Proportional representation for appointment of directors

This is one of the method of electing a director in a company.. Previously it was oly for public cos. As per new Act, its applicable for all cos but still remains as non mandatory provision..
The rationale behind this section is to instill the democracy in corporates as well
Its genesis is from UK parliament and of course in our parliament.. And thereby they have incorporated the same in CA 1956 vide sec. 265..
Let me give eg to understand this..
As the section states there are 2 methods mainly- Single transferable voting and Cumulative voting.. U can also employ any other method but everything sld b authorised in articles..
Suppose if u hold 300 shares in a company and there are 4 directors to b elected.. Then you are eligible to put 300*4 = 1200 votes .. U can use all these votes for single candidate or u can divide ur votes among the candidates.. This is as per cumulative voting
So there is reduced scope for promoters or majority shareholders' clout to nominate their persons as directors..
As per single transferable voting u r eligible for 1 vote per person irrespective of shareholding..
: These methods can b done only once in 3 years and pls note that the respective director cannot b removed during his tenure..
So under single voting system , as stated earlier if there are 4 directors to be elected.. And there are 2 shareholders A and B in that company means A is eligible to appoint 2 directors and B is eligible to appoint 2 directors.. Under cumulative means if A holds 76% and B holds 24% means- A can appoint 3 directors and B can appoint 1 director..
: Thereby under both the methods the minority interests are protected n democracy is upheld..
Also pls note that the election sld b for minimum of 2-3 rds of directors..
Section 163 of the Companies Act, 2013.

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The above article is written by Mr.Annirudh, ACS, LLB, Corporate law expert from Chennai.

Your Value systems take you to Greatness

1. A person does not first become great & then learn great ways to live life. In fact it is the other way around ie., an ordinary person learns great ways to live life & it is only thereafter that he achieves greatness. You need a ladder to go to the top and it is not the other way around.

2. Mahatma Gandhi did not first become great & then develop his value systems that made him a Mahatma. Infact he developed the required value systems when he was still a Mohandas which eventually made him a Mahatma.

3. Buddha did not become Buddha & then learn to love the world, Siddhartha Loved the world & thereafter become a Buddha.

4. In chess even a great player has to first decide which soldier has to be made a Queen and it is only then that a lot of strategies can be put into place to achieve this.

5. Every legendary person knew right in the beginning that they were not cut out for ordinary things, infact they believed that they could achieve legendary possibilities which is why they achieved it. The more & more you buy into this thought process the more & more you will achieve.

6. The attitudinal changes, the approach, the emotional changes, the body language etc that are required within you to achieve greatness must be started today & from this moment.

7. Don't wait for tomorrow to start, learn your lessons from yesterday , bring in the required changes today in anticipation of your tomorrow & this will lead you to the glorious future that you ultimately deserve.

Wishing you Most and More.
By Mr.Suman.

Emotional intelligence

Controlling emotional intelligence is art.

Don't excuse yourself

‘Don’t excuse yourself

1. Research has revealed that giving excuses ie., ‘Excusitis’ is the biggest physiological disease. Don’t get entrapped into this disease.

2. Don’t find excuses but instead find every reason to fulfill your commitments and not otherwise.

3. One of the excuses in impelementing ideas or positive values/virtues etc., is citing the reason of ‘Impracticability’. Understand that ‘Impracticability’ is the vocabulary of a mediocre who does not want to take the responsibility of implementation. Don’t cripple yourself with the excuse of ‘Impracticability’.

4. There is nothing impracticable in the process of implementation of positive values and virtues and there should not be anything ‘impracticable’ in the process of achieving any of your goals.

By Mr.Suman

How to embrace change

1. Need : If you keep doing the same things, you will keep getting the same results. Ascertain the change required to become the No.1 and embrace the change to achieve desired results.

2. Pace of implementation: Immediately/ at the point of realization/ in the very first instance because,
(a) Any change if not implemented within 48 hours is likely to be not implemented at all; and
(b) the energy required to embrace change is a lot less than the energy spent in resisting the change.

