BOARD RESOLUTION OF A NEWLY INCORPORATED COMPANY
First meeting of the
Directors immediately after incorporation of the company disposes of numerous
items which are important for a company just registered.
Section 2(13) defines director
as including any person occupying the position of director by whichever name
called. This definition presupposes a lawful occupation of the position. A
person functioning as a director without being lawfully appointed cannot be
treated as a director. The scheme of the Act shows that the ultimate control
and management of the affairs of a company vests in the Board of Directors.
The Board of Directors is
first formed in either of the following ways:
(a) By being named as such
in the Articles of Association of the company;
(b) By subscribing to the
Memorandum of Association;
(c) By conferring the power
to appoint to the subscribers of the memorandum or a majority of them.
(Regulation 64, Schedule I) on promotion.
Subscribers of Memorandum deemed to be
directors
In default of and subject to
any regulation in the articles of association of a company subscribers of the
memorandum of association who are individuals shall be deemed to be the
directors of the company, until the directors are duly appointed in accordance
with section 255. (Section 254). Where the subscribers are directors, under
such an article they hold office until the first directors are actually
appointed. Morley (John) Building Co. v. Barras, (1891) 2 Ch 386.
As per section 253 only
individuals can be appointed as directors and no body corporate, association or
firm can be appointed director of a company. The office of a director in a
company is to be certain extent an office akin to a trust and therefore it was
felt desirable that some individual human being should be available as a field
of accountability. Oriental Metal Pressing Works (P.) Ltd. v. Bhaskar Kashinath
Thakoor, (1961) 31 Com Cases 143 (SC).
Advantage of appointing first Directors
As to the appointment of
first directors by the articles, the designated Director(s) under sub-section
(2) of section 33 has the authority of signing and delivering to the Registrar
of Companies a declaration in a prescribed form to the effect that all the
requirements of the Companies Act, 1956 and the rules there under have been
complied with in respect of registration and matters incidental thereto. The
declaration may also be made by an Advocate of the Supreme Court or of a High
Court or a Chartered -Accountant or a Secretary in whole-time
practice in India and associated with the formation of the company.
Registration of memorandum and articles (S. 33)
By the Companies (Amendment)
Act, 1988, the amendment made to section 33 added clause (c) to sub-section
(1) by which the agreement, if any, proposed to be entered into for appointment
as Managing, or Whole-time Director or Manager will be filed with the
Registrar of Companies at the time of incorporation of a company along with
memorandum and articles of association of the company. In addition to
recognising a Secretary in whole-time practice in India for the purpose
of filing declaration of compliance of legal formalities for incorporation of a
company, a Chartered Accountant in whole-time practice in India can also
sign the same provided he is practising in India and he is not in fulltime
employment.
If the Registrar of
Companies is satisfied that all the requirements are complied with by the
company and that it is authorised to be registered under the Companies Act,
1956 he will then retain and register the memorandum of association and
articles if any, and also the agreement if any.
The effect of registration
of memorandum of association and also articles of association if any is that
the Registrar of Companies under his hand will certify that the company is
incorporated and in the case of a limited company that the company is limited.
The said certificate is called the certificate of incorporation. From the date
of incorporation, the company becomes capable of exercising all the functions
of an incorporated company and has a perpetual succession and a common seal.
(section 34).
Once so registered, the
company's corporate identity will not be affected by any change in shareholding
or membership. Memtec Ltd. v. Lunarmeck, (2001) 103 Com Cases 1078.
Corporate Identity Number (CIN)
Circular No. 12/2000, dated
25th October, 2000, issued by the Department of Company Affairs gives
guidelines on corporate identity number (CIN). On or after 1st November, 2000
all Registrars of Companies will allocate a corporate identity number
consisting of 21 digits. The CIN has been designed to help easily identify
companies belonging to a State, industry, ownership or age. Currently, the
present registration number assigned to a company does not reflect the activity
or the State or ownership of a company. The CIN assigned to a company
indicates, listing status, economic activity (industry) State, year of
incorporation, ownership and sequential number assigned by Registrars of
Companies. The first digit of the CIN represents the listing status of a
company. If the company is unlisted the alphabet entered is 'U' and if it is
listed the alphabet entered is U. The second five digits represent the economic
activity of the company. The Standard National Industrial Classification (NIC
98 at the 5 digit level issued to assign activity/State in which the company's
registered office is situated. All states are represented by a two alphabet
code. In case of companies operating in diverse fields the five digit is
usually shown as 00000 and in such a case entering the code 00000 as economic
activity, a specific economic activity of the company based upon the main
object in the memorandum of association of company should be entered. in these
five digits. The next four digits indicate the year in which the company was
incorporated. The next three digits indicate the ownership code through a three-alphabet
code and the last six places in the CIN are the unique sequential number
assigned to every company by the concerned Registrar of Companies. There will
not be any space, hyphen, oblique sign, etc., between the various digit/code
components.
Time
of Holding First Board Meeting
The first board meeting of a
company can be held immediately after the date of registration and should not
be held later than within one month of the date of registration. This is so
because as per sub-section (5) of section 224 of the Act the first
auditor or auditors of a company should be appointed by the Board of Directors
within one month of the date of registration of the company and the auditor or
auditors so appointed shall hold office until conclusion of the first annual
general meeting of the company. If the Board of Directors fails to appoint
auditors within one month of the date of registration of the company the
company itself in general meeting may appoint the first auditor or auditors.
