in capital clause in Memorandum of Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2 9.1 Checkpoints to be observed before and while passing Board Resolution. . . . 9.2 Specimen 1: Notice and Agenda of Board Meeting . . . . . . . . . . . . . . . . . . . . 9.4 9.2 9.3 Specimen 2: Board Resolutions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6 9.4 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.8 Part II: Ordinary Resolution for change Capital clause of Memorandum of Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.13 9.5 Checkpoints to be observed before and while passing Ordinary Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.13 9.6 Specimen 1: Notice of extra ordinary general meeting for the purpose of passing a resolution for alteration of the Capital Clause of the Memorandum of Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.14 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.18 9.7 Specimen 2: General meeting resolutions. . . . . . . . . . . . . . . . . . . . . . . . . . . 9.19 9.8 Specimen 3: Minutes of Extra Ordinary General Meeting. . . . . . . . . . . . . . 9.21 Chapter 10 Change of objects clause in Memorandum of Association. . . . . . 10.1 Part I: Board Resolution for change of objects clause in Memorandum of Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2 10.1 Checkpoints to be observed before and while passing Board Resolution. . . 10.2 10.2 Specimen 1: Notice and Agenda of Board Meeting . . . . . . . . . . . . . . . . . . . 10.3 10.3 Specimen 2: Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5 10.4 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.6 Part II: Special resolution for change of main objects’ clause in Memorandum of Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.9 10.5 Checkpoints to be observed before and while passing Special Resolution in General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.9 10.6 Specimen 1: Notice of extra ordinary General Meeting for the purpose of obtaining approval of memebers for alteration of objects clause of the Memorandum of Association. . . . . . . . . . . . . . . . . . . . . . . . . 10.10 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.12 10.7 Specimen 2: Special Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.13 10.8 Specimen 3: Minutes of Extra Ordinary General Meeting. . . . . . . . . . . . . 10.14

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Chapter 11

Shifting of registered office of the company and change in Domicile clause/Registered Office clause in Memorandum of Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1 Part 1: Change of registered office of the company – not requiring alteration in Memorandum of Association . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2 11.1 Checkpoints to be observed before and while passing Board Resolution. . . 11.2 11.2 Specimen 1: Notice and Agenda of Baord Meeting . . . . . . . . . . . . . . . . . . . 11.3 11.3 Specimen 2: Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5 11.4 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5 Part II: Board Resolution for change of Domicile/ Registered office clause of the Memorandum of Association (outside the same city town, village where the registered office of the company is situated) . . . . . . . . . . 11.8 11.5 Checkpoints to be observed before and while passing Board Resolution. . . 11.8 11.6 Sepcimen 1: Notice And Agenda of Board Meeting. . . . . . . . . . . . . . . . . . . 11.9 11.7 Specimen 2: Board resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.11 11.8 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . 11.13 Part III: Special Resolution for change of Domicile/ Registered office clause in Memorandum of Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.16 11.9 Checkpoints to be observed before and while passing Special Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.16 11.10 Specimen 1: Notice of extra ordinary general meeting for the purpose of passing a special resolution for shifting of Registered office of the company outside local limits & for Alteration of Domicile/Registered Office Clause of the Memorandum of Association. . 11.17 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.19 11.11 Specimen 2: Special Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.20 11.12 Specimen 3: Minutes of Extra Ordinary General Meeting. . . . . . . . . . . . . 11.21 Chapter 12

Conversion of a Private Limited Company to One Person Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1 Part I: Board resolution authorising conversion of a company from private Limited company to one person company.. . . . . . . . . . . . . . . . . . . . . . . . . . 12.2 12.1 Checkpoints to be observed before and while passing Board Resolution. . . 12.2 12.2 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . . 12.4 12.3 Specimen 2: Board resolutions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.6 12.4 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.8 Part II: Special resolution for approval for conversion of a company from private limited to one person company. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.12 12.5 Checkpoints to be observed before and while passing Special Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.12

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12.6

12.7 12.8

Specimen 1: Notice of extra ordinary general meeting for the purpose of conversion of the company from private limited to one person company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Specimen 2: Members’ Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Specimen 3: Minutes of extra ordinary general meeting . . . . . . . . . . . . . .

12.13 12.16 12.17 12.18

Conversion of a company from a Private Limited to Public Limited Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1 Part I: Board resolution authorising conversion of a company from private limited to public limited company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.2 13.1 Checkpoints to be observed before and while passing Board Resolution. . . 13.2 13.2 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . . 13.4 13.3 Specimen 2: Board Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.6 13.4 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.9 Part II: Special resolution for approval for conversion of a company from private limited to public limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.14 13.5 Checkpoints to be observed before and while passing Special Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.14 13.6 Specimen 1: Notice of extra ordinary general meeting for the purpose of conversion of the company from private limited to public limited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.15 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.18 13.7 Specimen 2: Members’ Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.19 13.8 Specimen 3: Minutes of extra ordinary general meeting . . . . . . . . . . . . . . 13.20 Chapter 13

Chapter 14

Conversion of a Company from a Public Limited to Private Limited Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1 Part I: Board meeting pre- EGM: Board resolution authorising conversion of a company from public to private. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.2 14.1 Checkpoints to be observed before and while passing Board Resolution. . . 14.2 14.2 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . . 14.4 14.3 Specimen 2: Board resolutions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.6 14.4 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.7 Part II: Special resolution for approval for conversion of a company from public limited to private limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.10 14.5 Checkpoints to be observed before and while passing Special Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.10 14.6 Specimen 1: Notice of extra ordinary general meeting for the purpose of conversion of the company from public limited to private limited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.11 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.14 xxx

Detailed table of contents

14.7 Specimen 2: Members’ resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14.8 Specimen 3: Minutes of extra ordinary general meeting . . . . . . . . . . . . . .

Part III: Board meeting post EGM - Board resolution giving authority to post conversion of a company from public to private. . . . . . . . . . . . . . . . .

14.9 Checkpoints to be observed before and while passing Board Resolution. .

14.10 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . .

14.11 Specimen 2 Board resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14.12 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . .

14.15 14.16 14.19 14.19 14.20 14.22 14.24

Chapter 15

Conversion of a Company with the Charitable Objects (Sec. 8 company) to a Private Limited or a Public Limited Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.1 Part I: First board meeting - Board resolution considering the proposal for conversion and then authorising one of the director to take necessary steps in respect of the said conversion. . . . . . . . . . . . . . . . . . . . . 15.2 15.1 Checkpoints to be observed before and while passing Board Resolution. . . 15.2 First Board Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.6 15.2 Specimen 1: Notice and agenda of first board meeting. . . . . . . . . . . . . . . . . 15.6 15.3 Specimen 2: First board meeting - Board resolutions. . . . . . . . . . . . . . . . . . 15.8 15.4 Specimen 3: First Board Meeting - Minutes of board meeting. . . . . . . . . . 15.10 Second Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.13 15.5 Specimen 1: Notice and agenda of Second board meeting. . . . . . . . . . . . . 15.13 15.6 Specimen 2: Board resolutions of Second board Meeting . . . . . . . . . . . . . 15.15 15.7 Specimen 3: Minutes of Second board meeting. . . . . . . . . . . . . . . . . . . . . 15.17 Part II: Special resolution for approval for conversion of a company from private limited to public limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.22 15.8 Checkpoints to be observed before and while passing Special Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.22 15.9 Specimen 1: Notice of extra ordinary general meeting for the purpose of conversion of the company into a private limited to public limited company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.23 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.27 15.10 Specimen 2: Members’ resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.28 15.11 Specimen 3: Minutes of Extra Ordinary General Meeting. . . . . . . . . . . . . 15.29 Chapter 16

Conversion of a Private Limited or a Public Limited Company to a Company registered under Sec. 8 (company with the Charitable Objects). . . . . . . . . . . . . . . . . . . . . 16.1 Part I: Board resolution authorising conversion of a company from a private limited or a public limited company to a company registered under Sec. 8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.2 16.1 Checkpoints to be observed before and while passing Board Resolution. . . 16.2 xxxi

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16.2 16.3 16.4 Part II: 16.5 16.6

16.7 16.8

Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . . 16.4 Specimen 2 Board Resolutions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.6 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.8 Special resolution for approval for conversion of a company from private limited to public limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.13 Checkpoints to be observed before and while passing Special Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.13 Specimen 1: Notice of extra ordinary general meeting for the purpose of conversion of the company from private limited/public limited to a company with the charitable objects registered U/ 8 of the Companies Act, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.14 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.17 Specimen 2: Members’ resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.18 Specimen 3: Minutes of extra ordinary general meeting . . . . . . . . . . . . . . 16.19

Chapter 17

Conversion of a One Person Company into a Private/ Public Limited Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.1 Part I: Board meeting - Pre approval of conversion - Board resolution authorising conversion of a company from opc to either a private limited company or a public limited company. . . . . . . . . . . . . . . . . . . . . . . 17.2 17.1 Checkpoints to be observed before and while passing Board Resolution. . . 17.2 17.2 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . . 17.4 17.3 Specimen 2: Board resolutions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.6 17.4 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.7 Part II: Member’s resolution for approval for conversion of a company from OPC to public limited/private limited . . . . . . . . . . . . . . . . . . . . . . . . 17.10 17.5 Checkpoints to be observed before and while passing Member’s Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.10 17.6 Specimen 1: Notice of board resolution for the purpose of conversion of the company into public limited/private limited company, to be sent to member pursuant to Sec. 122. . . . . . . . . . . . . . . . . 17.11 17.7 Specimen 2: Members’ resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.13 17.8 Specimen 3: Minutes of member’s resolution. . . . . . . . . . . . . . . . . . . . . . . 17.13 Part III: Board meeting post passing of member’s resolution - Board resolution giving authority to comply with the provisions of Companies act, post conversion resolution passed by the member . . . . . . 17.15 17.9 Checkpoints to be observed before and while passing Board Resolution. . 17.15 17.10 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . 17.16 17.11 Specimen 2 Board resolutions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.18 17.12 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.20

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Chapter 18 Public issue of Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.1 Part I: Board resolution for issue of shares and incidental matters. . . . . . . . . . . . . 18.2 18.1 Checkpoints to be observed before and while passing Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.2 18.2 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . . 18.3 18.3 Specimen 2: Board resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.6 18.4 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.9 Part II: Special resolution for approval of public offer. . . . . . . . . . . . . . . . . . . . . . 18.14 18.5 Checkpoints to be observed before and while passing Special Resolution in general meeting and E-voting. . . . . . . . . . . . . . . . . . . . . . . . 18.14 18.6 Specimen 1: Notice of extra ordinary general meeting for the purpose of obtaining consent of memebers for public offer of equity shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.15 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.23 18.7 Specimen 2: Members’ resolution for approval of public offer of equity shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.24 18.8 Specimen 3: Minutes of meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.27 Chapter 19 Issue of shares on private placement basis . . . . . . . . . . . . . . . . . . 19.1 Part I: Audit committee resolution for appointment of registered valuer . . . . . . . . 19.2 19.1 Checkpoints to be observed before and while passing resolution for appointment of Registered Valuer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.2 19.2 Specimen 1: Notice and agenda of audit committee meeting. . . . . . . . . . . . 19.3 19.3 Specimen 2: Committee resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.5 19.4 Specimen 3: Minutes of meeting of the audit committee. . . . . . . . . . . . . . . 19.5 Part II: Board resolution for issue of shares on private placement basis. . . . . . . . . . 19.8 19.5 Checkpoints to be observed before and while passing Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.8 19.6 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . 19.10 19.7 Specimen 2: Board resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.12 19.8 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.14 Part III: Special resolution for approval of issue of shares on private placement basis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.19 19.9 Checkpoints to be observed before and while passing Special Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.19 19.10 Specimen 1: Notice of extra ordinary general meeting for the purpose of obtaining consent of memebers for bonus issue of shares . . . . 19.20 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.26 19.11 Specimen 2: Members’ resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.27 19.12 Specimen 3: Minutes of Extra Ordinary General Meeting. . . . . . . . . . . . . 19.28

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Chapter 20 Issue of shares on preferential offer basis. . . . . . . . . . . . . . . . . . . 20.1 Part I: Audit committee resolution for appointment of registered valuer . . . . . . . . 20.2 20.1 Checkpoints to be observed before and while passing resolution for appointment of Registered Valuer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.2 20.2 Specimen 1: Notice and agenda of audit committee meeting. . . . . . . . . . . . 20.3 20.3 Specimen 2: Committee resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.5 20.4 Specimen 3: Minutes of meeting of the audit committee. . . . . . . . . . . . . . . 20.5 Part II: Board resolution for issue of shares on preferential offer basis . . . . . . . . . . 20.8 20.5 Checkpoints to be observed before and while passing Board Resolution. . . 20.8 20.6 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . 20.10 20.7 Specimen 2: Board resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.12 20.8 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.15 Part III: Special resolution for approval of issue of shares on preferential allotment basis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.19 20.9 Checkpoints to be observed before and while passing Special Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.19 20.10 Specimen 1: Notice of extra ordinary general meeting for the purpose of obtaining consent of members for making a preferential offer on private placement basis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.20 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.26 20.11 Specimen 2: Members’ resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.27 20.12 Specimen 3: Minutes of extra ordinary general meeting . . . . . . . . . . . . . . 20.28 Chapter 21 Rights issue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part I: Board resolution for rights issue and allotment of shares. . . . . . . . . . . . . . .