3. Conclusion: Embrace and implement desired changes immediately.

Wishing you Most and More and loving you so much, Suman.

How to be No.1 in market

You can and must become the no.1 in the market by:

1) starting to create strategies keeping the market potential in mind (don't go by the strategies of your competitors. if you think of the enemy long enough, you will start thinking like the enemy) ;

2) arrive at the resources required for (1) above such as monetary, human resources etc.,

3) make progress towards 1 & 2 incrementally on a daily basis

It does not matter how long it takes to reach the No.1 position but what matters is that you must eventually reach there.

Don't give yourself a choice on this and Don't die without becoming the No.1.

Remember the world remembers only the winner and there is no place even for the runner up.

Wishing you Most and More

By Mr.Suman

Talk by Mr.Arvind dattar

Corporate Frauds: Penalising the Honest & Rewardi…: http://youtu.be/Jmadtetfz8w

Memorandum of the company under Companies Act, 2013

As per Section 4 of Companies Act, 2013 the memorandum of the a company shall state the following clauses

a) Name of the company should carry last word "Limited" or "Private Limited" in case of public or private limited company respectively. However this clause does not applies to companies registered under  section 8.
b) Situation clause
c) Object clause, objects are need not to divide into main, ancillary
d) Liability clause and
e) Capital clause, incase of one person company , nominee name should mention and he will became member of the company in the event of death of the subscriber.

Formats for MOA is available in Table A, B, C, D, and E in SCHEDULE I as may be applicable to such company.

Maintaining Registers outside the registered office

As per section 94 & 95 of Companies Act, 2013

Registers specified u/s 88 and copies of the annual return maintained u/s 92 shall be kept at registered office of the company.

However, the aforesaid registers can be kept at anyother place in india otherthan registered office in which more than 1/10 th of total members reside and by passing SPECIAL RESOLUTION  by the company.

The registers and copies of all returns shall be open for inspection for Members,Security holders during business hours without paying any fee. If any other persons can inspect registers by paying prescribed fee.

According to Sec 95, registers and returns shall be treated as PRIMA FACIE evidence before court of laws for anything directed or authorised in that documents.

Registers to be maintained under Companies Act, 2013

As per section 88 of the companies act, 2013
1. Every company should keep and maintain the following registers at the registered office of the company:-
(i) Register of members indicating separately each class of equity and preference shareholders.

(ii)Register of debenture holders

(iii) Register of any other securityholders.

2. Register of beneficial owner maintained by depository shall be deemed to be register maintained under this act.

3. If so authorised by AOA a company can maintain a separate register outside india called foreign register containing names and particulars of members, debenture holders or beneficial owners residing outside india.

Forms under Companies Act 2013

39 new forms from 14/04/2014 plz read the same

First new form name is given then its purpose is mentioned and corresponding old forms details which we use to file

1.       INC-1 Application for reservation of name – old form  1A

2.       INC-2 OPC- Application for Incorporation - New form

3.       INC-3 OPC- Nominee consent form - New form

4.       INC-4 OPC- Change in Member/Nominee - New form

5.       INC-5 OPC- Intimation of cessation - New form

6.       INC-6 OPC- Application for Conversion - New form

7.       INC-7 Incorporation of Co. (Other than OPC) 1

8.       INC-18 Application to Regional director for conversion of section 8 co.

into any other kind of co. - New form

9.       INC-20 Intimation to Registrar of revocation/surrender of license issued u/s 8  - New form

10.   INC.21 Application for commencement of business old form  19, 20

11.   INC-22 Notice for situation or change of situation of registered office old form 18

12.   INC-23 Application to Regional director for approval to shift the registered office from one state to another state or from jurisdiction of one registrar to another within the state - old form 1AD,24AAA