Agenda for First Board Meeting [ICSI-SS-1]
Annexure B to the Secretarial
Standard 1 gives an illustrative list of items of businesses for the Agenda for
the first board meeting of a company, which are the following:
1. To appoint the chairman
of the meeting.
2. To note the Certificate
of Incorporation of the company, issued by the Registrar of Companies.
3. To take note of the
Memorandum and Articles of Association of the company, as registered.
4. To note the situation of
the Registered Office of the company.
5. To confirm/note the
appointment of the first Directors of the company.
6. To read and record the
notices of disclosure of interest given by the Directors.
7. To consider the
appointment of Additional Directors.
8. To consider the
appointment of the Chairman of the Board.
9. To fix the financial year
of the company.
10. To consider the
appointment of the first Auditors.
11. To adopt the Common Seal
of the company.
12. To appoint Bankers and
to open bank accounts of the company.
13. To authorise printing of
share certificates.
14. To authorise the issue
of share certificates to the subscribers to the Memorandum and Articles of
Association of the company.
15. To approve preliminary
expenses and preliminary contracts.
16. To consider the
appointment of the Managing Director/Whole time Director/Manager and Company Secretary,
if applicable and other senior officers.
Election of Chairman
"RESOLVED that pursuant to article ______of the Articles of Association of the company, Mr ________be and is hereby appointed to hold the office of the Chairman of this meeting and every subsequent Board Meeting of the company until otherwise decided."
See under Resolution
No. 2.
Election of Chairman in absence of any provision in the articles
"RESOLVED that Mr______ be and is hereby
appointed as the Chairman of this meeting and to hold the office of the
chairman of every subsequent Board Meeting of the company until otherwise decided."
1. Election of Chairman and determination of his period of office. -Clause 76(l) of Table 'A'
(Schedule I to the Companies Act, 1956). The Board may elect a Chairman of its,
meetings and determine the period for which he is to hold office. In case there
is no provision in the articles of association of the company, election and
appointment of Chairman of Board Meetings is a must otherwise there will be no
one to conduct the proceedings of a meeting.
2. Mode of Election. -The chairman will be elected by show of hands in the
first instance by the members personally present at the meeting and if poll is
demanded by them on the election of the Chairman, it should be taken forthwith.
If some person other than the Chairman elected by show of hands is elected
chairman as a result of the poll, he will be the chairman for the rest of the
meeting. (Section 177 read with section 175)
3. When Chairman not present members present may elect one of its
members to be Chairman of meeting. - Usually an article similar to this regulation
is adopted by almost every company but if no such provision is there in the
articles of the company, then any Director presiding over any meeting of the
Directors lacks of the legal status of a Chairman. If no Chairman is elected or
if the Chairman is not present at any meeting within five minutes of the time
fixed for holding the meeting, the Board may elect one of its members to be the
Chairman of that particular meeting.
4. Privilege of Chairman. -The Chairman of the Board of Directors has
special privilege in many respects. Save as otherwise expressly provided in the
Act, questions arising at any meeting of the Board shall be decided by a
majority of votes. In the case of an equality of votes, the Chairman of the
Board shall have a second or casting vote. Further the Chairman's declaration
of result of voting by show of hands will be conclusive evidence of the fact
without proof of the number or proportion of the votes cast in favour of or
against such resolution. (Section 178)
5. Chairman's Role in Corporate Governance.-The Committee believes that
the role of Chairman is to ensure that the board meetings are conducted in a
manner which secures the effective participation of all directors, executive
and non-executive alike, and encourages all to make an effective
contribution, maintain a balance of power in the board, make certain that all
directors receive adequate information, well in time and that the executive
directors look beyond their executive duties and accept full share of the
responsibilities of governance. The Committee is of the view that the
Chairman's role should in principle be different from that of the chief executive,
though the same individual may perform both roles.
Given the importance of
Chairman's role, the Committee recommends that a non executive Chairman should
be entitled to maintain a Chairman's office at the company's expense and also
allowed reimbursement of expenses incurred in performance of his duties. This
will enable him to discharge the responsibilities effectively.
This is a non-mandatory
recommendation. [Paras 8.1 to 8.2]
[Kumarmangalam Birla
Committee Report on Corporate Governance].
6. Chairman for Meetings of the Board.-Paragraph 5.1 of this
standard provides that every company should have a Chairman who would be the
Chairman for meetings of the Board. It would be the duty of the Chairman. [ICSI-SS
1]
S. 254-Constitution of the Board-Appointment of first Directors-Board Resolution
WHEREAS the following persons being subscribers to the Memorandum of Association produced and signed an instrument dated the_____, 2002 in pursuance of article_____ of the Articles of Association of the company determining the first Directors of the company and constituting the first Board of Directors of the Company, viz.
1. Mr_______
2. Mr_______
3. Mr_______
4. Mr_______
5. Mr_______
6. Mr_______
NOW THERFORE, IT IS RESOLVED that Messrs _______________ be and are hereby appointed as First Directors of the Company till the conclusion of the first Annual General Meeting of the Company.
