SEBI requires disclosure by banks in case of NPA divergence

By Mayank Agarwal, (finserv@vinodkothari.com)

The banking sector is one of the pillars for economic development of any country, and any well balanced and healthy economy is largely dependent on a transparent and credible banking system. In recent years, the Indian economy has recognized the importance of a well-regulated and fundamentally strong banking framework and made it one of its priorities to clear out the vast amount of unhealthy practices and activities that tread on the fine line of regulation. A slew of new policies which led to clearer recognition norms, stricter disclosure requirements, more hands-on approach by the Reserve Bank of India (RBI) and an overall environment that is much more transparent than before are all testimony to the fact that the banking institutions are in for a major overhaul. The introduction of practices such as Asset Quality Review (AQR), restructuring norms and the introduction of Insolvency and Bankruptcy Code (IBC) by the RBI were steps aimed towards a fundamentally cleaner banking system. Read more

Hundreds of LLPs may be vanishing soon

By Sandeep Kumar Mishra, (corplaw@vinodkothari.com)

Introduction

After issuing of show cause notices[1] (SCNs) for striking of names of more than 3 lakh non-operating companies, the Registrar has now taken the same action for LLPs. It seems that government has decided to heavily come down on existence of non-operative Limited Liability Partnerships (‘LLPs’) or say fake firms which are causing significant buzz all over in the corporate sector. The Finance Minister had already indicated through his bold statement that actions will be initiated against the body corporate which have been strictly meant for the purpose of circulation of black money and are not carrying any business activity. It now seems that the Registrar of Companies  (RoC) Kolkata, have given the non-operative firm an ultimatum to either make the compliances and start doing the business activity for which they were formed or else be ready to pack up for ever.

Looking at the long list of LLPs which have been issued SCNs under section 75 of Limited Liability Partnership Act, 2008 (the “Act”); it is evident that these LLPs have failed to comply with the provisions of the Act. These LLPs are required to either furnish reason for non-compliance or get struck down from the Register of Companies being maintained by the RoC.

Provisions of law

Section 75 of the Act read with rule 37(1) of Limited Liability Partnership Rules, 2009 (‘LLP Rules’) provides that –

(a) where the Registrar has reasonable cause to believe that an LLP is not carrying on any business or operation for a period of two years or more; or

(b) where the LLP is not carrying out business for a period of one year or more and has made an application in Form 24 to the Registrar, with the consent of all partners of the limited liability partnership for striking off its name from the register

the Registrar shall send a SCN to such LLP and all its partners, of his intention to strike off the name of the limited liability partnership from the Register and at the same time request the recipients to send their representations along with copies of the relevant documents, if any, within a period of one month from the date of the SCN.  However, such SCN shall not be given where the LLP has made an application for striking off its name.

Provided further that where the limited liability partnership is regulated under a special law, the above application for removal of its name shall be accompanied by approval of the regulatory body constituted or established under that law.

Registrar my struck off name of limited liabilities partnership firm from register of Limited liabilities partnership maintain by ROCs, after giving reasonable opportunity of being heard—

Curing step taken by the ROCs

Recently, RoC of West Bengal, Shillong and Odisha has sent SCN to hundreds of LLPs.  This bold step taken by the government is giving clear indication to the Partner/Promoter of LLPs, who device such mechanism merely for circulation of fund under shadow concept separate legal entity of body corporate. Either to comply with provision of law in true sprite in letter or cease to be perpetual existence as separate legal entity. With these SCNs coming, now LLPs are rushing to professionals to seek advisory on the response to be submitted, If such LLPs accept their default and agree for being struck down then the designated directors shall be held liable for the non-compliances made so far and on the other side if someone wants to revive the LLPs then the burden of making the defaults good shall be nothing less than incurring huge expenses.

A critical question mark on the fate of creditors and stakeholders

With the SCNs flowing in, the names of most of the LLPs will get struck off, either willingly or unwillingly at the hands of the RoCs. However, one needs to understand the fate of creditors and other stakeholders holding any interest in such LLPs.