13.   INC-24 Application for change of name old form -  1B

14.   INC-27 Conversion form Pvt. To public or vice-versa old forms -  1B, 62

15.   INC-28 Notice of order of the Court or Tribunal or any other competent authority - old form 21

16.   PAS-3 Return of allotment - old form 2

17.   SH-7 Notice to Registrar for alteration of share capital - old form 5

18.   SH-8 letter of offer - New form

19.   SH-11 Return in respect of buy back of securities - old form 4C

20.   CHG-1 Application for registration of creation or modification of charge (other than debentures) - old form 8

21.   CHG.4 Particulars of satisfaction of charge - old form 17

22.   CHG-6 Notice of appointment or cessation of receiver or manager - old form 15

23.   CHG-9 Application for registration of creation or modification of charge in case of debentures - old form 10

24.   MGT-14 Filing of Resolutions and agreements to the Registrar under section 117 - old form 23

25.   DIR-3 Application for allotment of Director Identification Number - old form  DIN 1

26.   DIR-5 Intimation of change in particulars of Director to be given to the Central Government  - old form DIN 4

27.   DIR-7 Notice of resignation of a director to the Registrar - NEW FORM

28.   DIR-8 Particulars of appointment of directors and the key managerial personnel and the changes among them - Form 32, 32AD

29.   MR-1 Return of appointment of managing director or whole time director or manager - Form 25C

30.   MR-2 Form of application to the Central Government for approval of appointment or reappointment and remuneration or increase in remuneration or waiver for excess or over payment to managing director or whole time director or manager and commission or remuneration to directors - old form 25A

31.   URC-1 Application by a company for registration under section 366 - Old Form 37, 39

32.   FC-1 Information to be filed by foreign company - old form  44

33.   FC.2 Return of alteration in the documents filed for registration by foreign company - old form 49, 52

34.   FC.3 List of all principal places of business in India established by foreign company - old form 52

35.   FC.4 Annual Return - old form  PTII

36.   ADJ Memorandum of Appeal New form  - new form

37.   MSC-1 Application to ROC for obtaining the status of dormant company - new form

38.   MSC-3 Return of dormant companies -  New form

39.   MSC-4 Application for seeking status of active company - new form

Quorum of the general meetings under Companies Act 2013

As per Section 103 of companies act, 2013, The Quorum for general meetings:

In case of public company, quorum shall be as follows:

1. Five members personally present if total number of members as on general meeting is less than 1000.

2. Fifteen members personally present if total number of members as on general meeting is morethan 1000 but upto 5000.

3. Thirty members personally present  if the total number of members exceeds 5000 as on date of such convened meeting.

In case of private company:

Two members personally present is enough.

Note: above number of members personally present for want to quorum shall be increased subject to approval only.

Articles of Association of the Company can mention higher number of members for want of quorum than it is given in sec 103.

Maximum Number of directorships under Companies Act, 2013

As per section 165 of Companies Act, 2013

After notifying this section, a person  can hold office as a director in 20 companies maximum.

1. In the aforesaid limit he/she can hold office maximum in 10 public ltd companies.

2. For counting public ltd companies, even pvt ltd companies also taken for count if it is subsidiary or holding of public ltd company.

3. For calculating maximum limit alternative directorships also be counted.

4. Any person is in director if any person is already a director more than the above specified limit, then he/she has to regularise his directorship within one year from the commencement of this Act.

Using 'national' in the name

  Use of word "NATIONAL" in the name of companies or Limited Liability Partnership: MCA has been clarified on 11/02/2014 that no company or LLP should be allowed to be registered with the word ‘National’ as part of its title unless it is a government company and the Central / State government(s) has a stake in it.

Here is the MAC circular : http://www.mca.gov.in/Ministry/pdf/General_Circular_2_2014.pdf 

Notice of the General meeting under Companies Act, 2013

As per sec. 101 of Companies Act, 2013 notice for general meetings shall serve as follows:-

1. 21 days clear notice is required in writing or through electronic mode is required for convening general meeting.

2. Notice of every meeting shall be send to every member, auditors and directors of the company.

3. A meeting can be convened with shorter notice if consent is given in writing or through e-mode by not less than 95% of members entitled to vote such meeting.