RESOLVED FURTHER that Messrs be and are hereby directed to sign the consent in Form No. 29 to act as Directors and a return for each one of them in Form No. 32 in duplicate and the said consent and the return be filed with the Registrar of Companies within the prescribed time.
1. Appointment of First Directors.-First Directors of a company
can be appointed in either of the two ways. The first directors can be straight
away named in the Articles of Association of the company or there may be
provision made in the Articles of the company similar to Regulation 64 of Table
A of Schedule I that the number of the directors and the names of the first
directors shall be determined in writing by the subscribers of the memorandum.
2. Subscribers of Memorandum of Association deemed to be directors.-If no names are mentioned in
the Articles of Association to be the first directors of the company and if
provision is made in the Articles as per Regulation 64 then subscribers of the
Memorandum of Association who are individuals should be deemed to be the
directors of the company, until the directors are duly appointed in accordance
with section 255. This provision is made in section 254 of the Act.
3. Filing of consent and return with ROC-Once the directors are
appointed at the first Board Meeting by the subscribers to the memorandum of
Association of the company in the first Board Meeting Form No. 29 being the
consent to act as director under section 264 and Form No. 32 in duplicate being
the particulars of a director should be filed with the Registrar of Companies
within 30 days of that Board Meeting.
4. Filing of Consent by a Private Company.-If the company is a private
company and not a subsidiary of a public company then Form No. 29 is not
required to be filed under section 264 (3).
S. 165-Approval of the statement of preliminary expenses-Board Resolution
"RESOLVED that the preliminary expenses amounting to Rs. ______ expended by the promoters of the Company in connection with incorporation of the Company as per the statement placed before the meeting and initialled by the Chairman for purpose of identification be and is
hereby approved."
1. Mention in Statutory Report.-Under section 165(3)(c) of the Act, an
account or estimate of the preliminary expenses of the company, in addition to
other things should be mentioned in the statutory report prepared by a public
company and forwarded to the members of that company at least 21 days before
the day of the statutory meeting. This is only applicable in the case of public
companies.
2. Writing off preliminary expenses.-Under section 78(2)(b)
preliminary expenses incurred by any company before incorporation can be
written off later by the amount standing in the share premium account of the
company.
3. Penalty for default.- If default is made in complying with the provisions
of section 165, every director or other officer of the company who is in
default will be punishable with fine of Rs. 5,000/-. [Section 165(9)].
Certificate of Incorporation [S. 34(1)]
1. Company becomes legal entity from the date mentioned in Certificate
of Incorporation.-The company from the date of incorporation mentioned in the certificate
of incorporation becomes a legal entity capable of exercising all the functions
of an incorporated company. A private company can commence business immediately
after the date mentioned in the certificate of incorporation but in the case of
a public company, it has to obtain certificate of commencement of business from
the Registrar of Companies to commence business.
2. Company not a Citizen.-The company though a legal person, it is not a
citizen sc as to claim the fundamental rights granted to citizens by the
Constitution. State Trading Corporation of India Ltd. v. CTO, (1963) 2 Comp LJ
234. The corporate entity of the company will be disregarded if it is used for
tax evasion. Jaggilal v. CIT UP, AIR 1966 SC 932. Merely because a company
purchases almost the entirety of the shares in another company it will not
serve as a means of putting an end to the corporate character of the other
company. Spencer and Co. Ltd. Madras v. Commissioner of Wealth Tax Madras,
(1969) 39 Comp Cases 212: AIR 1969 Mad 359.
3. Advantages of Incorporation.-The advantage of
incorporation is that the company never dies. It has perpetual succession and
remains in existence, however, often it~ members change until it is dissolved
by liquidation. PALMER'S COMPANY GUIDE 36th Edn., pages 2-3. A company
may be criminally liable for breach of any of the provisions of the Act or
other statutory duty and may be convicted in all cases where mens rea is not an
essential element. Director of Public Prosecutions v. Kent and Sussex
Contractors Ltd., (1944) 1 All ER 199 (KB). A company is alike distinct from
its Board of Directors also. They also cannot enforce a right in their
individual capacity which belongs to the company. Tata Engineering &
Locomotive Co. Ltd. v. State of Bihar, AIR 1965 SC 40, Prithvi Cotton Mills v.
Broach Borough Municipality, AIR 1968 Guj 124 at 148.
4. Clear distinction between company's legal entity and shareholders.-Provisions of sections 34,
48 and 49 maintain a clear distinction between a company's legal entity and its
actions, assets, rights and liabilities on the one hand, and the individual
shareholders and their actions, assets, rights and liabilities on the other. So
lifting of corporate veil of a company as a rule is not permissible in law
unless otherwise provided by clear words of the statute or by very compelling
reasons. (1999) 33 CLA 458 (Ker).
5. Company coming within the definition of money lender.-Companies registered under
the Act would come within the definition of money lender under section 2(7) of
the Kerala Money Lenders Act and therefore be bound by all other provisions of
that Act applicable to a money lender including the liability to take a
licence.
6. Liability structure in tact.-If there is a change in the
management of a company such change will not affect the liability structure of
the company and therefore the guarantors of the company's debts will not be discharged
merely because of a change in management of the Company. Punjab National Bank
v. Lakshmi Industrial and Trading Co. P. Ltd., AIR 2001 All 28.