21.1 Checkpoints to be observed before and while passing board resolution. . . .

21.2 Specimen 1: Notice and Agenda of board meeting. . . . . . . . . . . . . . . . . . . .

21.3 Specimen 2: Board resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21.4 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21.1 21.1 21.1 21.3 21.5 21.5

Chapter 22 Issue of Bonus Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.1 Part I: Board resolution for recommendation and issue of bonus shares. . . . . . . . . 22.2 22.1 Checkpoints to be observed before and while passing Board Resolution. . . 22.2 22.2 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . . 22.3 22.3 Specimen 2: Board resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.5 22.4 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.6 Part II: Special resolution for approval of bonus issue of shares . . . . . . . . . . . . . . . 22.9 22.5 Checkpoints to be observed before and while passing Special Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.9 22.6 Specimen 1: Notice of extra ordinary general meeting for the purpose of obtaining consent of members for bonus issue of shares . . . . . 22.10 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.13 xxxiv

Detailed table of contents

22.7 22.8

Specimen 2: Members’ resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.14 Specimen 3: Minutes of extra ordinary general meeting . . . . . . . . . . . . . . 22.15

Chapter 23 Issue of sweat equity shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.1 Part I: Audit committee resolution for appointment of registered valuer . . . . . . . . 23.2 23.1 Checkpoints to be observed before and while passing resolution for appointment of registered valuer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.2 23.2 Specimen 1: Notice and agenda of audit committee meeting. . . . . . . . . . . . 23.3 23.3 Specimen 2: Audit committee resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.5 23.4 Specimen 3: Minutes of meeting of the audit committee. . . . . . . . . . . . . . . 23.5 Part II: Board resolution for recommendation and allotment of sweat equity shares.23.7 23.5 Checkpoints to be observed before and while passing Board Resolution. . . 23.7 23.6 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . . 23.9 23.7 Specimen 2:Board resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.11 23.8 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.12 Part III: Special resolution for authorising issue of sweat equity shares . . . . . . . . . 23.16 23.9 Checkpoints to be observed before and while passing special resolution in general meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.16 23.10 Specimen 1: Notice of extra ordinary general meeting for the purpose of obtaining consent of members for issue of sweat equity shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.17 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.20 23.11 Specimen 2: Members’ resolution for issue of sweat equity shares. . . . . . 23.22 23.12 Specimen 3: Minutes of extra ordinary general meeting . . . . . . . . . . . . . . 23.23 Chapter 24 Preference Shares – Issue & Redemption. . . . . . . . . . . . . . . . . . . 24.1 Part I: Audit committee resolution for appointment of registered valuer . . . . . . . . 24.2 24.1 Checkpoints to be observed before and while passing resolution for appointment of Registered Valuer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.2 24.2 Specimen 1: Notice and agenda of audit committee meeting. . . . . . . . . . . . 24.3 24.3 Specimen 2: Audit committee resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.5 24.4 Specimen 3: Minutes of meeting of the audit committee. . . . . . . . . . . . . . . 24.5 Part II: Board resolution for issue of preference shares . . . . . . . . . . . . . . . . . . . . . . 24.8 24.5 Checkpoints to be observed before and while passing Board Resolution. . . 24.8 24.6 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . 24.10 24.7 Specimen 2: Board resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.12 24.8 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.14 Part III: Special resolution for approval of issue of preference shares. . . . . . . . . . . 24.18 24.9 Checkpoints to be observed before and while passing Special Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.18 24.10 Specimen 1: Notice of extra ordinary general meeting for the purpose of obtaining consent of memebers for issue of preference shares.24.20 xxxv

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Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

24.11 Specimen 2: Members’ resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

24.12 Specimen 3: Minutes of extra ordinary general meeting . . . . . . . . . . . . . .

Part IV: Board resolution for redemption of preference shares . . . . . . . . . . . . . . . .

24.13 Checkpoints to be observed before and while passing Board Resolution. .

24.14 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . .

24.15 Specimen 2: Board resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

24.16 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . .

24.29 24.30 24.33 24.37 24.37 24.38 24.40 24.41

Chapter 25 Allotment of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.1 Part I: Board resolution for allotment of shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.1 25.1 Checkpoints to be observed before and while passing Board Resolution. . . 25.1 25.2 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . . 25.3 25.3 Specimen 2: Board Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.6 25.4 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.12 Chapter 26 Transfer and Transmission of Shares. . . . . . . . . . . . . . . . . . . . . . .

Part I: Board Resolution for approving the transfer/ transmission of shares. . . . . .

26.1 Checkpoints to be observed before and while passing Board resolution . . .

26.2 Sepcimen 1: Notice and agenda of baord meeting . . . . . . . . . . . . . . . . . . . .

26.3 Specimen 2: Board resolutions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

26.4 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

26.1 26.1 26.1 26.2 26.4 26.5

Chapter 27 Buy Back of Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.1 Part I: Board resolution authorising buy back of securities. . . . . . . . . . . . . . . . . . . 27.2 27.1 Checkpoints to be observed before and while passing Board Resolution. . . 27.2 27.2 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . . 27.4 27.3 Specimen 2: Board resolutions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.7 27.4 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.10 Part II: Special resolution for approval for buy back of shares. . . . . . . . . . . . . . . . 27.16 27.5 Checkpoints to be observed before and while passing Special Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.16 27.6 Specimen 1: Notice of extra ordinary general meeting for the purpose of obtaining consent of memebers for bonus issue of shares . . . . 27.17 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.21 27.7 Specimen 2: Members’ Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.22 27.8 Specimen 3: Minutes of extra ordinary general meeting . . . . . . . . . . . . . . 27.23 Chapter 28 Aceptance of Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part I: Board resolution for acceptance of deposits. . . . . . . . . . . . . . . . . . . . . . . . .

28.1 Checkpoints to be observed before and while passing board resolution. . . .

28.2 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . . xxxvi

28.1 28.2 28.2 28.5

Detailed table of contents

28.3 28.4

Specimen 2: Board resolutions (acceptance of deposits from public) . . . .

Board resolutions (acceptance of deposits from members by public companies and private companies not eligible for exemption). . . . . . . . . .

28.5 Board resolutions (acceptance of deposits from members by private companies eligible for exemption). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28.6 Board resolution for filing one-time return of outstanding receipt of money or loan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28.7 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part II: Resolution for approval of invitation of deposits. . . . . . . . . . . . . . . . . . . .

28.8 Checkpoints to be observed before and while passing special resolution in general meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28.9 Specimen 1: Notice of extra ordinary general meeting for the purpose of obtaining consent of members for inviting deposits. . . . . . . . .

Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28.10 Specimen 2: Resolutions of members. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28.11 Specimen 3: Minutes of extra ordinary general meeting . . . . . . . . . . . . . .

28.11 28.13 28.15 28.17 28.17 28.28 28.28 28.29 28.32 28.34 28.35

Chapter 29 Repayment of Pre-matured Deposits. . . . . . . . . . . . . . . . . . . . . . .

Part I: Board resolution for repayment of pre-matured deposits. . . . . . . . . . . . . . .

29.1 Checkpoints to be observed before and while passing Board Resolution. . .

29.2 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . .

29.3 Specimen 2: Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

29.4 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

29.1 29.1 29.1 29.2 29.4 29.4

Chapter 30 Creation, modification and satisfaction of charges. . . . . . . . . . . . 30.1 Part I: Board resolutions for creation, modification, and satisfaction of charges . . 30.2 30.1 Checkpoints to be observed before and while passing Board Resolution. . . 30.2 30.2 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . . 30.4 30.3 Specimen 2: Board resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.8 30.4 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.13 Part II: Special resolution for creation of charges on the assets of the company . . 30.22 30.5 Checkpoints to be observed before and while passing special resolution in general meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.22 30.6 Specimen 1: Notice of extra ordinary general meeting for sale, lease, or disposal of undertaking. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.23 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.26 30.7 Specimen 2: Minutes of extra ordinary general meeting . . . . . . . . . . . . . . 30.27 Declaration of Beneficial Interest and Significant Beneficial Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.1 Part I: Board Resolution for declaration of beneficial interest, Significant Beneficial ownership and other incidental matters. . . . . . . . . . . . . . . . . . . . 31.2 Chapter 31

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31.1 31.2 31.3 31.4

Checkpoints to be observed before and while passing Board Resolution. . . 31.2 Specimen 1: Notice And Agenda of Board Meeting. . . . . . . . . . . . . . . . . . . 31.4 Specimen 2: Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.7 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . 31.10

Chapter 33 33.1 33.2 33.3 33.4

Types of resolutions (General meeting approvals) under the Companies Act, 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Matter requiring ordinary resolution under Companies Act 2013 . . . . . . . .

Matters requiring special resolution under Companies Act 2013. . . . . . . . .

Items of business to be transacted by postal ballot. . . . . . . . . . . . . . . . . . . .

Items of Ordinary Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter 34 General meetings: AGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part I: General Meetings: AGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

34.1 Checkpoints to be observed before AGM. . . . . . . . . . . . . . . . . . . . . . . . . . .

34.2 Specimen 1: Notice of annual General Meeting (In case of private company). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

34.3 Specimen 2: Minutes of annual General Meeting. . . . . . . . . . . . . . . . . . . . .

34.4 Notice of AGM of public company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

33.1 33.1 33.4 33.8 33.9 34.1 34.1 34.1 34.2 34.5 34.6 34.9

Chapter 35 Meeting to be called on Requisition. . . . . . . . . . . . . . . . . . . . . . . . 35.1 Part I: Board meeting to consider the requisition for convening of general meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.2 35.1 Checkpoints to be observed before and while passing Board Resolution. . . 35.2 35.2 Specimen 1: Notice and agenda of nomination and remuneration committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.3 35.3 Specimen 2: Board Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.4 35.4 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.5 35.5 Specimen 4: Notice of requisition of general meeting . . . . . . . . . . . . . . . . . 35.7 Part II: Extra ordinary general meeting called on requisition. . . . . . . . . . . . . . . . . . 35.9 35.6 Checkpoints to be observed before and while passing Shareholders/ Members Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.9 35.7 Specimen 1: Notice of general meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.10 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.12 35.8 Specimen 2: Minutes of Extra-ordinary general meeting. . . . . . . . . . . . . . 35.13 Chapter 36 Postal Ballot & Voting through Electronic Means . . . . . . . . . . . .