Conclusion

With the wide spread epidemic of non-operative and bogus LLPs encompass in the Indian corporate sector taking shadow of concept of separate legal entity for circulation of  fund and deriving tax benefit, Now the ROCs have come up with a well devised mechanism to cure the same from its root. At this moment, we await to see what shall be the next step of the ROCs against the response being submitted by the LLPs which more or less shall be over by the end of this month as all of the LLPs are given just one month time to respond to the SCNs. To sum up, ROCs have turned the tables in the game, better late than never.

Further we have analyzed similar issue pertaining to strike off of more than 3 lakh companies from register of companies maintained by ROCs

http://vinodkothari.com/corporate-laws/


[1] http://www.icai.org.in/LLP%20Rules.pdf

http://www.mca.gov.in/Ministry/pdf/PublicNotice_27072017.pdf

http://www.mca.gov.in/Ministry/pdf/ROCWBLLPNotice_26072017.pdf

http://www.mca.gov.in/Ministry/pdf/Notice_listofLLP.pdf

Revised Secretarial Standards- Key Amendments

By Team Vinod Kothari & Company, (corplaw@vinodkothari.com)

Considering the various changes brought in the Companies Act, 2013, vide barrage of notifications, clarifications and amendments, there was a need to align the current Secretarial Standards viz. Secretarial Standard -1 (‘SS-1’) and Secretarial Standard -2 (‘SS-2’) with the changes in the provisions of the Act brought by virtue of such notifications, amendments etc.. Considering this, the Institute of Company Secretaries of India has revised the aforesaid Secretarial Standards issued in the year 2015. The revised standards will be effective from October 1, 2017.

Going through the revised text, it seems that the changes have been brought to align with the provisions of the Act keeping in mind the recent changes thereon, though, certain things are still said to be remained unattended. An analysis on the revised text is presented in the table below:

SS 1- Key Amendments

 

Para No Changes as per revised SS-1 Our Analysis
Scope has been amended to exempt Section 8 companies as well along with OPCs, from the applicability of the Standard. Section 8 Companies were already exempted from the applicability of Secretarial Standards vide MCA’s notification dated June 5, 2015, wherein the companies have been exempted from the applicability of Section of the Act, which deals with Secretarial Standards.
Definition of Secretarial Auditor now also includes a firm of Company Secretary(ies) in Practice. This has been inserted to provide clarity.
1.2 Earlier only Time, Place, Mode and Serial Number of Meeting was to be mentioned in the notice of the meeting now the Day has been specifically provided as per the Act This is a clarificatory change
1.2.2 The restriction of not holding a Board Meeting on a National Holiday specifically has gone away with. The same is in contradiction with the requirement of Act, which prohibits BM to be held on a National Holiday.
1.2.3 Any Director may participate through Electronic Mode in a Meeting unless the Act or any other law specifically prohibits such participation through Electronic Mode in respect of any item of business.

 

The provision with respect to the option of the company to provide video-conferencing facility has been done away with.

Now the Chairman has no authority to allow a Director to participate by electronic mode on restricted items. This has been done to align the same with the Act. Because, no such power was given to the Chairman in Act.

 

The existing language was conflicting with the provisions of the Companies Act, 2013 and hence, been deleted.

1.3 In case of the Meeting is conducted at a shorter Notice, the company may choose an expedient mode of sending Notice and Agenda. No mode of sending notice at a shorter notice was provided in the standards previously, with this amendment it is further clarified that any faster mode of sending the Notice.
1.3 The proof of sending of Notice has to be maintained for such period as decided by the Board, which shall not be less than 3 years from the date of Meeting. This will increase compliance burden for the companies.
1.3.4 The Notice shall inform the Directors about the option available to them to participate through Electronic Mode and provide them all the necessary information.