Incorporation of Company
RESOLVED THAT printed copy
of the original Memorandum and Articles of Association of the company and the
original copy of the certificate of Incorporation dated the 2002 laid before
the meeting, perused be taken on record and the Secretary of the Company be
directed to keep the original copy of the Certificate of Incorporation in safe
custody.
1. Certificate of Incorporation.-Certificate of incorporation
is issued by the Registrar of Companies certifying under his hand that the
company is incorporated and is also a limited company (private or public). It
is the evidence of registration of a company.
2. Documents to be verified by Registrar at the time of issue of
Certificate of Incorporation.- The Registrar issues this certificate after
verifying the following documents submitted to him:
1. Memorandum of
Association;
2. Articles of Association;
3. Declaration in Form No. 1
4. Particulars of Directors
in Form No. 32; in duplicate;
5. Intimation of situation
of registered office of the company in Form No. 18;
6. Consent to act as
director in Form No. 29 if the company is a public company.
3. ROC cannot refuse Registration.-If these documents are in
order and are in conformity with the provisions of the Companies Act, 1956, and
rules and regulations framed there under, then the Registrar cannot refuse
registration and in case he refuses, he may be compelled to register by an
order of the Court. The date given by the Registrar on the certificate of
incorporation will be the date of incorporation of the company and on that
date, the company will come into being as a separate legal entity having
perpetual succession and a common seal.
4. Lifting of Corporate Veil not permitted.-Corporate veil of a company
once registered under the Act cannot be lifted by the court just at the
instance of a person seeking to show beneficial interest in the company
indirectly through a chain of inter-corporate investments just to
establish his competence of file suit in derivative action. BBN (UK) Ltd. v.
Janardan Mohandas Rajan Pillai, (1994) 13 CLA 138 (Bom).
5. Lifting of Corporate Veil permitted.-Court would look at reality
behind corporate veil when corporate character is employed to commit illegality
or defraud others. DDA v. Skipper Construction Co. (P.) Ltd., (1996) 21 CLA 291
(SC).
"RESOLVED that subject
to the approval of income-tax authorities, the first 'Financial Year' of
the company be the period from the date of incorporation of the company, viz
_____, 2002 _____ to _____ 2003_____, both days inclusive, and that the second
and the subsequent 'Financial Years' of the company be the period from 1st
April to 31st March in each year."
1. Financial year once fixed cannot be altered unless permitted by
Income- Tax Officer.-The financial year of the company once fixed by the
Board of Directors cannot be altered subsequently unless permitted to do so by
the Income-tax Officer pursuant to sub- section (4) of section 3 of
the Income-tax Act, 1961.
2. Procedure for alteration of accounting year.-Sections 166 and 210 of the
Companies Act, referring to the annual accounts, do not introduce any specific
impediment in the alteration of the accounting year. Sub-section (4) of
section 210 provides for the length of a 'financial year' within the meaning of
the Companies Act. Provision of the said sub-section is that a 'financial
year' may not be more than a calendar year, but it shall not exceed fifteen
months, provided that it may be extended to eighteen months where special
permission has been granted in that behalf by the Registrar. The provisions of
the Income-tax Act and the Companies Act, in regard to subsequent
alteration of the financial year, may be noted as follows:
Nature of alteration |
Action to be taken |
|
A. If as a result of the proposed alteration of
the 'financial year' it is changed to ‘April to March’ instead of 'January to
December' then the first 'financial year' will consist of 15 months, i.e.,
beginning from 1st January of one year and ending on 31st March of the next
year. |
(a) Call a Board Meeting of the company
concerned. At the meeting adopt a new accounting year and approve preparation
of next accounts for the new period which may be more or less than a year. (b)
Obtain the permission of the- Registrar if the period to which
the next account
relates exceeds 15 months (Section 210(4)). |
|
B. If as a result of the proposed alteration, the
'financial year' is changed to 'July to June' of the next year from the
original 'financial year' of January to December, then the first 'financial
year' will consist of 18 months, i.e., from January of one year to June of
the next year. |
(a) Call a Board Meeting of the company
concerned. At the meeting adopt a new accounting year and approve preparation
of next accounts for the new period which may be more or less than a year. (b) Obtain the permission of the Registrar if the
period to which the next account relates exceeds 15 months (Section 210(4)). (c) Obtain, if necessary, the approval of
the Registrar of Companies to the extension of time for holding the Annual General
Meeting (Section 166). |
3. Financial
year of subsidiary and holding company.-Where the financial year of
the subsidiary does not coincide with that of the holding company, the
financial year of the subsidiary shall not end on a day which precedes the day
on which the holding company's financial year ends by more than six months
(Section 212(2)(c)).
4. Penalty for default.-Penalty for not complying with the provisions of
section 210 will make any person being a director or not being a director but
charged by the Board of Directors with the duty of seeing that the provisions
of this section are complied of the concerned company, in respect of each
offence punishable with imprisonment of 6 months or with fine of up to Rs.
10,000/- or with both. No person will be sentenced to imprisonment for
any such offence unless it was committed wilfully.
Appointment of First Auditors
WHEREAS Messrs ABC &
Company, Chartered Accountants and Auditors, ___________ Nagpur 440 012, have
consented to act as the Auditors of the company as per their letter dated the
_______, 2002.
AND WHEREAS THE said letter
was received by the company and placed before the meeting intimating that the
said appointment would be in accordance with the limits stated in section
224(lB) of the Companies Act, 1956, the Board considered the same.