Part I: Approval of postal ballot. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

36.1 Checkpoints to be observed before and while approving the proposal of Postal Ballot. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

36.2 Specimen 1: Notice and Agenda of Board Meeting . . . . . . . . . . . . . . . . . . . xxxviii

36.1 36.2 36.2 36.3

Detailed table of contents

36.3 Specimen 2: Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.5 36.4 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.6 36.5 Specimen 4: Consent by Scrutiniser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.10 Part II: Postal Ballot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.11 36.6 Checkpoints to be observed for Postal Ballot. . . . . . . . . . . . . . . . . . . . . . . 36.11 36.7 Specimen 1: Notice of Postal Ballot. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.12 36.8 Specimen 2: Postal Ballot Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.17 36.9 Specimen 3: Advertisement to be Published in the Newspaper . . . . . . . . . 36.20 36.10 Specimen 4: Minutes of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.21 Annexure: List of businesses which shall be passed only by postal ballot. . . . . . . . 36.24 Chapter 37 Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.1 Part I: Board Resolution for declaration of interim dividend, book closure, and recommendation of final Dividend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.2 37.1 Checkpoints to be observed before and while passing Board Resolution. . . 37.2 37.2 Specimen 1: Notice and Agenda of Board Meeting . . . . . . . . . . . . . . . . . . . 37.3 37.3 Specimen 2: Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.6 37.4 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . 37.10 Part II: Ordinary resolution for declaration of final Dividend. . . . . . . . . . . . . . . . . 37.17 37.5 Checkpoints to be observed before and while passing Ordinary Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.17 Chapter 38 Books of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.1 38A Maintenance and disposal of Books of Accounts. . . . . . . . . . . . . . . . . . . . . 38.3 Part I: Board Resolution for Maintenance and Disposal of Books of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.3 38A.1 Checkpoints to be observed before and while passing Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.3 38A.2 Specimen 1: Notice and Agenda of Board Meeting . . . . . . . . . . . . 38.5 38A.3 Specimen 2: Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.6 38A.4 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . 38.7 38B Approval and signing of Financial Statements and Board’s report. . . . . . . 38.10 Part I: Audit committee resolution for examination of the financial statements and auditor’s report. . . . . . . . . . . . . . . . . . . . 38.11 38B.1 Checkpoints to be observed before and while examining the financial statements and auditor’s report. . . . . . . . . . . . . . . . . 38.11 38B.2 Specimen 1: Notice and agenda of audit committee meeting. . . . 38.12 38B.3 Specimen 2: Committee Resolution . . . . . . . . . . . . . . . . . . . . . . . 38.13 38B.4 Specimen 3: Minutes of meeting of the Audit Committee . . . . . . 38.14 Part II: Board resolution for signing and approval of financial statements and board’s report . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.16

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38B.5 Checkpoints to be observed before and while passing Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

38B.6 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . .

38B.7 Specimen 2: Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . .

38B.8 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . .

38.16 38.17 38.19 38.21

Chapter 39 Corporate social responsibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.1 Part I: CSR Committee Resolutions for Formulation and recommendation of CSR Policy and the amount of CSR Expenditure. . . . . . . . . . . . . . . . . . . 39.2 39.1 Checkpoints to be observed before and while passing the resolutions regarding formulation and recommendation of CSR Policy and the Amount of CSR Expenditure. . . . . . . . . . . . . . . . . . . . . . . . . 39.2 39.2 Specimen 1: Notice and Agenda of CSR Committee Meeting. . . . . . . . . . . 39.3 39.3 Specimen 2: CSR Committee Resolutions. . . . . . . . . . . . . . . . . . . . . . . . . . 39.5 39.4 Specimen 3: Minutes of Meeting of the Corporate Social Responsibility Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.5 Part II: Board Resolution for constitution and reconstitution of CSR Committee, and approval of CSR Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.8 39.5 Checkpoints to be observed before and while passing Board Resolution. . . 39.8 39.6 Specimen 1: Notice and Agenda of Board Meeting . . . . . . . . . . . . . . . . . . . 39.9 39.7 Specimen 2: Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.11 39.8 Specimen 3: Minutes of Bord Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.13 Chapter 40 Appointment of Internal Auditor. . . . . . . . . . . . . . . . . . . . . . . . . .

Part I: Board Resolution for appointment of the internal auditor . . . . . . . . . . . . . .

40.1 Checkpoints to be observed before and while passing Board Resolution. . .

40.2 Specimen 1: Notice and Agenda of Board Meeting . . . . . . . . . . . . . . . . . . .

40.3 Specimen 2: Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

40.4 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . .

40.1 40.1 40.1 40.3 40.5 40.6

Chapter 41 Appointment of Auditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.1 Part I: Audit committee resolution for appointment of auditor. . . . . . . . . . . . . . . . 41.2 41.1 Checkpoints to be observed before and while passing resolution for appointment of Auditors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.2 41.2 Specimen 1: Notice and agenda of audit committee meeting. . . . . . . . . . . . 41.3 41.3 Specimen 2: Committee resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.7 41.4 Specimen 3: Minutes of meeting of the audit committee. . . . . . . . . . . . . . . 41.8 Part II: Board resolution for appointment of auditor. . . . . . . . . . . . . . . . . . . . . . . . 41.12 41.5 Checkpoints to be observed before and while passing Board Resolution. . 41.12 41.6 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . 41.13 41.7 Specimen 2: Board resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.17 41.8 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.20 xl

Detailed table of contents

Part III: Ordinary resolution for appointment of auditors. . . . . . . . . . . . . . . . . . . . .

41.9 Checkpoints to be observed before and while passing Special Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

41.10 Specimen 1: Notice of annual/ extra ordinary general meeting for the purpose of obtaining consent of memebers for appointment of auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

41.11 Specimen 2: Members’ resolution for appointment of auditors . . . . . . . . .

41.12 Specimen 3: Minutes of annual/ extra ordinary general meeting. . . . . . . .

41.27 41.27

41.28 41.30 41.31 41.32

Chapter 42 Cost Auditor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.1 Part I: Audit committee resolution for appointment of Cost Auditor . . . . . . . . . . . 42.2 42.1 Checkpoints to be observed before and while considering the appointment / Reappointment of Cost Auditor. . . . . . . . . . . . . . . . . . . . . . . 42.2 42.2 Specimen 1: Notice and Agenda of audit committee meeting . . . . . . . . . . . 42.3 42.3 Specimen 2: Minutes of meeting of the Audit Committee. . . . . . . . . . . . . . 42.5 Part II: Appontment/Reappointment of a Cost Auditor/Matters incidental thereto at a Board Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.7 42.4 Checkpoints to be observed before and while passing Board Resolution. . . 42.7 42.5 Specimen 1: Notice and Agenda of Board Meeting . . . . . . . . . . . . . . . . . . 42.10 42.6 Specimen 2: Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.13 42.7 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . 42.17 Part III: Ordinary resolution for the purpose of ratification of remuneration of Cost Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.23 42.8 Checkpoints to be observed before and while passing Special Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.23 42.9 Specimen 1: Notice of extra ordinary general meeting for the purpose of ratification of Remuneration of Cost Auditors . . . . . . . . . . . . . 42.24 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.26 42.10 Specimen 2: Ordinary Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.27 42.11 Specimen 3: Minutes of extra ordinary General Meeting. . . . . . . . . . . . . . 42.28 Chapter 43 Appointment of Secretarial Auditor. . . . . . . . . . . . . . . . . . . . . . . .

Part I: Board Resolution for appointment of the Secretarial Auditor. . . . . . . . . . . .

43.1 Checkpoints to be observed before and while passing Board Resolution. . .

43.2 Specimen 1: Notice and Agenda of Board Meeting . . . . . . . . . . . . . . . . . . .

43.3 Specimen 2: Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

43.4 Specimen 3: Minutes of Bord Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

43.1 43.1 43.1 43.3 43.5 43.5

Chapter 44 Appointment, Cessation, and Removal of Directors. . . . . . . . . . . 44.1 44A Appointment of Directors at Board Meetings. . . . . . . . . . . . . . . . . . . . . . . . 44.3 Part I: Resolution for appointment of directors by Nomination and Remuneration Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.4 xli

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44A.1 Checkpoints to be observed before and while considering the appointment of directors by Nomination and Remuneration Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.4 44A.2 Specimen 1: Notice and Agenda of nomination and remuneration Committee Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . 44.5 44A.3 Specimen 2: Minutes of meeting of the Nomination & Remuneration Comiittee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.7 Part II: Board resolution for appointment of additional directors at the board meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.9 44A.4 Checkpoints to be observed before and while considering the appointment of Additional directors at the Board Meeting. . . . 44.9 44A.5 Specimen 1: Notice and Agenda of Board Meeting . . . . . . . . . . . 44.10 44A.6 Specimen 2: Board Resolution For Appointment of Additional Director. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.11 44A.7 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . 44.12 Part III: Board resolution for appointment of director to fill up the casual vacancy at the board meeting. . . . . . . . . . . . . . . . . . . . . . . 44.14 44A.8 Checkpoints to be observed before and while considering the Appointment of Director to fill up the Casual Vacancy at the Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.14 44A.9 Specimen 1: Notice and Agenda of Board Meeting . . . . . . . . . . . 44.15 44A.10 Specimen 2: Board Resolution for appointment of director in casual vacancy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.16 44A.11 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . 44.17 Part IV: Board Resolution for Appointment of Alternate Director. . . . . . . 44.19 44A.12 Checkpoints to be observed before and while passing board resolution for appointment of Alternate Director . . . . . . . . . . . . . 44.19 44A.13 Specimen 1: Notice and Agenda of Board Meeting . . . . . . . . . . . 44.20 44A.14 Specimen 2: Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.21 44A.15 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . 44.22 Part V: Board Resolution for appointment of Nominee Director . . . . . . . 44.24 44A.16 Checkpoints to be observed before and while passing board resolution for appointment of Nominee Director . . . . . . . . . . . . . 44.24 44A.17 Specimen 1: Notice and Agenda of Board Meeting . . . . . . . . . . . 44.25 44A.18 Specimen 2: Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.26 44A.19 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . 44.27 Appointment of Directors at General Meeting. . . . . . . . . . . . . . . . . . . . . . 44.29 Part I: Shareholders’/Members’ Resolution for appointment of directors at the General meeting . . . . . . . . . . . . . . . . . . . . . . . . . . 44.29 44B.1 Checkpoints to be observed before and while considering the appointment of directors at the General meeting. . . . . . . . . . . 44.29

Detailed table of contents

44C

44D

44B.2 Specimen 1: Notice of annual General Meeting. . . . . . . . . . . . . . 44.30 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . 44.33 44B.3 Specimen 2: General Meeting Resolutions. . . . . . . . . . . . . . . . . . 44.34 44B.4 Specimen 3: Minutes of annual General Meeting. . . . . . . . . . . . . 44.34 Appointment of Independent Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.37 Part I: Resolution for appointment of independent directors at the meeting of nomination and remuneration committee. . . . . . . . . . 44.38 44C.1 Checkpoints to be observed before and while considering the appointment of Independent director. . . . . . . . . . . . . . . . . . . . 44.38 44C.2 Specimen 1: Notice and Agenda of nomination and remuneration Committee Meeting. . . . . . . . . . . . . . . . . . . . . . . . . 44.39 44C.3 Specimen 2: Nomination & Remuneration committee (“NRC”) resolution recommending the appointment of Independent Director. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.40 44C.4 Specimen 3: Minutes of Meeting of the Nomination & Remuneration Comiittee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.41 Part II: Board Resolution for Appointment of Independent Director at the Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.43 44C.5 Checkpoints to be observed before and while passing Board Resolution for Appointment of Independent Director at the Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.43 44C.6 Specimen 1: Notice and Agenda of Board Meeting . . . . . . . . . . . 44.44 44C.7 Specimen 2: Board Resolution for the appointment of Independent Director. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.45 44C.8 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . 44.46 Part III: Shareholder’s/ Member’s resolution for Appointment of independent director at General Meeting . . . . . . . . . . . . . . . . . . . 44.48 44C.9 Checkpoints to be observed before and while passing shareholder’s/ member’s resolution for appointment of Independent Director at general meeting. . . . . . . . . . . . . . . . . . . . 44.48 44C.10 Specimen 1: Notice of extra-Ordinary/Annual General Meeting. 44.49 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . 44.51 44C.11 Specimen 2: General Meeting resolution for the appointment of Independent Director. . . . . . . . . . . . . . . . . . . . . . 44.52 44C.12 Specimen 3: Minutes of Annual General Meeting . . . . . . . . . . . . 44.52 Cessation of a Director due to Resignation. . . . . . . . . . . . . . . . . . . . . . . . . 44.54 Part I: Board Resolution for Cessation of a director due to Resignation.44.55 44D.1 Checkpoints to be observed before and while considering the Cessation of a Director/ Noting of resignation of a Director at the Board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.55 44D.2 Specimen 1: Notice and Agenda of Baord Meeting . . . . . . . . . . . 44.56 xliii