 

Further, the director may intimate his intention of participation through Electronic Mode at the beginning of the Calendar Year, which shall be valid for such Calendar Year.

This mandates every company to provide the option of participation through electronic mode, to the directors in every meeting.

 

This will be a one-time compliance annually in a calendar year.

1.3.6, 1.3.7 Sending notices, agenda, agenda notes and other documents by courier has been restricted. Only speed post and registered post are now accepted.
1.3.7 In case of alternate directorship, notice is given to both alternate and original director, however, the mode of sending Notice, Agenda and Notes on Agenda to the original director shall be decided by the company. It is clarified that the alternate director will receive notice and agenda as per the mode prescribed by the director, if any, however, the mode of sending the notice to the original director is on company’s discretion.
1.3.7 Proof of sending Agenda and Notes on Agenda and their delivery shall be maintained by the company for such period as decided by the Board, which shall not be less than three years from the date of the Meeting.

 

Companies will have to ensure such additional requirement.
1.3.10 Any item not included in the Agenda may be taken up for consideration with the permission of the Chairman and with the consent of a majority of the Directors present in the Meeting only, i.e., the requirement of consent of Independent Director has gone away with. This will provide ease in tabling urgent business matters at the meeting.
2.1 The company can 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 without holding meeting in every quarter. The strict requirement of holding board meeting in every quarter has gone away with.

 

However, for listed companies such relaxation may be redundant because of the periodical filing requirements with the stock exchange.

3.2 In case of a private company, a Director shall be entitled to participate in respect of such item after disclosure of his interest.

 

Further, If the item of business is a related party transaction, then he shall not be present at the Meeting, whether physically or through Electronic Mode, during discussions and voting on such item.

 

The amendment seems to create confusion as it has mixed intent of both Section 184 and Section 188 of the Act.

 

Going by the language of the revision, the related party will not be able to vote at the meeting on any transaction (the scope goes much beyond the transactions specified in Section 188). This will be very difficult for companies, especially private companies which are mostly closely held and even otherwise.

4.1. The mode of presence should be mentioned in attendance register also.

 

If an attendance register is maintained in loose-leaf form, it should be bound periodically, atleast once in every three years.

 

Further, where there is no CS, the attendance register must be authenticated by the Chairman or by any other Director authorised by the Chairman and the fact of such participation is must be recorded in the Minutes as well.

 

Even after a person ceases to be a Director, he shall be entitled to inspect the attendance register of the Meetings held during the period of his Directorship.

This will impose additional compliance burden on the companies which is not required as the minutes will already contain mode of presence and will also be preserved permanently.

 

Earlier the power of authentication was with the CS of the Company, however, such power has also been extended any other director who has been authorised in this regard.

 

 

This additional has provided an additional option for the directors to inspect the attendance register of the Meetings held during the period of his Directorship.

4.1.6 The attendance register shall be preserved for a period of at least eight financial years from the date of last entry made therein and may be destroyed thereafter with the approval of the Board. Clarity regarding the tenure has been provided.
4.2 Leave of absence shall be granted to a Director only when a request for such leave has been communicated to the Company Secretary or Chairman or to any other person authorised by the Board to issue Notice of the Meeting. Now, leave of absence can also be communicated to any person duly authorised by the Board to issue notice of the Meeting.
5.1.2 In case of a private company, the Chairman may continue to chair and participate in the Meeting after disclosure of his interest.

 

If the item of business is a related party transaction, the Chairman shall not be present at the Meeting, whether physically or through Electronic Mode, during discussions and voting on such item.

 

The insertion seems to bring further ambiguities as the first insertion provides that the Chairman may continue to chair and participate in the Meeting after disclosure of his interest.

 

However, in case of RPTs, the chairman shall not be present in the Meeting.

 

The intent of Section 184 and Section 188 has been mingled resulting into practical difficulties for companies.

5.1.2 The Chairman shall ensure that the required Quorum is present throughout the Meeting and at the end of discussion on each agenda item the Chairman shall announce the summary of the decision taken thereon.