“NOW THEREFORE IT IS
RESOLVED that Messrs ABC & Company, Chartered Accountants, be and are
hereby appointed as the first Auditors of the company to hold office until the
conclusion of the first Annual General Meeting of the company at a remuneration
of Rs ________”
1. Appointment of first auditors and fixation of remuneration.-Pursuant to subsection (5)
of section 224 of the Companies Act, the first Auditor or Auditors of a company
have to be appointed by the Board of Directors within one month of the date of
registration of the company and the Auditor or Auditors so appointed shall hold
office until the conclusion of the first Annual General Meeting of the company.
The remuneration payable to the Auditor(s) is also, accordingly, fixed by the
Board of Directors for the initial year.
2. Filling up of vacancy in the office of first auditor.-If, due to any reason
whatsoever, otherwise than by way of resignation there arises a vacancy in the
office of the first Auditor of the company, the Board may again appoint another
Auditor or Auditors of a company to hold office until the conclusion of the
first Annual General Meeting and fix remuneration therefor.
3. On failure of Board to appoint first auditor-auditor to be
appointed by company in general meeting.-If the Board, in either of
the above cases, fails to exercise its power, the company in the General
Meeting has to appoint the first Auditor or Auditors by an ordinary resolution.
The first Auditor so appointed should be intimated with seven days of his
appointment and then the Auditor must inform the Registrar in Form No. 23B
about his accepting or refusing the appointment within one month of the receipt
of intimation of his appointment.
4. On failure of general meeting to appoint auditor, Central Government to fill up the vacancy.-The residual power to appoint an Auditor in the event of failure to appoint Auditors by the general meeting, lies with the Central Government, who may appoint a person to fill in the vacancy. The fact of this should be intimated to the Central Government within 7 day by giving notice and if a company fails to do so, the company and every officer of the company who is in default will be punishable with fine of upto Rs. 5,000/-.
Opening of First Bank Account
Miscellaneous-Opening of bank account for the company-Board Resolution-Single authorisation
"RESOLVED:
(i) that a current bank
account in the name of the company be opened with the ABC Bank________, Main
Office, Nagpur 440 012, and that the following persons who are the Directors of
the company for the time being are individually authorised to sign or accept
all cheques, bills of exchange, promissory notes and other orders:
1. Mr_______
2. Mr_______
3. Mr_______
4. Mr_______
5. Mr_______
6. Mr_______
(ii) that the aforesaid bank
be instructed to honour all cheques, promissory notes and other orders drawn by
and all bills accepted on behalf of the company whether such account be in
credit or overdrawn, and to accept and credit to the account of the company all
moneys deposited with or owing by the bank or any account or accounts at any
time or times kept or to be kept in the name of the company and the amount of
all cheques, notes, bills, other negotiable instruments, orders or receipt
provided they are endorsed/signed by any of the above Directors individually on
behalf of the company and such signature shall be sufficient authority to bind
the company in all transactions between the bank and the company including
those specifically referred to herein.
(iii) that the Secretary of
the company be instructed to furnish to the bank certified true copy of the
Memorandum and Articles of Association and a list of the names and specimen
signatures of the aforesaid Directors of the company authorised to sign on
behalf of the company and a copy of the resolution signed by the Chairman and
the bank be informed from time to time by a notice in writing under the hand of
the Chairman of any changes which may take place therein and be entitled to act
upon such notice until the receipt of further notice under the hand of the
Chairman.
(iv) that this resolution
shall remain in force until notice in writing of its withdrawal or cancellation
is given to the bank by the Chairman of the company."
1. General Powers of the Board.-Since a company cannot
operate on its own being an artificial juristic person, section 291 of the Act
has provided that the Board of Directors will exercise all powers and do all
acts and things as the company is authorised to exercise and do.
2. Board's power of authorisation.-If the secretary of a
company is authorised by the Board of Directors of file a suit on behalf of the
company and the managing director is authorised by the same Board to execute a
general power of attorney in the name of that secretary delegating the powers
to him, the said suit filed by the secretary is validly filed. The act is only
ancillary and the secretary acts under the supervision of the managing
director. Mahalaxmi Textiles and another v. Haryana State Handloom &
Handicrafts Corporation. (1999) 35 CLA (Snr) 10 (Punj & Har).
3. Resolution for opening bank account passed by circulation.-Board Resolutions for
opening bank accounts in the name of the company in general may be passed by
circulation under section 289 and need not be passed at a meeting of the Board
as envisaged by section 292 but it is always advisable to pass a resolution at
the first Board Meeting held after incorporation for opening first bank account
of the company.
Opening of First Bank Account
(Another format)
Miscellaneous-Opening of bank account-Joint authorisation-Board Resolution
"RESOLVED that a
Current Account in the name of the Company with Bank at Branch be opened and
the said bank be instructed to honour cheques, bills of exchange and any other
negotiable instrument signed by any two directors of the Company.
RESOLVED further that any
two of the directors of the Company be and hereby are authorised to endorse on
behalf of the Company and present for collection to the credit of the aforesaid
bank account all cheques, bills of exchange and any other negotiable
instrument." -
See under Board Resolution No. 8.