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44D.3 Specimen 2: Board Resolution for noting of Resignation. . . . . . . 44.57 44D.4 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . 44.58 Part II: Board Resolution for cessation of a director due to death at the Board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.60 44D.5 Checkpoints to be observed before and while passing Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.60 44D.6 Specimen 1: Notice and Agenda of Board Meeting . . . . . . . . . . . 44.61 44D.7 Specimen 2: Board Resolution for noting of cessation of Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.62 44D.8 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . 44.63 Part III: Board Resolution for Vacation of office as a Director at the Board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.65 44D.9 Checkpoints to be observed before and while passing Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.65 44D.10 Specimen 1: Notice and Agenda of Board Meeting . . . . . . . . . . . 44.66 44D.11 Specimen 2: Board Resolution for vacation of office by a Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.67 44D.12 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . 44.68 Removal of Director. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.70 Part I: Board resolution & resolution of nrc for removal of directors at the board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.71 44E.1 Checkpoints to be observed before and while considering the Removal of Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.71 44E.2 Specimen 1: Notice and Agenda of nomination and remuneration committee meeting . . . . . . . . . . . . . . . . . . . . . . . . . 44.73 44E.3 Specimen 2: NRC Resolution for removal of Director. . . . . . . . . 44.75 44E.4 Specimen 3: Minutes of meeting of the nomination & remuneration committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.75 Part II: Board Resolution for removal of directors at the Board meeting. 44.77 44E.5 Checkpoints to be observed before and while passing Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.77 44E.6 SpEcimen 1: Notice and Agenda of Board Meeting. . . . . . . . . . . 44.78 44E.7 Specimen 2 Board Resolutions. . . . . . . . . . . . . . . . . . . . . . . . . . . 44.79 44E.8 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . 44.80 Part III: Shareholder’s/ Member’s Resolution for Removal of Director/an Independent Director at General Meeting . . . . . . . . . 44.84 44E.9 Checkpoints to be observed before and while passing Shareholder’s/ Member’s Resolution . . . . . . . . . . . . . . . . . . . . . . 44.84 44E.10 Specimen 1: Notice of extra-ordinary General Meeting. . . . . . . . 44.85 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . 44.87 44E.11 Specimen 2: Minutes of General Meeting. . . . . . . . . . . . . . . . . . . 44.88

Detailed table of contents

Chapter 45 Remuneration to Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.1 Part I: Nomination and remuneration committee resolution for approval of the remuneration policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.2 45.1 Checkpoints to be observed before and while considering the matters related to remuneration of Directors. . . . . . . . . . . . . . . . . . . . . . . . . 45.2 45.2 Specimen 1: Notice and agenda of nomination and remuneration committee meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.4 45.3 Specimen 2: Committee resolutions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.7 45.4 Specimen 3: Minutes of meeting of the nomination & remuneration committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.9 Part II: Board resolution for approval of the remuneration of directors. . . . . . . . . 45.13 45.5 Checkpoints to be observed before and while passing Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.13 45.6 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . 45.15 45.7 Specimen 2: Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.18 45.8 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.21 Part III: Special resolution for remuneration to directors and incidental matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.26 45.9 Checkpoints to be observed before and while passing Special Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.26 45.10 Specimen 1: Notice of extra ordinary general meeting for the purpose of obtaining consent of memebers for remuneration to directors or waiver of excess remuneration. . . . . . . . . . . . . . . . . . . . . . . . . 45.27 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.33 45.11 Specimen 3: Minutes of extra ordinary general meeting . . . . . . . . . . . . . . 45.35 Chapter 46 Committees of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

46.1 Checkpoints to be observed before and while constituting various committee of the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

46.2 Sepcimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . .

46.3 Specimen 2: Board resolutions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

46.4 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

46.1 46.1 46.3 46.6 46.9

Chapter 47 Board Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47.1 Part I: Board Resolution for first board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . 47.2 47.1 Checkpoints to be observed before and while preparing the Agenda for the First Board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47.2 47.2 Sepcimen 1: Notice of first Board Meeting after Incorporation. . . . . . . . . . 47.3 47.3 Specimen 2: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . 47.17 Part II: Board Resolution for signing and approval of financial statements and board’s report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47.30

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47.4 47.5 47.6 47.7

Checkpoints to be observed before and while passing Board Resolution. .

Specimen 1: Notice and Agenda of Board Meeting . . . . . . . . . . . . . . . . . .

Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . .

47.30 47.31 47.34 47.37

Chapter 48

Contributions to charitable and other funds, political parties, and defence funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.1 Part I: Board Resolutions for contributions to charitable and other funds, political parties, and Defence Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.2 48.1 Checkpoints to be observed before and while passing Board Resolution. . . 48.2 48.2 Specimen 1: Notice and Agenda of Board Meeting . . . . . . . . . . . . . . . . . . . 48.4 48.3 Specimen 2: Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.6 48.4 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.8 Part II: Ordinary Resolution for contribution to bona fide charitable funds exceeding 5% of the average of net profits for the 3 immediately Preceding Financial Years. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.13 48.5 Checkpoints to be observed before and while passing Special Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.13 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.16 48.6 Specimen 2: Ordinary Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48.18 48.7 Specimen 3: Minutes of extra ordinary General Meeting. . . . . . . . . . . . . . 48.18 Chapter 49 Disclosure of Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part I: Board Resolution for noting the disclosure of interest. . . . . . . . . . . . . . . . .

49.1 Checkpoints to be observed before and while passing Board Resolution. . .

49.2 Specimen 1: Notice and Agenda of Board Meeting . . . . . . . . . . . . . . . . . . .

49.3 Specimen 2: Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

49.4 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . .

49.1 49.1 49.1 49.3 49.6 49.7

Chapter 50 Loans to Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.1 Part I: Board Resolution for convening General Meeting. . . . . . . . . . . . . . . . . . . . 50.1 50.1 Checkpoints to be observed before and while passing Board Resolution. . . 50.1 50.2 Specimen 1: Notice and agenda of Board Meeting. . . . . . . . . . . . . . . . . . . . 50.3 50.3 Specimen 2: Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.4 50.4 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.5 Part II: Special Resolution for approving loans to Directors. . . . . . . . . . . . . . . . . . 50.8 50.5 Checkpoints to be observed before and while passing Special Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.8 50.6 Specimen 1: Notice of extra ordinary general meeting for the purpose of obtaining consent of memebers for loans to Directors. . . . . . . . 50.9 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.13 50.7 Specimen 2: Minutes of extra ordinary general Meeting . . . . . . . . . . . . . . 50.14 xlvi

Detailed table of contents

Chapter 51 Related party Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.1 Part I: Audit committee resolution for approval of related party transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.2 51.1 Checkpoints to be observed before and while passing resolution for approval of related party transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.2 51.2 Specimen 1: Notice and agenda of audit committee meeting. . . . . . . . . . . . 51.3 51.3 Specimen 2: Committee Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.5 51.4 Specimen 3: Minutes of meeting of the audit committee. . . . . . . . . . . . . . . 51.8 Part II: Board resolution for approval of related party transactions . . . . . . . . . . . . 51.12 51.5 Checkpoints to be observed before and while passing Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.12 51.6 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . 51.13 51.7 Specimen 2: Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.16 51.8 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.18 Part III: Ordinary resolution for approval of related party transactions. . . . . . . . . . 51.23 51.9 Checkpoints to be observed before and while passing Ordinary Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.23 51.10 Specimen 1: Notice of extra ordinary general meeting for the purpose of obtaining approval of members for entering into related party transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.25 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.29 51.11 Specimen 2: Members’ Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51.30 51.12 Specimen 3: Minutes of extra ordinary general meeting . . . . . . . . . . . . . . 51.32 Chapter 52 Loans and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.1 Part I: Board Resolutions for Loans and Investments. . . . . . . . . . . . . . . . . . . . . . . 52.2 52.1 Checkpoints to be observed before and while passing Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.2 52.2 Specimen 1: Notice and Agenda of Board Meeting . . . . . . . . . . . . . . . . . . . 52.4 52.3 Specimen 2: Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.7 52.4 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . 52.11 Part II: Special Resolution for loans and investments beyond Certain Limits. . . . 52.17 52.5 Checkpoints to be observed before and while passing Special Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.17 52.6 Specimen 1: Notice of extra ordinary general meeting for the purpose of increasing the limits applicable to making investments, extending loans, providing guarantees or securities with respect to loans to body corporates or persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.18 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.21 52.7 Specimen 2: Special Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.22 52.8 Specimen 3: Minutes of extra ordinary General Meeting. . . . . . . . . . . . . . 52.23 xlvii

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Chapter 53 Non cash transactions involving Directors . . . . . . . . . . . . . . . . . . 53.1 Part I: Audit committee resolution for appointment of registered valuer . . . . . . . . 53.2 53.1 Checkpoints to be observed before and while passing resolution for appointment of Registered Valuer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53.2 53.2 Specimen 1: Notice and agenda of audit committee meeting. . . . . . . . . . . . 53.3 53.3 Specimen 2: Committee Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53.5 53.4 Specimen 3: Minutes of meeting of the audit committee. . . . . . . . . . . . . . . 53.5 Part II: Board resolution for appointment of registered valuers and calling general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53.7 53.5 Checkpoints to be observed before and while passing Board Resolution. . . 53.7 53.6 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . . 53.8 53.7 Specimen 2: Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53.10 53.8 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . 53.11 Part III: Ordinary resolution for approval of non-cash transactions with directors or connected persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53.14 53.9 Checkpoints to be observed before and while passing Ordinary Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53.14 53.10 Specimen 1: Notice of extra ordinary general meeting for the purpose of obtaining consent of members for non cash transactions with director or connected person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53.15 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53.18 53.11 Specimen 2: Minutes of extra ordinary general meeting . . . . . . . . . . . . . . 53.19 Chapter 54

Appointment and Remuneration of Managerial Personnel - MD, WTD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.1 Part I: Appointment of executive director (Whole time director/ Managing Director) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.2 54.1 Checkpoints to be observed before and while considering the appointment of Executive Director (Whole time director/ Managing Director) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.2 54.2 Specimen 1: Notice and agenda of nomination and remuneration Committee Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.3 54.3 Specimen 2: Nomination and Remuneration Committee Resolution. . . . . . 54.5 54.4 Specimen 3: Minutes of meeting of the nomination & remuneration comiittee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.6 Part II: Appointment of executive director at the board meeting . . . . . . . . . . . . . . . 54.8 54.5 Checkpoints to be observed before and while passing Board Resolution. . . 54.8 54.6 Specimen 1: Notice and agenda of Board Meeting. . . . . . . . . . . . . . . . . . . . 54.9 54.7 Specimen 2: Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.11 54.8 Specimen 3 Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.11 Part III: Appointment of executive director at general meeting. . . . . . . . . . . . . . . . 54.14 54.9 Checkpoints to be observed before and while passing Board Resolution. . 54.14 xlviii

Detailed table of contents

54.10 Specimen 1: Notice of extra-ordinary General Meeting. . . . . . . . . . . . . . .

Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

54.11 Specimen 2: Members’ resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

54.12 Specimen 3: Minutes of Extra Ordinary General Meeting. . . . . . . . . . . . .

54.15 54.17 54.18 54.19

Chapter 55

Compensation for loss of office of Managing Director, Whole Time Director or Manager . . . . . . . . . . . . . . . . . . . . . . . . .

Part I: Board resolution for compensation for loss of office . . . . . . . . . . . . . . . . . .

55.1 Checkpoints to be observed before and while passing Board Resolution. . .

55.2 Specimen 1: Notice and Agenda of board meeting. . . . . . . . . . . . . . . . . . . .

55.3 Specimen 2: Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

55.4 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . .

55.1 55.1 55.1 55.3 55.4 55.5

Chapter 56 Appointment of KMP (Other than Managerial Personnel). . . . .

Part I: Board Resolution for appointment, designation of KMP and Incidental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

56.1 Checkpoints to be observed before and while passing Board Resolution. . .

56.2 Specimen 1: Notice and agenda of Board Meeting. . . . . . . . . . . . . . . . . . . .

56.3 Specimen 2: Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

56.4 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . .

56.1

Chapter 57 Appointment of Company Secretary (Other than KMP). . . . . . .

Part I: Board Resolution for appointment of company secretary. . . . . . . . . . . . . . .