 

This brings additional responsibilities on the Chairman.
6.1.1 Any Director other than an Interested Director, shall decide, before the draft Resolution is circulated to all the Directors, regarding the approval of the Board for a particular business shall be obtained by means of a Resolution by circulation.

 

The whole-time director has been changed to any director, providing ease in compliance to the companies.
6.2.2 Proof of sending and delivery of the draft of the Resolution and the necessary papers shall be maintained by the company for such period as decided by the Board, which shall not be less than three years from the date of the Meeting.

 

 

Earlier no time limit was specified this will impose additional compliance burden on companies.
6.2.3 An additional two days should be added for the service of the draft Resolution, in case the same has been sent by the company by speed post or by registered post or by courier, while computing the date of circulation of the draft of the Resolution given to the Directors to respond in case of Resolution by Circulation.

 

This additional two days have been given in order to provide sufficient time for the directors to decide, post receiving the draft.
6.3.2 The Resolution by circulation, if passed, shall be deemed to have been passed on the earlier of:

(a) the last date specified for signifying assent or dissent by the Directors, or

(b) the date on which assent has been received from the required majority, provided that on that date the number of Directors, who have not yet responded on the resolution under circulation, along with the Directors who have expressed their desire that the resolution under circulation be decided at a Meeting of the Board, shall not be one third or more of the total number of Directors; and shall be effective from that date, if no other effective date is specified in such Resolution.

This has been aligned with the Act.

 

However, SS also includes those directors who have not responded along with those who have expressed their desire that the resolution under circulation be decided at a Meeting of the Board. The same will cause practical difficulties to the companies.

7.2.1.3 The requirement of noting all appointments made one level below the Key Managerial Personnel by the Board has been done away with.

 

This will reduce minuting requirements.
7.2.2.1 (o) Consideration of any item other than those included in the Agenda with the consent of majority of the Directors present at the Meeting and ratification of the decision taken in respect of such item by a majority of Directors of the company.

 

Now the additional agendas taken at the meeting, the decision of which will have to be ratified even by the majority of the directors.
7.3.4 Reference to the earlier resolution to be mentioned in Minutes if a resolution is passed in supersession of it. This is a new insertion, which will provide complete facts and details.
7.4 Proof of sending draft Minutes and its delivery shall be maintained by the company for such period as decided by the Board, which shall not be less than three years from the date of the Meeting. Earlier no time period was provided for maintenance of these registers this will impose additional compliance burden on companies.
7.5.3 The alteration of Minutes entered shall be made only by way of express approval of the Board at its subsequent Meeting at which the Minutes are noted by the Board and the fact of such alteration shall be recorded in the Minutes of such subsequent Meeting. This has been added to in order to provide complete and correct data in the minutes. No such provision was there earlier.
7.6.4 Company needs to maintain the proof of sending the certified copy of signed minutes to the directors for 3 years. Like other documents, this has also to be maintained for three years.
9 The Report of the Board of Directors shall include a statement on compliances of applicable Secretarial Standards. This amendment will require the companies to specify in the Board’s Report, the fact that the Company is complying with the provisions of Secretarial Standards 1 and 2. No such specific disclosure was required earlier in Boards Report.

 

SS 2- Key Amendments

 

Para No. Changes as per revised SS-2 Our analysis
Scope has been amended to exempt Section 8 companies in addition to OPCs, from the applicability of the Standard. Ministry vide its notification dated June 5, 2015, has already exempted Section 8 companies from the applicability of Section 118 through which Secretarial Standards were prescribed. This aligns with such exemption.

 

Definition of Secretarial Auditor now also includes a firm of Company Secretary(ies) in Practice.