Opening of Bank Account
(Another format)
Miscellaneous-Opening of bank account-Board Resolution-Authority to MD only
"RESOLVED that a current banking account of ABC Limited be opened with the State Bank of India, Parliament Street, New Delhi and that the said Bank be and is hereby authorised to honour all cheques, drafts, bills of exchange, promissory notes and other negotiable instruments, signed, drawn, accepted or made on behalf of the company by Shri XYZ, the Managing Director of the company and to act on any instructions so given relating to the said banking account whether the same be overdrawn or not or relating to any transactions of the company."
See under Board Resolution No. 8.
Operation of bank account
(Another format)
Regn. 70 - Operation of banking account with limits Board Resolution
"RESOLVED THAT Shri
OPM, Manager (Accounts) of the Company be and is hereby authorised to operate
the Bank Accounts of the Company singly with the State Bank of India,
Parliament Street, New Delhi and the Indian Overseas Bank, Green Park, New
Delhi to the extent of Rs. 5.00 lakhs at a time.
RESOLVED FURTHER that the -aforesaid two banks be and are hereby authorised to honour all cheques, drafts, bills of exchange, promissory notes and other negotiable instruments signed, drawn, accepted or made on behalf of the Company by said Shri OPM, Manager (Accounts) of the Company, and to act on any instructions relating to the said Banking Accounts of the Company whether the same be overdrawn or not or relating to the transactions of the Company.
1. Authority to operate Bank Accounts.-The Board may authorise any
officer of the Company to operate the Bank Accounts of the Company either
singly or jointly by passing a resolution whether in a meeting or by
circulation.
2. Copy of resolution given to the Bank.-The certified true copy of
the board resolution should be forwarded to the concerned Bank or Banks along
with a forwarding letter stating therein the company's decision to make a
change in the signatories of operation of bank accounts of the company.
3. Bills of Exchange and Promissory notes.-A bill of exchange, hundi or
promissory note shall be deemed to have been made, accepted, drawn or endorsed
on behalf of a company if drawn, accepted, made, or endorsed in the name of, or
on behalf of or on account of, the company by any person acting under its
authority, express or implied (Section 47). Provisions of section 47 is
complementary to the provision given in Regulation 70 of Table A of Schedule I
of the Act. An instrument purported to be drawn by a company cannot be validly
treated as such unless on its face it satisfies the requirements of section 47.
Oriol Industries Ltd. v. Bombay Mercantile Bank, (1961) 31 Com Cases 185 (SC).
Opening of Bank Account
(Another format)
"RESOLVED that the
company do open a current Banking account with State Bank of India, Parliament
Street, New Delhi 110 001, and Shri SKM, Managing Director of the company be
and is hereby authorised to sign application form and other papers which may be
required for opening the said account.
RESOLVED FURTHER THAT the
aforesaid account will be jointly operated by any two of the following officers
of the company upto a limit of Rs. 50,000/- at a time:
(i) Shri. AKM - General Manager (Delhi)
(ii) Shri. KVS - Manager (Accounts)
(iii) Shri. RSR -
Works Manager.
RESOLVED FURTHER THAT the
aforesaid bank be and is hereby authorised to honour all the cheques, drafts,
bills of exchange, promissory notes and other negotiable instruments signed,
drawn, accepted, or made on behalf of the company by the aforesaid officers and
to act on any instructions relating to the said banking account of the company
whether the same be overdrawn or not relating to the transactions of the
Company.
RESOLVED FURTHER THAT Shri
SKM, Managing Director of the company be and is hereby authorised to change the
operation of the aforesaid account by other officers of the company from time
to time."
1. Board Resolution by circulation. –For the purpose of opening current banking account
of a company, the board resolution need not be passed at a meeting of the board
of directors but can be passed by circulating the board resolution among the
directors of the company under section 289 of the Act.
2. Change of operating instructions.-To change the existing
operating instructions of any bank account of a company another board
resolution should be passed rescinding the first resolution previously passed
and thereafter passing a fresh resolution giving changed operating
instructions.
Adoption
of common seal (S. 34(2))
The possession of a common
seal with its name engraved on it in legible characters is a statutory
requirement of an incorporated body, having a legal personality of its own. See
section 147(l). A company registered under the Companies Act, 1956, should have
only one common seal for use within India. Department's letter No. 8/4(255)/63-PR,
dated 25th January, 1963. The general practice is to use a metallic common
seal. Department's letter No. 8no(147)/64-PR, dated 8th December, 1964.
Under section 48 a company
may by writing under its common seal empower any person, either generally or in
respect of any specified matters, as its attorney to execute deeds on its
behalf in any place either in or outside India. A deed signed by such an
attorney on behalf of the company and under his seal where sealing is required
shall bind the company and have the same effect as if it were under its common
seal.
A company can have an
official seal for use outside India which is a facsimile of the common seal of
the company, with the addition on its face of the name of the territory,
district or place where it is to be used under section 50. The common seal of
the company being the signature of the company should be adopted by the company
at the first Board Meeting and its impression should be taken in the minutes
book of the Board.
S. 34(2)-Adoption of the common seal of the company-Board Resolution
"RESOLVED that the seal
as per impression affixed in the margin of the minutes initialled by the
Chairman and produced at this meeting be and is hereby approved and adopted as
the common seal of the company and that the two keys of the box containing the
said seal be placed in the custody of the Secretary and the Chairman respectively."