4. Notice shall specify the place, date, day and the hour of the meeting and shall contain the agenda of the meeting.

Issue of share certificates under companies Act 2013

As per the sec 56 (4) of Companies Act,2013

Share certificates to be delieverd within:

1. Two months from the date of incorporation in case of subscribers to MOA.

2. Two months from the date of further allotment of shares.

3. Within one month in case of transfer or transmission of shares.

Note: In case shares dealt with depository the company should intimate allotment of shares immediately on such allotment.

Salary credited to non resident external rupee account of NRI is not taxable in India

Under tax laws in India, the tax incidence is based on the concept of residence, which in turn depends on the number of days stayed in India.

Indian employees working overseas often face litigation over taxation of their overseas salary income, if such salary is received in India. This is because a non-resident can be subjected to tax in India on that portion of the income which is received in India.

The Income Tax Appellate Tribunal (ITAT) which adjudicates tax matters, in a recent decision, has held that merely because the salary was credited by the Singapore-based employer company to the employee's NRE bank account in Mumbai, it will not trigger a tax incidence in India. The ITAT sought to distinguish between 'income' received in India and an 'amount' received in India.

The ITAT relied on earlier judicial pronouncements and held that salary income is a compensation for services rendered by an employee. Thus, salary income in the hands of the non-resident employee cannot be taxed in India, if the services are rendered outside India. The place of receipt of the appointment letter is immaterial.

However, the income tax authorities pointed out that the money was received in India, as the salary cheques were credited by Executive Ship Management Pte — the Singapore employer — to the NRE ( non-resident external rupee) account maintained by the employee Arvind Singh Chauhan with HSBC Bank in Mumbai. Thus, it should be taxable in India in his hands.

Under tax laws, the tax incidence is based on the concept of residence, which in turn depends on the number of days stayed in India. A tax resident of India is subject to tax on his global income. However, a non-resident is subject to tax in India only under two situations, one of them being that income received in India is taxable in India. In this case, the employee who was working on a ship plying on international routes was a non-resident as he had spent less than 182 days in India during the relevant financial years relating to the matter being heard by the ITAT.

The ITAT rejected the contention of the tax department that the salary amount credited to the bank account in India should be subject to tax. It observed that the employee had a lawful right to receive the salary amount at the place of employment (which is the location of the foreign employer outside India). The ITAT held: "The connotation of an income having been received and an amount having being received are qualitatively different. The salary 'amount' is received in India in this case but the salary 'income' is received outside India".

Compounding of 297 transactions

The company has to obtain the prior approval from Central government  for related party transactions falls under purview of sec.297.
In some cases , if 297 transactions is completed without CG approval and if  it is a one time transaction. Then it is violation of 297.
Hence company has to compound the violation with Company law board.
Compounding application can be filed on  suo moto basis without receiving notice from authorities.
Company can pray for less penality if the application filed on suo moto basis. 

Please check the below points before filing the compounding application;

1. What is the nature of relationship.
2. What is the nature of the contract
3. Was a formal contract executed
4. What is the total value of the contract
5. Was it at prevailing market rates
6. Was it a one off transaction or repeated transactions spread over a period of time 

CSR RULES & effective date

MCA has Notified CSR related provisions of the Companies Act, 2013, has Amended Schedule VII and has also notified CSR Rules.

 

(Section 135, Amended Schedule VII and CSR Rules to come into force from 1st April, 2014)

1.       MCA, vide Notification dated 27th February, 2014, has notified Section 135 and Schedule VII of the Companies Act, 2013 (provisions relating to CSR) which shall come into force from 1st April, 2014.

2.       MCA, vide Notification dated 27th February, 2014, has notified the Companies (Corporate Social Responsibility Policy) Rules, 2014. These Rules shall come into force on 1st April, 2014.

3.       MCA, vide Notification dated 27th February, 2014, has made amendments to Schedule VII of the Companies Act, 2013. The notification shall come into force with effect from 1st April, 2014.