 

Though the intent was not to exclude a firm of PCS, however, the existing definition was not clear. This has been inserted to provide clarity.
1.2.2 The proof of sending the notice shall now be retained by or on behalf of the company for such period as decided by the Board, which shall not be less than three years from the date of the Meeting

 

No specific period has been mentioned in the existing text due to which an ambiguity was there as in what would be the time period for such retention of the proof of sending notice. Now, minimum 3 years period has been provided.
1.2.3 Notice shall simultaneously be hosted on the website till the conclusion of the meeting.

 

Listed companies were already required to place the notice on their website after dispatch of the same to the members by virtue of Rule 20 of MGT Rules. The said Rule as well as the existing para did not provide any timeline for keeping the notice on its website leaving it open ended. The amendment now clarifies that the notice shall be hosted on the website till the conclusion of the respective meeting.

 

1.2.4 Now, the notice of AGM should also specify the serial number of the Meeting. Companies generally specify the serial number of the meetings in the notice, however, this should now be specifically mentioned in order to comply with SS-2.

 

1.2.4 Exemption from providing the route map and prominent landmark has been provided in case of the following:

 

(a)   a company in which only its directors and their relatives are members;

(b)  a wholly owned subsidiary.

 

The existing requirement was not relevant for a company whose shares are held by directors only or a WOS of another company as the intent was to make it convenient for the members to attend the meetings.
1.2.4 In case of government companies, the AGM should be held at its registered office or any other place with the approval of the Central Government, as may be required in this behalf.

 

Similar requirement was brought by the Ministry vide its Notification dated June 5, 2015.

 

However, it is pertinent to note that the Ministry had come with another Notification on June 13, 2017 to amend the aforesaid June 5, 2015 Notification wherein it has been provided that Govt. companies may hold their AGM, at, (1) registered office, (2) such other place within the city, town or village in which the Registered Office is situated or (3) a place approved by the Central Government.

 

The revised text in SS seemingly missed the second category.

 

1.2.4 Notice of a private company shall specify the entitlement of a member to appoint proxy in accordance with this para, unless otherwise provided in the articles.

 

This is in line with the exception provided by the Ministry through June 05, 2015 Notification from Section 105 of the Act.
1.2.5 No resolutions are required to be stated in the notice for items of Ordinary Business. Existing text provided that where the auditors or directors to be appointed are other than the retiring auditors or directors, then the same shall be provided in the notice by way of a resolution even if the same falls under ordinary business.

 

The revised text has removed this requirement.

 

1.2.5 Explanatory statement to be annexed with the notice of private companies may not include the nature of the concern or interest (financial or otherwise of the directors, KMPs and their relatives along with other details as mentioned in the para if the Articles of such companies provide otherwise.

 

This is in line with the exception provided by the Ministry through June 05, 2015 Notification from Section 102 of the Act.
1.2.6 Private companies may not give notice and accompanying documents at twenty-one clear days in advance of the meeting if Articles provide otherwise.

 

This is in line with the exception provided by the Ministry through June 05, 2015 Notification from Section 101 of the Act.
1.2.7 The changes are as follows-

1.      Consent for holding a meeting at shorter notice shall have to be received by the company prior to the time fixed for the meeting;

 

2.      Companies are not required to observe the provisions relating to appointment of proxy if all the members entitled to vote give their consent to holding the meeting at shorter Notice; and

 

3.      Private companies may provide in its Articles, the manner of obtaining consent for a meeting at a shorter notice including the number of members from whom such consent will be required.

 

Considering the revised text, the following should be noted-

1.      The revised text has not considered the proposed amendment u/s 101 by virtue of the Companies (Amendment) Bill, 2017 wherein the manner of obtaining consent from the members is being proposed to be bifurcated considering the nature of the meeting viz. AGM or EGM;

 

2.      The change in the existing requirement of receiving the consent one day prior to the meeting to a time prior to the time fixed for the meeting is a welcome change considering the practical difficulties faced by the companies.

 

However, how will a company comply with the proxy requirements if the consent is received on the very day of the meeting is not clear as the consent may come at any time prior to the time fixed for the meeting and a proxy form has  to be submitted 48 hours prior to the date of meeting.