57.1 Checkpoints to be observed before and while passing Board Resolution. . .

57.2 Specimen 1: Notice and agenda of Board Meeting. . . . . . . . . . . . . . . . . . . .

57.3 Specimen 2: Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

57.4 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . .

57.1 57.1 57.1 57.3 57.4 57.6

56.2 56.2 56.4 56.7 56.9

Chapter 58 Dormant Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58.1 Part I: Board resolution for application for obtaining the status of dormant company and active company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58.2 58.1 Checkpoints to be observed before and while passing Board Resolution. . . 58.2 58.2 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . . 58.3 58.3 Specimen 2: Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58.5 58.4 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58.7 Part II: Special resolution for obtaining the status of dormant company . . . . . . . . 58.11 58.5 Checkpoints to be observed before and while passing Special Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58.11 58.6 Specimen 1: Notice of extra ordinary general meeting for the purpose of obtaining consent of members for obtaining the status of dormant company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58.12 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58.14 xlix

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58.7 58.8

Specimen 2: Members’ resolution for obtaining dormant status. . . . . . . . . 58.15 Specimen 3: Minutes of extra ordinary general meeting . . . . . . . . . . . . . . 58.16

Chapter 59 Conversion of Company to Limited Liability Partnership . . . . . 59.1 Part I: Board resolution authorising conversion of a company from a private limited or a public limited to other form of organisation/LLP. . . . . 59.2 59.1 Checkpoints to be observed before and while passing Board Resolution. . . 59.2 59.2 Specimen 1: Notice and agenda of board meeting . . . . . . . . . . . . . . . . . . . . 59.3 59.3 Specimen 2 Board resolutions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59.5 59.4 Specimen 3: Minutes of board meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59.7 Part II: Passing of an unanimous resolution for approval for conversion of a company to a limited liability company. . . . . . . . . . . . . . . . . . . . . . . . . . . 59.12 59.5 Checkpoints to be observed before and while passing Ordinary Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59.12 59.6 Specimen 1: Notice of extra ordinary general meeting for the purpose of conversion of the company from private limited / public limited to an LLP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59.13 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59.15 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59.17 59.7 Specimen 2: Members’ Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59.18 59.8 Specimen 3: Minutes of extra ordinary general meeting . . . . . . . . . . . . . . 59.19 Chapter 60 Offences, compounding, penalties, and legal representation. . . . 60.1 60A Compounding of Offences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.3 Part I: Board resolution for making application for compounding of Offences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.3 60A.1 Checkpoints to be observed before and while passing Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.3 60A.2 Specimen 1: Notice and agenda of Board Meeting. . . . . . . . . . . . . 60.5 60A.3 Specimen 2: Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.6 60A.4 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . 60.7 Annexure I: List of compoundable offences. . . . . . . . . . . . . . . . . . . . . . . . . 60.9 Annexure II: List of non-compoundable offences . . . . . . . . . . . . . . . . . . . 60.28 Annexure III: List of offences punishable for fraud. . . . . . . . . . . . . . . . . . 60.32 60B Adjudication of Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.36 Part I: Board resolution for making application for adjudication of Penalties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.36 60B.1 Checkpoints to be observed before and while passing Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.36 60B.2 Specimen 1: Notice and agenda of Board Meeting. . . . . . . . . . . . 60.38

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Detailed table of contents

60C

60B.3 Specimen 2: Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.39 60B.4 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . 60.40 Annexure I: List of offences punishable with penalty . . . . . . . . . . . . . . . . 60.43 Replies to notices, representations before authorities, and Legal Actions. 60.52 Part I: Board resolution for replies to notices, representations before authorities, and legal actions . . . . . . . . . . . . . . . . . . . . . . . 60.52 60C.1 Checkpoints to be observed before and while passing Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.52 60C.2 Specimen 1: Notice and agenda of Board Meeting. . . . . . . . . . . . 60.54 60C.3 Specimen 2: Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . 60.56 60C.4 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . 60.57

Chapter 61

Borrowing money from various Persons and creation of Charges for securing the amount borrowed. . . . . . . . . . . . . . . . . 61.1 Part I: Board Resolution for Borrowing Monies from Various Persons . . . . . . . . . 61.2 61.1 Checkpoints to be observed before and while passing Board Resolution. . . 61.2 61.2 Specimen 1: Notice and Agenda of Baord Meeting . . . . . . . . . . . . . . . . . . . 61.4 61.3 Specimen 2: Board Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61.6 61.4 Specimen 3: Minutes of Board Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 61.7 Part II: Special Resolution for giving Consent to the Board to Borrow Money in Excess of Paid-Up Capital, Free Reserves, and Securities Premium Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61.10 61.5 Checkpoints to be observed before and while passing Special Resolution in general meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61.10 61.6 Specimen 1: Notice of EOGM for obtaining consent of memebers for borrowing money, where Total Borrowings are in excess of paid-up capital, free reserves, and securities premium account and for sale, lease, or disposal of undertaking. . . . . . . . . . . . . . . . . . . . . . . . . . 61.11 Form No. MGT-11 – Proxy Form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61.16 61.7 Specimen 2: Special Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61.17 61.8 Specimen 3: Minutes of Extra Ordinary General Meeting. . . . . . . . . . . . . 61.19

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Chapter 1

An introduction to decisionmaking mechanism in Companies Synopsis 1.1 1.2 1.3

1.4 1.5

1.6

Advantages of ‘company’ as a form of business .............................................. 1.2 Company legislations ....................................................................................... 1.2 Types of Companies......................................................................................... 1.3 1.3.1 Types of Companies as per their key features ...................................... 1.4 1.3.2 Types of Companies as per the Liability .............................................. 1.7 1.3.3 Other types of Companies..................................................................... 1.8 Stakeholders in the company ......................................................................... 1.14 Overview of the provisions of the Act ........................................................... 1.19 1.5.1 Essentials before incorporation ........................................................... 1.19 1.5.2 Universal events and compliances ...................................................... 1.19 1.5.3 End of life of the company ................................................................. 1.21 Decision-making mechanisms under the Companies Act, 2013 .................... 1.21

Company is one of the most ancient forms of business organisations. Even in ancient India, it existed in the form of Srenis. The Companies Act, 2013 (hereinafter referred to as “the Act” or “Act”) defines ‘company’ in clause (20) of section 2 as “company” means a company incorporated under this Act or under any previous company law1. It is a functional definition and does not elaborate the 1

Section 2(67): “previous company law” means any of the laws specified below:— (i) (ii) (iii) (iv) (v) (vi)

Acts relating to companies in force before the Indian Companies Act, 1866 (10 of 1866); the Indian Companies Act, 1866 (10 of 1866); the Indian Companies Act, 1882 (6 of 1882); the Indian Companies Act, 1913 (7 of 1913); the Registration of Transferred Companies Ordinance, 1942 (Ord. 54 of 1942);{} the Companies Act, 1956 (1 of 1956); and Cont…

1.1

Meetings–Notices, Resolutions & Minutes under the Companies Act, 2013

Chapter 1

characteristics of the Company. The characteristics of the Company are best elaborated by the advantages it enjoys over the other forms of business.

1.1

ADVANTAGES OF ‘COMPANY’ AS A FORM OF BUSINESS

The various advantages over other forms of businesses helped the ‘company’ to thrive and prosper as a business form. One of the advantages is its scalability.

There is no upper limit on the number of members of a public company and a producer company. In contrast, the maximum number of persons allowed to form a partnership or an association of persons is 50. (Section 464).

A company is an artificial legal entity, a legal fiction. The separate status is granted by numerous judicial pronouncements which are now firmly rooted in section 9 of the Act. It’s an amalgam of interests of various stakeholders which primarily includes shareholders, other security holders, creditors, directors, managers, employees and public at large.

Company form is the most widely used corporate form for business across the world. There are multiple advantages of doing business in company form. This form allows the persons having the funds to come together with the persons having necessary skills. The limited liability ensures that the risk is spread across a wide number of persons. The common characteristics found across all jurisdictions are: legal personality, limited liability, transferable shares, delegated management through directors, and investor ownership.

1.2

COMPANY LEGISLATIONS

The contribution of Company Legislations to the development of ‘Company’ as a form of business is paramount. Various features like limited liability, different types of audits, collective administration of assets were introduced by successive legislation. The Indian history of the company legislations closely corresponds to the British history. The first enactment for regulation of the companies was passed in the year 1850. Later on, fresh enactments were made in the years 1857, 1860, 1866, Cont… (vii)

any law corresponding to any of the aforesaid Acts or the Ordinances and in force— a. in the merged territories or in a Part B State (other than the State of Jammu and Kashmir), or any part thereof, before the extension thereto of the Indian Companies Act, 1913 (7 of 1913); or b. in the State of Jammu and Kashmir, or any part thereof, before the commencement of the Jammu and Kashmir (Extension of Laws) Act, 1956 (62 of 1956), in so far as banking, insurance and financial corporations are concerned, and before the commencement of the Central Laws (Extension to Jammu and Kashmir) Act, 1968 (25 of 1968), in so far as other corporations are concerned; (viii) the Portuguese Commercial Code, in so far as it relates to sociedades anonimas; and (ix) the Registration of Companies (Sikkim) Act, 1961 (Sikkim Act 8 of 1961); (this clause is not yet enforced)

1.2

Chapter 1

An introduction to decision-making mechanism in Companies

1882 and 1913. The Companies Act, 1956 was passed after independence of the country. In terms of number of sections, it was one of the lengthiest legislations passed by the Parliament of India. However, certain state legislations like the Registration of Companies (Sikkim) Act, 1961 continued to exist alongside the 1956 Act and applied to the specific states. The Companies Act, 2013 seeks to repeal all the previous legislations and applies uniformly throughout the country.

The Companies Act, 1956 was amended 18 times to fulfil the demands of the evolving business world. The need for a fresh legislation was felt to cope with the various changes post globalization. The JJ Irani Committee report in the year 2004 laid down the foundation for a fresh outlook on the Company legislations. After introduction of two bills, the Companies Act, 2013 was notified in the Gazette of India on 30.08.2013. Various sections were notified in different tranches. This legislation introduced many new concepts like Corporate Social Responsibility, One Person Company and changed the existing concepts to suit the modern times.

Though the legislation is very recent, it is already amended thrice in the years 2015, 2017 as well as 2018 (including the Companies (Amendment) Ordinance, 2019). Other legislations like Insolvency and Bankruptcy Code, 2016 and the Finance Act, 2017 have made amendments to this legislation as well.

This legislation applies to all types of companies. For companies which are governed by special statutes (like insurance companies, banking companies, electricity generation and supply companies), the provisions of the Companies Act, 2013 apply where they are not contrary to the special statutes which govern them.

1.3

TYPES OF COMPANIES

The Act classifies companies into various types based on their characteristics. The main two types of companies are: Private and Public companies (clause (68) and (71) of section 2 respectively). Private companies have restrictions like a maximum of 200 members excluding past and present employees, restricted transferability of shares and not issuing securities to public. Public companies are those companies which are not private companies and include the subsidiaries of public companies. The minimum number of members is 2 for a private company and 7 for a public company.

There are two further sub-types of private company: One Person Company and Producer Company. One Person Company has only one member who is a natural person resident in India and citizen of India. While the number of member is one, the number of directors can be higher. Producer company is a special type of organization where certain producers (e.g. farmers) or institutions of such producers form a company for carrying out certain specified business. Their main motive is to create a common entity for pooling resources and ensure cheaper supply of ancillary services to their members. Their structure and management is quite different from other companies. Such companies are mainly governed by the 1.3

Meetings–Notices, Resolutions & Minutes under the Companies Act, 2013

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Part IXA of the Companies Act, 1956 and other provisions of the Companies Act, 2013 which do not conflict with the said provisions apply to them.

Another type of company is Nidhi company, governed under section 406. These companies are incorporated to inculcate the habits of saving among their members and carry out financial transactions of receiving deposits and lending only with their members. The provisions of the Act apply differently to the Nidhi companies.

Where a company is formed for a future project or to hold an asset or intellectual property, such company may obtain the status of ‘dormant company’ (Section 455).

To obtain this status, there shall be no significant accounting transactions. Even an existing company which is inactive can make such application. Upon obtaining such status, there are certain exemptions granted from the compliances under the Act. A specific return is required to be filed every year to continue to avail of this status.