"RESOLVED FURTHER that
the said seal shall be affixed on any instrument only on the authority of a
resolution of the Board of Directors or of a Committee of the Board of the
Company authorised by it in that behalf and except in the presence of at least
two directors and of the secretary or such other person as the Board of
Directors may appoint for the purpose and those two directors and the secretary
or other person as aforesaid shall sign every instrument to which the said seal
of the company is so affixed in their presence.
1. Seal-a symbolic representation.-The seal of a company is a
symbolic representation of the company. The idea of the use of seal is a relic
of the past when Kings and Emperors, great or small, used to put an impression
mainly' of their signs on documents to indicate the authenticity of such
documents. This kind of symbol to indicate authenticity was also in use in
India in the past. Monarchy in England specially used this kind of impressions
on documents or orders from the Kings.
2. Approval by Board of Common Seal.-The Companies Act in the
U.K. borrowed the idea from the common law practice and imported the same in
the area of company law practice for the use of the seal as a symbol to
indicate authenticity of the documents executed by a company. Company law in
India, which had grown up in line with its English counterpart, has also
adopted the same idea. Because of the importance given under the Companies Act,
1956, under section 48, in regard to execution of deeds under seal of a
company, precaution is taken in all companies in regard to custody of such
seal. Identification and approval of the symbol to be used as common seal of
the company, therefore, should be done by the Board of Directors at its first
meeting.
3. Safe custody of Common Seal.-Regulation 84 of Table 'A'
vests responsibility for the safe custody of the seal in the Board and it also
requires that the same should be affixed on any document only by a Board
resolution or by a committee thereof authorised to do so and in the presence of
two Directors and Secretary or any other person whom the Board may appoint for
the purpose, and three of them should also sign the document on which the seal
is required to be affixed.
4. Common Seal affixed on Share Certificates. -Rule 6 of the Companies
(Issue of Share Certificate) Rules, 1960 provides that every share certificate
shall be issued under the seal of the company which shall be affixed in the
presence of two directors or persons acting on behalf of the directors under a
duly registered power-of-attorney and the secretary or some other
person appointed by the Board for the purpose. The two directors or their
attorney and the secretary or other person shall sign the share certificate.
Situation of Registered Office of the Company
"RESOLVED that the
registered office of the company be situated at Dhantoli, Nagpur 440012 and the
Secretary be instructed to sign and file the notice of the situation of such
registered office with the Registrar of Companies, Maharashtra, in Form No. 18
pursuant to section 146 of the Companies Act, 1956.
RESOLVED FURTHER that a name
plate or board be affixed at the registered office and that the company's name
and address of the registered office be used or mentioned in legible character
in all business letters, in all its bill heads and letter papers and in all its
notices and other official publications, etc., pursuant to section 147 of the
Companies Act, 1956."
1. Notice to Registrar of situation of Registered office.-According to section 146(2)
of the Companies Act, a company, within thirty days from the date of its
incorporation or from the day on which it begins to carry on business, should
give notice to the Registrar of the situation of its registered office. Removal
of the registered office from one place to another within the same city, town
or village, that is, within the local limits, is also to be notified to the
Registrar within thirty days of the decision taken by the Board.
2. Address mentioned in the Annual Return.-The inclusion in the first
annual return of the company of a statement as to the address of its registered
office will not be taken to satisfy the obligation imposed by sub-section
(2) of section 146 to give notice to the Registrar of Companies. [Section
146(3)]
3. Special Resolution and approval of the Company Law for removal of
registered office from one State to another.-Removal of registered office
outside the local limits but within the same State should be done by means of a
Special Resolution passed by the company. A notice of change should be filed
with the Registrar within thirty days in Form No. 18.
If the place of registered office is changed from one place to another within the same state but from the jurisdiction of one Registrar of Companies to the jurisdiction of another Registrar of Companies within the same state then in addition to passing of Special Resolution confirmation of the concerned Regional Director should also be obtained by making an application under section 17A.
In case the registered
office is removed from one State to another, then, in addition to passing of
Special Resolution, approval of the Company Law Board is necessary which is to
be obtained by making a petition. The order of approval of the Company Law
Board should be filed, within three months, with the Registrar of each of the
States, old and new, along with a notice in Form No. 21 and the requisite filing fee on the basis of
the authorised share capital of the company.
4. Meaning of terms "Head Office" or Registered Office.-Provisions exist in the
Companies Act in sections 143, 144, 146, 147, 163, 223, 303, etc. in regard to
various formalities connected with the registered office of the company whereas
sections 209(2), 228 and 292(l) proviso deal with provisions in regard to
branch office of a company.
The term 'Head Office',
however, has not been defined anywhere in the Companies Act. Though in certain
cases, 'Head Office' or 'Registered Office' may mean the same place of
business, it is not, in practice, the same place in actual practice. The head
office or the principal office may be located anywhere irrespective of the
situation of the registered office of the company. Head office, in the business
sense, is taken as the principal place of business or administrative center of a company wherefrom usually all
communications are made. For change of head office from one place to another,
however, no formalities need be complied with under the Companies Act.
5. Notification of situation of registered office to Registrar.-Situation of registered
office is usually notified to the Registrar in Form No. 18 at the time of
registration of the company to facilitate communication with the company.