 

3.      The change related to private companies is in line with the exception provided by the Ministry through June 05, 2015 Notification from Section 101 of the Act.

 

5.1 Chairman of a meeting of private company may be appointed in terms of the provisions in its Articles.

 

This is in line with the exception provided by the Ministry through June 05, 2015 Notification from Section 104 of the Act.
6.1 The restriction on the proxies to be members of a Section 8 companies has been removed.

 

Further, private companies may appoint proxies in the manner as provide in their articles.

Though Section 105 did not provide for any restriction on a section 8 company, however, the existing text in this para had provided that the proxies have to be member also. This was a contradiction with the provisions of the Act which gets clarified by virtue of the deletion of the same.

 

The change related private companies is in line with the exception provided by the Ministry through June 05, 2015 Notification from Section 105 of the Act.

 

New Para New insertion.

 

Para 6.6.3.  In case of remote e-voting:

 

(i)                the letter of appointment of representative(s) of the President of India or the Governor of a State; or

 

(ii)              the authorisation in respect of representative(s) of the Corporations;

 

should be received by the scrutiniser/ company on or before close of e-voting.

 

In case of postal ballot such letter of appointment/ authorisation shall be submitted to the scrutiniser along with physical ballot form.

 

If the representative attends the Meeting in person to vote thereat, the letter of appointment / authorisation, as the case may be, shall be submitted before the commencement of Meeting.

 

 

Unlike proxies, there was no clarity in regard to the manner of submission of appointment/ authorisation letter of authorised representatives. In absence of a clear provision, the companies, scrutinisers appointed for meetings have faced practical difficulties and diverse practice is being followed.

 

The followings are to be noted-

 

1.      In case of remote e- voting such authorisation shall have to be received by the company/ scrutiniser on or before the closing of remote e-voting i.e. one day prior to the date fixed for physical meeting in terms of Rule 20 of MGT Rules. However, obtaining of such an authorisation in case of remote e- voting is meaningless as the identity of the person actually voting remains unknown.

 

2.      In case of presence of such authorised persons at the meeting for the purpose of voting, the authorisation letter shall be submitted before the commencement of the meeting;

 

3.      In case of postal ballot, the same shall be sent with the ballot form itself.

 

 

6.7.3 A proxy need not be informed of the revocation. This will reduce compliance on the part of member. However, without such intimation, how will the proxy come to know about the revocation remains unclear as the same may create confusion at the physical meeting.

 

7.1 Every resolution, except a resolution which has been put to vote through remote e-voting or on which a poll has been demanded, shall be proposed by a Member and seconded by another Member.

 

The requirement of proposing and seconding seemed vague in case of remote e-voting.  Same in case of a poll as a poll can be conducted only on demand or at the discretion of the Chairman. The Act does not provide any such requirement of a resolution to be proposed and seconded.

The removal is a welcome change.

 

7.3 In a meeting of a private company voting by show of hands shall be in accordance with the Articles.

 

This is in line with the exception provided by the Ministry through June 05, 2015 Notification under Section 107 of the Act.
7.4 In a meeting of a private company a poll shall be conducted in accordance with the Articles.

 

This is in line with the exception provided by the Ministry through June 05, 2015 Notification under Section 109 of the Act.
7.5.2 The changes are as follows-

 

In case of a private company, a member who is a related party is entitled to vote on such Resolution.

 

Further, a member who is a related party is entitled to vote on a Resolution pertaining to approval of any contract or arrangement to be entered into by:

 

a.       One Govt. company with any other Govt. company; or

b.      An unlisted Govt. company with the prior approval of competent authority.

 

 

This is in line with the exception provided by the Ministry through June 05, 2015 Notification under Section 188 of the Act for the private companies and Govt. companies.

 

However, listed companies will still have to observe the provisions of Listing Regulations.