While all these types of companies aim at earning profits and distributing it amongst their members, the companies which are incorporated with charitable objects aim at using the money earned to furthering their objects (otherwise called section 8 companies). Their objects can be promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or the like. Such companies are not required to add the words ‘Limited’ or ‘Private Limited’ to their name. A partnership firm can be a member of such companies only.

Another classification of companies is based on the liability of the members. The most common type is company with limited liability. This liability may be limited by shares or by guarantee. For companies limited by shares, the liability of the members remains limited to the extent of unpaid amount on the shares held by them.

In case of companies limited by guarantee, the members undertake to contribute the amount guaranteed in the event of winding up of the company. In case of unlimited companies, there is no limit on the liability of the members. The only benefit is the members are liable to the company and not to the creditors directly.

Small companies are companies which have paid-up capital and turnover less than the prescribed limits. They are given certain exemptions under the Act. Foreign companies are companies which are incorporated outside India and have a place of business in India or conduct any business activity in India. In addition to activities carried out directly, activities carried out through agents as well as through electronic mode are covered as well.

These types are further elaborated below: 1.3.1

Types of Companies as per their key features

A company can be incorporated in any one of the following form; i.e.

1.4

(a)

An One person company,

(b)

A Private limited company or

Chapter 1

(c)

An introduction to decision-making mechanism in Companies

A Public limited company

Definitions & key features Definitions Section 2(62)

Section 2(68)

Section 2(71)

One Person Company

Private Limited Company

Public Limited Company

means a company which “private company” means a has only one person as a 2[company having a member; minimum paid-up share capital as may be prescribed, and which by its articles],— (i) restricts the right to transfer its shares; (ii) except in case of One Person Company, limits the number of its members to two hundred: Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause, be treated as a single member: Provided further that— (A) persons who are in the employment of the company; and (B) persons who, having been

public company” means a company which— (a) is not a private company; (b) has a minimum paid-up share capital , as may be prescribed: Provided that a company which is a subsidiary of a company, not being a private company, shall be deemed to be public company for the purposes of this Act3 even where such subsidiary company continues to be a private company in its articles;

2

In case of Section 8 Company, in clause (68) of section 2 the requirement of having minimum paidup share capital shall not apply. – Vide MCA Notification dated 5th June, 2015.

3

Such company shall be treated as a public company both for rights and obligations arising under the Act. This company shall be treated as a private company only for 3 conditions specified in the definition of the private company regarding restriction on right to transfer, limitation on the maximum number of members and prohibition on invitation to public for subscription to securities.

This interpretation was adopted by the Company Law Board in the case of Hillcrest Realty Sdn. Bhd. v Hotel Queen Road Pvt. Ltd., 2006 71 SCL 41 CLB for similar definition in the Companies Act, 1956.

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Definitions Section 2(62)

Section 2(68)

Section 2(71)

One Person Company

Private Limited Company

Public Limited Company

formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased, shall not be included in the number of members; and (iii) prohibits any invitation to the public to subscribe for any securities of the company; KEY- FEATURES Minimum number of members - 1 (one)

Minimum number of members - 2

Minimum number of members - 7

There can be only 1(One) Member

Maximum number of members - 200 members subject to the provisions of sec 2(68)

There is no restriction on the maximum number of members

Minimum number of Directors - 1 (one)

Minimum number of Directors - 2 (Two)

Minimum number of Directors – 3

Shares cannot be transferred, except by way of appointment of a Nominee. However, in case of transfer of ownership of OPC, the entire shareholding may be transferred.

Shares are not freely transferable. There are restrictions on the transferability through the Articles.

Shares are freely transferable

Number of Board Meetings

Number of Board Meetings Number of Board Holding of Board meetings Meetings

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Definitions Section 2(62)

Section 2(68)

Section 2(71)

One Person Company

Private Limited Company

Public Limited Company

depends upon whether the Holding of Board meetings depends upon company falls under the the number of directors. category of a ‘small company’ as defined under the Companies Act. Minimum 2 Board meetings.

Minimum 4 board Meetings would be conducted with the gap of not less than 120 days in between two meetings

Quorum for Board Meetings Not applicable, if there is a single Director (Applicable if the number of directors are more than One)

Quorum for Board Meetings - 2

Quorum for Board Meetings - 3

Holding of Annual general meeting is not required

Annual General meeting is required to be held

Annual General meeting is required to be held

1.3.2

Types of Companies as per the Liability

Based on the liability concept, a Company can be incorporated as: (a)

a Company limited by Shares,

(b)

a Company Limited by Guarantee, or

(c)

an Unlimited Company.

Following definitions explain the above three concepts: Definitions Section 2(22)

Section 2(21)

Section 2(92)

“company limited by shares”

“company limited by guarantee”

“unlimited company”

means a company having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them;

means a company having means a company not the liability of its members having any limit on the limited by the liability of its members; memorandum to such amount as the members may respectively undertake to contribute to the assets of the company in the event 1.7

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Definitions Section 2(22)

Section 2(21)

Section 2(92)

“company limited by shares”

“company limited by guarantee”

“unlimited company”

of its being wound up; The liability of the members is limited and determined solely on the basis of unpaid amount on shares.

The liability of members is The liability of members is limited and determined unlimited. solely on the basis of amount of guarantee given by them.

The personal assets of the shareholders are accountable only to the extent of unpaid amount on shares. However, this liability is enforced by the company and not by the creditors themselves.

The personal assets of the shareholders are accountable only to the extent of guarantee.

However, this liability is enforced by the company and not by the creditors themselves.

The personal assets of the shareholders are accountable to the extent of unpaid liabilities in the company. However, this liability is enforced by the company and not by the creditors themselves.

Funds may be raised by issue of shares and other permissible means.

Funds may be raised by issue of shares and other permissible means.

Funds may be raised by issue of shares and other permissible means.

Membership is transferred The interest of members The interest of members by transfer of shares. may be transferred. may be transferred.

However, guarantee is required to be executed afresh by the new member.

1.3.3

Other types of Companies

There are certain other types of companies as well. Few of which are further defined under sec 2 of the Companies Act, 2013. It is important to understand these categories as many compliances in relation to the companies depend upon the category under which the company is getting covered.

Following chart explains and provides various categories of such companies and their definitions under the Act, as well as under the allied rules, if any.

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Categories of Companies The Private and the Public limited companies incorporated under the Companies Act may acquire different status and can be further categorized as under: S Company No. Category 1. Company incorporated with the charitable Objects (Sec 8) Company

Section Reference 8(1)

Definitions under the Companies Act Where it is proved to the satisfaction of the Central Government that a person or an association of persons proposed to be registered under this Act as a limited company— (a) has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object; (b) intends to apply its profits, if any, or other income in promoting its objects; and (c) intends to prohibit the payment of any dividend to its members,

the Central Government may, by license issued in such manner as may be prescribed, and on such conditions as it deems fit, allow that person or association of persons to be registered as a limited company under this section without the addition to its name of the word “Limited”, or as the case may be, the words “Private Limited” , and thereupon the Registrar shall, on application, in the prescribed form, register such person or association of persons as a company under this section.

4

2.

Producer Company

3.

Small Company

465 4read with (l) “Producer Company” means a body Part IXA of the corporate having objects or activities Companies Act, specified in section 581B and registered 1956 (sec 581A) as Producer Company under this Act (under the Companies Act, 1956) ; 2(85) “small company” means a company, other than a public company,—

The provisions of Part IX A of the Companies Act, 1956 shall be applicable mutatis mutandis to a Producer Company in a manner as if the Companies Act, 1956 has not been repealed until a special Act is enacted for Producer Companies.

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Meetings–Notices, Resolutions & Minutes under the Companies Act, 2013

S Company No. Category

Section Reference

Chapter 1

Definitions under the Companies Act (i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than ten crore rupees; and (ii) turnover of which as per its last profit and loss account does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than hundred crore rupees:

4.

5.

6.

5

1.10

Provided that nothing in this clause shall apply to— (A) a holding company or a subsidiary company; (B) a company registered under section 8; or (C) a company or body corporate governed by any special Act; Government 2(45) “Government company” means any Company company in which not less than fifty-one per cent of the paid-up share capital5 is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company; Listed 2(52) “listed company” means a company which Company has any of its securities listed on any recognized stock exchange; Listed Entity 2(p) of the SEBI “listed entity” means an entity which has (Listing listed, on a recognised stock exchange(s), Obligations and the designated securities issued by it or Disclosure designated securities issued under schemes managed by it, in accordance with the listing Requirements) agreement entered into between the entity Regulations, 2015 and the recognised stock exchange(s); Defined under sec 2(64) as follows: ‘“paid-up share capital” or “share capital paid-up” means such aggregate amount of money credited as paid-up as is equivalent to the amount received as paid-up in respect of shares issued and also includes any amount credited as paid-up in respect of shares of the company, but does not include any other amount received in respect of such shares, by whatever name called.’ Hence, both equity and preference capital is required to be included here.

Chapter 1

S Company No. Category 7. Foreign Company

8.

9.

6

Holding Company

Subsidiary Company

An introduction to decision-making mechanism in Companies

Section Reference 2(42)

2(46)

2(m) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 2(87)

Definitions under the Companies Act “foreign company” means any company or body corporate incorporated outside India which,— has a place of business in India whether by itself or through an agent, physically or through electronic mode; and conducts any business activity in India in any other manner. “holding company”, in relation to one or more other companies, means a company of which such companies are subsidiary companies; 6 Explanation- For the purposes of this clause, the expression “company” includes any body corporate. “holding company” means a holding company as defined in sec 2(46) of the Companies Act, 2013;

“subsidiary company” or “subsidiary”, in relation to any other company (that is to say the holding company), means a company in which the holding company— (i) controls the composition of the Board of Directors; or (ii) exercises or controls more than one-half of the total voting power either at its own or together with one or more of its subsidiary companies: Provided that such class or classes of holding companies as may be prescribed shall not have layers of subsidiaries beyond such numbers as may be prescribed.

Explanation inserted by the Companies Amendment Act, 2017

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S Company No. Category

10. Associate Company

7

1.12

Section Reference

2(6)

Chapter 1

Definitions under the Companies Act Explanation.—For the purposes of this clause,— a) a company shall be deemed to be a subsidiary company of the holding company even if the control referred to in sub-clause (i) or subclause (ii) is of another subsidiary company of the holding company; b) the composition of a company’s Board of Directors shall be deemed to be controlled by another company if that other company by exercise of some power exercisable by it at its discretion can appoint or remove all or a majority of the directors; c) the expression “company” includes any body corporate; d) “layer” in relation to a holding company means its subsidiary or subsidiaries; “associate company“, in relation to another company, means a company in which that other company has a significant influence, but which is not a subsidiary company of the company having such influence and includes a joint venture company.

Explanation.—For the purposes of this clause, “significant influence” means control of at least twenty per cent of total share capital7, or of business decisions under an agreement; The Companies (Amendment) Bill, 2017 proposes to replace this explanation with the following explanation:

As per rule 2(1) (r) of the Companies (Specification of definitions details) Rules, 2014, ‘total share capital’ is the aggregate of the (a) paid-up equity share capital and (b) convertible preference share capital.

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S Company No. Category

An introduction to decision-making mechanism in Companies

Section Reference

Definitions under the Companies Act

‘Explanation.—For the purpose of this clause(a) the expression “significant influence” means control of at least twenty per cent. of total voting power, or control of or participation in business decisions under an agreement; (b) the expression “joint venture” means a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement; 2(b) of the associate shall mean any entity which is SEBI (Listing an associate under sub-section (6) of Obligations and section 2 of the Companies Act, 2013 or Disclosure under the applicable accounting standards: Requirements) Provided that this definition shall not be Regulations, applicable for the units issued by mutual 2015 fund which are listed on a recognised stock exchange(s) for which the provisions of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 shall be applicable; 11. Specified MCA An unlisted public company which is IFSC Public Notification GSR licensed to operate by: Company 08 (E) dated 4th - the Reserve Bank of India or January 2017 - the Securities and Exchange Board of India or - the Insurance Regulatory and Development Authority of India from the International Financial Services Centre located in an approved multi services Special Economic Zone set-up under the Special Economic Zones Act, 2005 (28 of 2005) read with the Special Economic Zones Rules, 2006 (herein after referred to as “Specified IFSC public company”) 12. Specified MCA A private company which is licensed to IFSC Private Notification GSR operate by Company 09 (E) dated 4th - the Reserve Bank of India or January 2017 - the Securities and Exchange Board of India or 1.13

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S Company No. Category

Section Reference

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Definitions under the Companies Act -

the Insurance Regulatory and Development Authority of India from the International Financial Services Centre located in an approved multi services Special Economic Zone set-up under the Special Economic Zones Act, 2005 (28 of 2005) read with the Special Economic Zones Rules, 2006 (hereinafter referred to as “Specified IFSC private company�).

1.4

STAKEHOLDERS IN THE COMPANY

As noted above, the company facilitates the coming together of persons having different resources. Such different resources like capital, skills are pooled into the business of the company. These persons are given different rights and assigned different liabilities based on their interests. Some of them are noted below: Promoters- Promoters of the company are the persons who conceive the idea of business, idea of formation of the company. They enter into required contracts like availing the services of the professionals for incorporation, finding other subscribers and directors etc. They may themselves become shareholders and directors as well. In their role before incorporation, they may make profits but they must disclose these profits. Companies Act. 2013 now recognises their role after formation of the company and enables the acquisition of status of promoters and change therein later.

Subscribers, shareholders, members- Subscribers are the first persons who agree to purchase shares or become members in the company. They undertake to do so by subscribing to the Articles of Association and Memorandum of Association. Membership of the company may be acquired later by purchasing shares of the company or by undertaking to pay the guarantee amount.

Shareholders are often called as owners of the company. However, in strict legal sense, the company owns its own assets and is a different legal personality.

Employees and workmen- While the labour legislations take care of interests of the employees and workmen, the Companies Act, 2013 also takes into account their interests. The protection of interests can be direct and indirect. There are certain benefits like Sweat Equity shares, Employee Stock Option schemes available under the Act. Even the workmen are recognised under certain provisions of the Act. Under winding up, their dues are paid in preference to other creditors.

Creditors- The funds required to run a company can be either borrowed or owned. The owned sources are from the shareholders. Regarding the borrowed 1.14

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funds, a general classification is based on the term of borrowing: long term or short term. The longer term ones are deposits or debentures. The short term ones are often trade creditors like suppliers. The Companies Act, 2013 seeks to protect the interests of creditors, primarily the financial ones.

Auditors and professionals- The provisions of the Act are technical in nature. As numerous compliances are involved, the monitoring mechanism is very difficult.

The Act mandates the certification regarding compliance of the provisions by professionals like company secretary in practice, chartered accountant in practice, cost accountant in practice or an advocate. These professionals also advice the companies regarding compliances of the provisions of the Act. There are 4 types of audits under the Act: Statutory audit, Secretarial Audit, Cost Audit and Internal Audit. Statutory Audit is concerned with the financial matters.

It is mandatory for all companies. Secretarial Audit is concerned with the legal matters. Cost Audit is related only with costing matters. Internal Audit has a very broad scope and can cover varied matters. Secretarial Audit, Cost Audit and Internal Audit are mandatory only for certain companies.

Directors- As the shareholders are usually large in number and scattered over a considerable distance, they elect the directors to take care of the day-to-day business of the company. Minimum number of directors is 1 for One Person Company, 2 for Private Company and 3 for Public Company. The maximum number of directors is 15 but the same may be increased by the members by passing a special resolution. For appointment as a Director, a Director Identification Number (DIN) is required to be obtained. One person shall have only one such DIN. The office of the Directors carries great powers as well as responsibilities. They are supposed to act as both as agents of the company and trustees of the money and property of the company. They may be held liable for the losses caused due to lapse in their duties. The Boards of companies in India are uni-level (single tiered) and not multi-level as found in countries like Germany.

The two main types of directors are: Executive and Non-executive directors. The former are usually in the employment of the company and have higher responsibilities related to day-to-day business.

Some of the other types of directors under the Act are: Independent Director, Woman director, Small shareholders director. Independent directors are required to be appointed by listed public companies and other public companies having paid-up capital of Rs. 10 crores or having turnover higher than Rs. 100 crores or having borrowing in excess of Rs. 50 crores. The number of Independent Directors in minimum 2 for the public companies while it is minimum of 1/3rd for listed companies. Another type of director is ‘Woman Director’. Companies having paid-up capital of more than Rs. 100 crores or turnover of more than Rs. 300 crores are required to appoint at least 1 woman director on the Board (Section 149). The listed companies may elect one small shareholders’ director to represent 1.15

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the interests of shareholders holding shares of less than Rs. 20 thousand in nominal value.

A person can become a director in maximum of 20 companies out of which the number of public companies cannot exceed 10 (Section 165). Directors cease to hold office on expiry of their term, if any or on resignation or on removal from office or on death.

A director is any person (individual) who is appointed in the capacity of a Director in any company incorporated under the Companies Act, 2013. As per the Companies Act, 2013, the term is defined as under; Under the Companies Act ●

Section 2(34) defines the term “director” as follows: “Director” means a director appointed to the Board of a company; A person can get appointed in the capacity of a director, either by the Board of Directors or by the General Body, i.e. the members of the company at their duly convened meeting.

●

Section 2(10) defines the term “Board of Directors” or “Board” as follows: “Board of Directors” or “Board”, in relation to a company, means the collective body of the directors of the company.

The term has been also used under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as LODR).

Under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 Regulation 2(d) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, defines the term “board of directors or board of trustees” as follows: “Board of Directors” or “Board of Trustees” shall mean the board of directors or board of trustees, whichever applicable, of the listed entity.

Requirement of having a director/ a Board of Directors under the Companies Act Section 149 of the Companies Act, 2013 provides for the requirement of having directors in every company. It not only specifies the minimum and maximum number of directors, but also provides for the requirement of having different categories of directors depending upon the type of company.

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Following chart covers the main types of companies and the applicable provisions in relation to directors: S Particulars No.

8

One Person Private Company Limited

Public Limited

Section 8 company

Govt. company

1.

Minimum Number of 1 Directors [Sec 149(1)(a)]

2

3

2 or 3 depending upon whether a Private/Public company

2 or 3 depending upon whether a Private/Public company

2.

Maximum Number of Directors [Sec 149(1)(b)]

15

15

Not Applicable

Not Applicable

3.

Where the maximum √ number of directors exceeds 15, a Special resolution will be required for increase in the Limit of such 15 (number of directors)

√

√

Special resolution not required

Special resolution not required

4.

Applicability for having a Woman Director [Sec 149(2)]

Not Applicable

Not At least 1 Applicable In case of a Listed Company or such other Company having prescribed8 capital

If a Public limited company having prescribed capital - At least 1

If a Public limited company having prescribed capital - At least 1

5.

Applicability for Not having an Applicable Independent Director [Sec 149(4)]

Not At least Applicable 1/3rd 9 of the total number of directors if prescribed limits are exceeded

If a Public limited company - At least 1/3rd of the total number of directors if prescribed limits are exceeded

If a Public limited company - At least 1/3rd of the total number of directors if prescribed limits are exceeded

15

Every other public company having (a) (b)

9

Type of Company

paid–up share capital of one hundred crore rupees or more; or turnover of three hundred crore rupees or more:

Explanation to sec 149(4)—For the purposes of this sub-section, any fraction contained in such onethird number shall be rounded off as one.

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Applicability for having a director who has stayed in India for a total period of not less than 182 days in the previous financial year 10 [Sec 149(3)]

Chapter 1

Type of Company One Person Private Company Limited Applicable At least 1

Public Limited

Section 8 company

Applicable Applicable Applicable At least 1 At least 1 At least 1

Govt. company Applicable At least 1

Section 149 also explains various eligibility criteria applicable to a person getting appointed as an Independent director in a company which are covered separately under the Chapter relating to the independent Directors.

Regulators- As the companies control immense economic power, the role of regulators is crucial. There are two kinds of regulators: those having power over all the companies generally and those having power over companies in specific sectors. The regulators having power generally are: Ministry of Corporate Affairs, Securities and Exchanges Board of India and Competition Commission of India.

Regulators having specific powers are Reserve Bank of India, Insurance Regulatory and Development Authority and other regulators which are concerned with a particular industry.

Majority of the powers under the Act are with Central Government. These powers are exercised by the Ministry of Corporate Affairs which is the concerned Ministry. Certain powers are available with Regional Directors and Registrar of Companies. There are total 7 Regional Directors across the country and 25 Registrars (Only in Maharashtra and Tamil Nadu, there are 2 Registrars). The powers available with the Ministry of Corporate Affairs ranges from deciding the applicability of the Act, framing rules to giving exemptions, levying penalties etc.

Judicial authorities- To decide the questions of law and facts, there is a separate quasi-judicial Tribunal set-up under the Act: National Company Law Tribunal (Tribunal). There are certain exclusive powers given to the Tribunal with the aim to expedite the decisions. The powers which were vested in Company Law Board as well as the High Court are now exercised by the Tribunal. The Tribunal is required to make an endeavour to dispose of the matter in a period of 3 months.

The ordinary Civil Courts are not allowed to deal with these matters (Section 430).

The appeal from the Tribunal can be made to National Company Law Appellate Tribunal. Appeal from the decisions of the National Company Law Appellate 10

1.18

The Companies Amendment Act, 2017 has added a provision for newly incorporated companies by virtue of which, in case of a newly incorporated company the requirement under sec 149(3) shall apply proportionately at the end of the financial year in which it is incorporated.

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Tribunal can be filed to the Supreme Court. Such appeal to the Supreme Court can only be on the questions of law.

While the Tribunal and Courts are empowered to look at the Civil matters, Special Courts are established to decide the criminal matters. To try the offences under the Act, Special Courts are established or designated under section 435. Having separate Courts is expected to expedite the trial of offences. All offences under the Act, except those which contain an element of fraud, are non-cognizable.

The Act also establishes other authorities like the Investor Education and Protection Fund and National Financial Regulatory Authority which look at a very specific function.

1.5

OVERVIEW OF THE PROVISIONS OF THE ACT

1.5.1

Essentials before incorporation

The process of incorporation of the company starts with the approval of the proposed name. The proposed name is approved by the Registrar when it does not resemble the name of any existing company and is not undesirable.

The fundamental documents of the company are: Memorandum and Articles of Association. A person dealing with the company is expected to know the contents of these documents. These documents serve as the contracts between the shareholders and the company. Memorandum of Association contains the name, state where the registered office is to be situated, objects, liability of the members and capital of the company. Articles of Association contain the rules and regulations for the internal management of the company. Articles of Association contain various provisions regarding raising of share capital, lien and forfeiture of shares, payment of dividend, conduct of meetings etc.

After approval of name, application for incorporation may be made. Currently, only one form [INC-32(SPICe)] is required to be filed. The application for name approval can be made in this form as well.

1.5.2

Universal events and compliances

All corporate transactions can be broadly classified as universal/ pervasive compliances or intermittent events and compliances. Intermittent events are those events which may or may not occur in the life of all companies. It includes raising of finances, paying returns on the finances, restructuring the company etc.

Pervasive compliances are those compliances which are required to be made by all the companies throughout their lifetime. Most crucial ones are related to the returns and reports. Every company is required to prepare financial statements and get them approved by the shareholders every year. The Board is required to prepare and send a Board’s Report to the members which contains both financial and non-financial information of the company.

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The directors take decisions by way of passing Board resolutions. Except for certain powers which are to be exercised only by the Board, other decisions can be taken by Committees of the Board. The Act mandates the constitution of Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee for certain types of companies.

Board Meetings- All companies are required to conduct at least 4 Board meetings in a year. The gap between two consecutive meetings shall not exceed 120 days.

Small companies, One Person Companies, and Dormant companies are required to hold only 2 meetings in a year. The gap between the two meetings shall be more than 90 days. For conduct of meetings of the Board, compliance with the Secretarial Standard-1 prescribed by the Institute of Company Secretaries of India is required.

Frequency of Meetings As per (SS1-2) the company shall hold at least four Meetings of its Board in each calendar year with a maximum interval of one hundred and twenty days between any two consecutive Meetings.