 

 

 

8.4 The requirement of authorising the Chairman or in his absence, any other Director by the Board to receive the scrutiniser’s register, report on e-voting and other related papers with requisite details, has been deleted.

 

The deletion will not impact the current position as similar requirement is there under Rule 20 of MGT Rules.
8.5.2 Newspaper advertisement of notice of the meeting shall be placed till the conclusion of the meeting.

 

Please refer comments as provided under notice of meeting.
8.6.1 Scrutiniser to submit his report to the Chairman or authorized person within 3 days from the date of Meeting.

 

This is in line with the provisions under Rule 20 of the MGT Rules.

 

However, this will not impact the listed companies as the declaration of results is required within 48 hours of conclusion of the meeting in terms of Listing regulations.

 

8.6.2 The voting details is now required to be displayed for at least three days on the Notice Board of the company at its Registered Office and its Head Office as well as Corporate Office, if any, if such office is situated elsewhere.

 

Companies will have to ensure that the results are displayed for atleast three days. There was no timeline earlier.
9.2 Conduct of poll by private companies shall be in accordance with the Articles.

 

This is in line with the exception provided by the Ministry through June 05, 2015 Notification under Section 109 of the Act.
9.5.1 The scrutiniser(s) shall submit his report within seven days from the last date of the poll to the Chairman.

 

In case of a private company, the declaration of result of poll shall be in accordance with this para, unless otherwise provided in the Articles.

Rule 21 of MGT Rules does not provide for any such timeline for submission of report by the scrutiniser in case of voting in a poll. The revised text provides for 7 days timeline to the scrutiniser to submit his report and 2 days of submission of such report for declaration of such result by the Chairman.

 

Considering the fact that the provisions of Section 109 (Demand for Poll) are not applicable to a company covered under Section 108 (Mandatory voting through electronic means), this will impact only those companies which are not covered under Section 108.

 

In regard to private companies, the change is in line with the exception provided by the Ministry through June 05, 2015 Notification under Section 109 of the Act.

 

13.2 The qualifications, observations or comments or other remarks if any, mentioned in the Secretarial Audit Report issued by the Company Secretary in Practice, which have any material adverse effect on the functioning of the company, should be read at the AGM.

 

Now, only the qualifications, observations or comments which have any material adverse effect on the functioning of the company are required to be read out at the AGM. However, what would be the manner of determination of such material impact have not been provided.
15.3 If a meeting is adjourned for a period not exceeding three days and where an announcement of adjournment has been made at the meeting itself, giving in the details of day, date, time, venue and business to be transacted at the adjourned meeting, the company may also opt to give notice of such adjourned Meeting either individually or by publishing an advertisement.

 

Generally, a 3 days’ notice is required for a meeting adjourned for less than 30 days. However, if such an adjournment meeting is held within 3 days and the venue, date, time etc. has already been decided in the original meeting, the company has been given an option to further send a notice.

The insertion is not relevant.

15.4

 

A meeting other than an AGM or a requisitioned meeting stands adjourned for want of quorum, then the adjourned meeting shall be held on the same day, in the next week at the same time and place or on such other day, irrespective of the fact that the day be a National Holiday.

 

An adjourned AGM, adjourned for want of quorum or otherwise, shall not be held on a National Holiday, only if any item relating to filling up of vacancy of a director retiring by rotation is included in the agenda of such adjourned Meeting.

 

The company shall ensure compliance of the provisions of holding the AGM every year, including adjournment thereof within a gap of not exceeding 15 months from the date of the previous AGM or within such extended period permitted by the Registrar of Companies.

 

1.      Now companies will be able to adjourn an EGM even on a national holiday. The Act is silent on this.

 

2.      Further, restriction on holding of an adjourned AGM on a national holiday shall be applicable only on a situation where an item relating to filling up of vacancy of a director retiring by rotation is pending to be decided in such adjourned meeting. Therefore, for discussions of items other than the above, an AGM may be adjourned to be held on a national holiday too.

 

3.      In regard to changes for private companies the same is in line with the exception provided by the Ministry through June 05, 2015 Notification under Section 96 and 100 of the Act.

 

 

16.6.1 The scrutiniser shall submit his report within seven days from the last date of receipt of postal ballot forms to the Chairman or a person authorised by him, who shall countersign the same.

 

The same has been aligned with Rule 22 of MGT Rules. However, the listed companies will still have to observe the requirements of the Listing Regulations.
16.6.2 Scrutiniser’s report shall be displayed for at least three days.

 

A period of three days has to be maintained like in case of displaying the results of AGM.
17.1.6 Minutes of Meetings, if maintained in loose-leaf form, shall be bound periodically at least once in every three years.

 

Now the maximum periodicity has been provided.
17.2.1.1 The conclusion time of the AGM is not required to be mentioned in the minutes. Not a relevant change.
Provisions for Nidhi Companies
1.2.1 In case of a Nidhi Companies, notice may be served individually only on Members who hold shares of more than 1000 rupees in face value or more than 1% of the total paid-up share capital of the company, whichever is less. For other Members, Notice may be served by a public notice in newspaper circulated in the district where the Registered Office of the company is situated and by displaying the same on the Notice Board of the company No such option was available to the Nidhi Companies as per the erstwhile SS. However, the same has been aligned with the MCA’s exemption provided to Nidhi Companies vide its notification dated June 5, 2015.
7.5.1 No Member shall exercise Voting Rights on poll in excess of five percent of total Voting Rights of equity shareholders.
16.2 Nidhis are not required to provide e-voting facility to their Members.

 

Brief of Amendments reflecting in FDI Policy, 2017

CS Vinita Nair, corplaw@vinodkothari.com

The Department of Industrial Policy and Promotion (DIPP) has issued the Consolidated FDI Policy 2017 (Policy 2017)[1] incorporating the amendments made to the erstwhile Consolidated FDI Policy 2016 (Policy 2016) through various Press Notes issued during the year 2016 (Press Notes 5 and 6 of 2016 series) and 2017 (Press Note 1 of 2017 series) as well as amendments made in FEMA (Transfer or Issue of Security by a Person Resident outside India) Regulation, 2000 (FDI Regulations) through various RBI notifications. This article describes the amendments made after comparing Policy 2016 and Policy 2017. Read more

Amendment in SAST and ICDR in line with the Insolvency Code.

By Rohit Sharma (resolution@vinodkothari.com)

Introduction

That any Act or Statute evolves and gaps in it are removed while the same become effective and is implemented – is a known theory.

With the implementation of the Insolvency and Bankruptcy Code, 2016 (“IBC” or “Code”) and with passing days of such implementation, the gaps in the Code / linked statutes are being realized and accordingly corresponding amendments are being brought. Read more

Comparative analysis of Companies (Amendment) Bill 2017

Taming UPSI and tampering disclosure requirements

By CS Vinita Nair, corplaw@vinodkothari.com

It is a fact that certain decisions are taken by Board impromptu/ surprise item and is not a part of the agenda. Therefore, the agenda includes an item ‘With the permission of Chairperson’ to keep the agenda flexible. It is a good thought to ponder upon that whether all tabled items are impromptu in true sense? Can companies put Unpublished Price Sensitive Information (UPSI) as tabled items and cut the prior intimation requirements? Read more

FAQs on GST on Directors’ Remuneration

By Ankit Bhalotia ,gst@vinodkothari.com

The GST law, introduced with effect from 1st July, 2017, makes a major rejig in the indirect tax system in the country. With its introduction, several concepts have been brought up, playing with the minds of the people. One such concept that has created havoc is the reverse charge mechanism and its viding applicability. Services of director i.e. sitting fees, commission has been covered under the Government notified services on which the tax would be payable on reverse charge.

Following are the some of the pertaining questions answered in respect of GST on Director Services Read more