Further, it shall be sufficient if a One Person Company, Small Company or Dormant Company holds one Meeting of the Board in each half of a calendar year and the gap between the two Meetings of the Board is not less than ninety days.

Chart showing applicability of provisions regarding frequency of Board Meetings Sr. No.

Particulars Private Company

1.

First Meeting

2.

Subsequent Minimum 4 Minimum 2 Minimum 2 meetings meetings in a meetings in a meetings in a year year and one year and one meeting every meeting every half of a six calendar calendar year months

3.

Gap in between two meetings

1.20

IFSC Company

Section 8 Company

Small Listed Company, Company One Person Company & Dormant Company

Within 30 Within 60 Within 30 Within 30 Within 30 days of days of days of days of days of Incorporation Incorporation Incorporation Incorporation Incorporation

Gap in Not between 2 applicable consecutive meetings not to exceed 120 days

Minimum 2 Minimum 4 meetings in a meetings in a year and one Year meeting every half of a calendar year

Gap in Not between 2 applicable consecutive meetings shall not be less than 90 days

Gap in between 2 consecutive meetings not to exceed 120 days

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An introduction to decision-making mechanism in Companies

Meetings of shareholders- As noted above, the ownership of shares and management of the company are distinct. However, for certain matters, approval of the shareholders is needed. Such approval is obtained in meetings called as ‘general meetings’ of members. Every year, the company is required to hold one such meeting called as ‘annual general meeting’. Any meeting other than this is called ‘extraordinary general meeting’. The opinion of the shareholders is ascertained through passing of resolutions. There are two types of resolutions: ordinary or special. Where the number of votes cast in favour exceed the votes cast against the resolution, it is called as ‘ordinary resolution’. For a resolution to be called a ‘special resolution’, the number of votes cast in favour shall be at least thrice the number of votes cast against the resolution. (Section 114) To ensure participation of all shareholders in the decision making, certain businesses are transacted by postal ballot. In such matters, the right to vote can be exercised though it is not possible to attend the meeting. Additionally, companies whose shares are listed and companies having more than 1000 members are required to provide the facility of voting through electronic means (Section 108).

For conduct of meetings of members, compliance with the Secretarial Standard-2 prescribed by the Institute of Company Secretaries of India is required to be observed.

1.5.3

End of life of the company

As the company is a separate legal entity through legal fiction, its existence can be destroyed only through law. Such means may be voluntary or by way of an action of regulator. There are multiple ways of erasing the existence of the Company like striking off the name of the Company under Chapter XVIII, winding up, voluntary liquidation (under the Insolvency and Bankruptcy Code, 2016) etc.

1.6

DECISION-MAKING MECHANISMS UNDER THE COMPANIES ACT, 2013

As noted above, there is a divestment of ownership and management in companies. The shareholders are the owners of the company who can legally exercise all the powers which are vested in the company and are clearly the higher authority. Further, they also enjoy the powers of ratifying the acts of directors which are ultra vires the mandate of the board but intra vires the mandate of the company. This position solidifies the argument that the directors are akin to agents.

The whole commercial set up of a company was aptly explained by the Supreme Court11 in the following words: “A company is, in some respects, an institution 11

Life Insurance Corporation of India v Escorts Ltd. and Ors., MANU/SC/0015/1985 : AIR 1986 SC 1370.

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Meetings–Notices, Resolutions & Minutes under the Companies Act, 2013

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like a State functioning under its ‘basis Constitution’ consisting of the companies Act and the Memorandum of Association. Carrying the analogy of constitutional law a little further, Gower describes “the member in general meeting” and the directorate as the two primary organs of a company and compares them with the legislative and the executive organs of a parliamentary democracy where legislative sovereignty rest with Parliament, while administration is left to the Executive Government, subject to a measure of control by Parliament through its power to force a change of Government. Like the government, the directors will be answerable to the ‘Parliament’ constituted by the general meeting.

But in practice (again like the Government), they will exercise as much control over the Parliament as that exercises over them although it would be constitutionally possible for the company in general meeting to exercise all the powers of the company, it clearly would not be practicable (except in the case of one or two - man- companies) for day-to-day administration to be undertaken by such a cumbersome piece of machinery. So the modern practice is to confer on the Directors the right to exercise all the company’s powers except such as general law expressly provides must be exercised in general meeting.

But a perusal of the provisions of the Companies Act itself makes it clear that in many ways the position of the director vis-a-vis the company is more powerful than that of the Government vis-a-vis the Parliament. The strict theory of Parliament sovereignty would not apply by analogy to a company since under the Companies Act, There are many powers exercisable by the Directors with which the members in general meeting cannot interfere. The most they can do is to dismiss the Directorate and appoint others in their place, or alter the articles so as to restrict the powers the Directors for the future.”

Further, the directors are able to delegate their powers further. While this may appear to be prima facie in conflict with the maxim of “delegatus non potest delegare” (a delegate cannot delegate further), it does not operate in Company form. It was held in The Barium Chemicals Ltd. and Anr vs The Company Law Board and Others12 by the Supreme Court that “the maxim “delegatus non potest delegare” must not be pushed too far. The maxim does not embody a rule of law.

It indicates a rule of construction of a statute or other instrument conferring an authority. Prima facie, a discretion conferred by a statute, on any authority is intended to be exercised by that authority, and. by no other. But the intention may be negatived by any contrary indications in the language, scope or object of the statute. The construction that would best achieve the purpose and object of the statute should be adopted.”

Hence, there are certain approvals which are required to be obtained from the shareholders while there are certain original powers of the Board which cannot be 12

1.22

MANU/SC/0037/1966, AIR 1967 SC 295

Chapter 1

An introduction to decision-making mechanism in Companies

encroached upon by the members of the Company. This position is codified in sub-section (1) and (2) of section 179 of the Act as follows: (1)

The Board of Directors of a company shall be entitled to exercise all such powers, and to do all such acts and things, as the company is authorised to exercise and do: Provided that in exercising such power or doing such act or thing, the Board shall be subject to the provisions contained in that behalf in this Act, or in the memorandum or articles, or in any regulations not inconsistent therewith and duly made thereunder, including regulations made by the company in general meeting: Provided further that the Board shall not exercise any power or do any act or thing which is directed or required, whether under this Act or by the memorandum or articles of the company or otherwise, to be exercised or done by the company in general meeting.

(2)

No regulation made by the company in general meeting shall invalidate any prior act of the Board which would have been valid if that regulation had not been made.

It shall also be noted that the shareholders can invest either through preference shares or through equity shares. As the preference shares are required to be redeemed within a period of 20 years13 and enjoy limited voting rights14, preference shares are not considered for the purpose of this analysis. Hence, only equity shareholders, whether holding ordinary shares or shares with differential voting rights, have a say is the decisions regarding the Company. Members, hence, basically hold a chose-in-action for certain rights as members. The divestiture noted above means that the decision making process in companies can be divided into 2 processes: first level decisions which deal with the appointment of directors and other structural changes and second level decisions will include all incidental decisions which follow thereafter. The purview of second level decisions is much wider and less regulated in the Companies Act, 2013 than the first level decisions due to the reasons which justify the delegation. They give the Board the residuary powers of decision-making. The control over secondary level decisions can be established through the Articles of Association of the Company which contain the regulations for management of the company.15 The Articles are nothing but a contract between the shareholders entered at the time of incorporation of the company. The same are equally binding on the other members who become 13 14

Pursuant to the provisions of sub-section (2) of section 55, the preference shares issued by companies except those issued for infrastructure projects are to be redeemed within 20 years.

Pursuant to the provisions of sub-section (2) of section 47, the preference shareholders have voting rights only for the resolutions which affect their rights and not on all resolutions concerning the company. They acquire complete voting rights when the dividend is unpaid for 2 consecutive years.

15

Sub-section (1) of section 5 of the Act

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members of the company at a later date. While making such provisions, legal requirement shall act as minimum threshold. ‘Articles cannot provide for anything lesser than that but anything more stringent can be provided’.16 The Articles are thus treated as statutory contracts which are subject to the provisions in the Act and the Memorandum.

The commercial practice of using contracts to control the decisions of the Board has witnessed considerable changes in the past half-century. The courts are grappling with the question of enforceability of the contracts entered into shareholders inter se. Such agreements may take the form of pooling agreements, memorandum of understanding or certain clauses in joint venture agreements. The object behind entering into all these agreements is to protect the resources being invested. When these agreements are entered into between all shareholders with company as a consenting party, they often result into being incorporated in the Articles by way of an amendment or substitution as the case may demand.

However, the shareholders agreements which are not made part of Articles are not held to be enforceable by the courts. Supreme Court recognised this principle of not enforcing what is not a part of Articles in the case of V. B. Rangaraj v V.B. Gopalakrishnan17. Bombay High Court extended this principle to all other matters in the case of IL And FS Trust Co. Ltd. v Birla Perucchini Ltd.18 A severe view was taken of a pooling agreement in Rotta India Ltd. v. Venire Industries Ltd.19 ‘It is thus clear that the specific performance of pooling agreements between shareholders to vote in a particular manner cannot be extended to denude or sterlise the powers of directors and any such agreement would be unenforceable’.

Courts are hence unwilling to recognise the privately entered agreements between the shareholders although the shareholders occupy a controlling position in the company.20 However, where the company has derived any benefit out of such agreement, it shall be binding on the company only for the terms on which it has acted upon as held in Harshadbhai B Patel v. Bhagirath Construction Co. (P.) Ltd.21 The Articles, being a contract between members is not enforceable by Directors or employees.22 It is made abundantly clear by the courts that even shareholders in other capacities cannot sue on this contract. But the Articles present an 16

Amrit Kaur Puri v Kapurthala Flour, Oil And General Mills Company Private Limited [1984] 56 CompCas 194 (P&H), MANU/PH/0217/1982

17

AIR 1992 SC 453, MANU/SC/0076/1992

18

2004 121 CompCas 335 Bom, MANU/MH/1057/2002

19

[2000] 100 Comp. Cas. 19

20

The pleading of applicability of doctrine of identification was rejected by the Supreme Court in Reliance Natural Resources Limited v. Reliance Industries Limited (2010) 7 SCC 1.

[2014] 185 CompCas 58 (CLB), MANU/CL/0018/2013

21 22

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Re New British Iron Co [1898] 1 Ch. 324

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An introduction to decision-making mechanism in Companies

opportunity to shareholders to come together and impose common restrictions on operations of these agents.

After ascertaining the powers of the shareholders and the Board, it should be noted that these powers are exercisable through meetings or other processes of voting recognised under the Act. While the respective chapters deal with the provisions, certain points related to delivery of notices and importance of minutes is required to be noted here. The right to receive notices of the meetings is a statutory right of the shareholders as well as directors. Where the shareholder is not given any notices, his right to receive notices and also to exercise his voting rights is impaired. Such impairment of right may amount to oppression and mismanagement. Indeed, non-delivery of notices often frames the fulcrum of oppression and mismanagement petitions. Aprt from this consequence, a penalty of Rs. 25,000/- is leviable on every officer of the company whose duty is to give notice of Board Meetings and who fails to do so. Regarding the notices of meetings of members, section 101 specifically provides that any accidental omission to give notice to, or the non-receipt of such notice by, any member or other person who is entitled to such notice for any meeting shall not invalidate the proceedings of the meeting. As no penalty or fine is prescribed under the said Section, section 450 shall be applicable and the company and every officer of the company who is in default or such other person shall be punishable with fine which may extend to Rs. 10,000/-.

The minutes are the records of the proceedings of the meeting. The minutes of each meeting shall contain a fair and correct summary of the proceedings thereat.

The minutes have a great evidentiary value as until the contrary is proved, the meeting shall be deemed to have been duly called and held, and all proceedings thereat to have duly taken place, and the resolutions passed by postal ballot to have been duly passed and in particular, all appointments of directors, key managerial personnel, auditors or company secretary in practice, shall be deemed to be valid. [Section 118 (8)].

To summarise, the decisions of the Company are made either by the Directors or the Members and are subject to the legal provisions and its memorandum and articles of association. It is crucial that the procedures regarding meetings are followed correctly and proper recording made as the meetings for the substratum of corporate decisions.

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