6. Penalty for default.-Any default in complying with the requirements of
section 146 will make the company and every officer of the company who is in
default punishable with fine of upto Rs. 500/- for every day during which
the default continues. [Section 146(4)]
Particulars of Directors and General Notice of Interest
S. 303(2)-Particulars of Directors and general notice of interest-Board Resolution
"RESOLVED that Form No.
32 setting out particulars of the first Directors of the company, as recorded
in the register of Directors and as placed before the meeting, be filed in
duplicate by Mr ______________, one of the Directors named in the Articles of
Association of the company, with the Registrar of Companies, Maharashtra, in
accordance with the provisions of section 303 of the Companies Act, 1956, and
the same be and is hereby approved. General notices of interest in compliance
with the provisions of sub-section (3) of section 299 were received from
the Directors and the same were read and recorded."
1. Disclosure of interest by Directors.-The Directors interested or
concerned have to disclose the nature of their interest or concern, as per
section 297 or 299. So far as section 299 is concerned, instead of disclosing
interest or concern under that section every time, an annual general notice and
thereafter, its annual renewal notice, may be given by the Directors in
accordance with that section by holding a Board Meeting and by placing the
terms of contract received from the Directors for consideration.
2. Approval of Central Government required when directors interested.- Under proviso to section
297(l) the previous approval of the Central Government is required to be
obtained for entering into such contract where the paid-up share capital
of the company is not less than rupees one crore. The application to be made to
the Central Government for the purpose should be in Form No. 24-A.
3. No consent of Central Government required for purchase or sale of
materials for cash at prevailing market price and/or if person with whom
contract entered regularly does business.-If the contract entered into
relates to (a) purchase or sale of materials for cash at prevailing market
prices or (b) if the person with whom such contract is entered into regularly
trades or does business, then no consent of the Central Government will be
necessary provided that in the latter case the value of such transaction does
not exceed Rs. 5,000/- in any year comprising the period of the contract
or contracts [Section 297(2)].
4. Contract entered without consent of Board-Consent to be
obtained within three months.-If such a contract is entered into without the
consent of the Board, then such consent must be obtained at a meeting within
three months of the date on which it was entered.
5. Interested Director not to take part in discussion and voting.-Excepting the case of a
private company which is neither a holding nor a subsidiary company of a public
company and excepting some other cases as mentioned in section 300(2), an
interested Director cannot take part in discussion and voting in respect of a
contract or arrangement iii which he is interested or concerned. Such an
interested or concerned Director will not also be counted in quorum (Section
303), but where the number of such interested Directors exceeds or equals to
two-thirds of the total strength of the Board of Directors, then at least
two disinterested Directors present in the meeting will be deemed to be proper
quorum [Proviso to section 287(2) proviso].
6. Directors, interest not to be disclosed.-Issue of share/warrants
cannot be considered to be an arrangement or a contract within the scope of
section 299 or 300. TNK Govindaraja Chetty & Co. v. Kadri Mills (CBE) Ltd.,
(1998) 30 CLA 49 (CLB). Registration of shares is also not a matter in which
directors' interest is required to be disclosed under section 299. Mukkattukara
Catholic Co. Ltd. v. M. V. Thomas, (1995) 19 CLA 339 (Ker).
7. Penalty for default.-If default is made in complying with sub-section
(1) or (2) of section 303, the company and every officer of the company who is
in default will be punishable with fine of upto Rs. 5001- for every day
during which the default continues.
Secretary/Secretary in whole-time practice [Ss.
2(45)/2(45A)]
By the Companies (Amendment)
Act, 1988, section 2(45) defining Secretary has been amended and accordingly
'Secretary' means a 'Company Secretary' as defined in the Company Secretaries
Act, 1980 and includes an individual possessing prescribed qualifications. The
responsibility of a Secretary has also been increased as he is particularly
specified in the Act as an 'Officer who is in default' bracketed along with the
managerial personnel.
The concept of company
Secretary in practice has been introduced for the first time in the Companies
Act by the Companies (Amendment) Act, 1988. According to section 2(45A), a
Secretary in whole time practice means a Company Secretary in practice as
defined in the Company Secretaries Act and who is not in full-time
employment.
The filing of the statutory
declaration in Form No. 1 prescribed under section 33(2) of the Act for
compliance of legal formalities for incorporation of a company has now been
given to a whole-time practicing Secretary. For commencement of business
the verified declaration under section 149 can now be given by a whole-time
practising Company Secretary. The amendment to section 161 that the annual
return of listed companies shall also be signed by a whole-time
practising Secretary given thrust for the practising side of the profession.
According to statutory
guidelines prescribed in Schedule XIII for appointment of managerial personnel
and payment of managerial remuneration to them without reference to the Central
Government, the Auditor or the Secretary of the company or where the company
has not appointed any Secretary, a Secretary in whole-time practice can
also certify that the requirements of Schedule XIII have been complied with and
such certificate shall be incorporated in the return filed with the Registrar
of Companies under subsection (2) of section 269 in Form No. 25C.
Meaning of 'officer who is in default' (S. 5)
The definition of officer
who is in default has been revised by the Companies (Amendment) Act, 1988, so
that officers and Directors who are in charge of the management (Managing
Director, Whole-time Directors, Managers and Secretary) who have been
given by the Board the responsibility of complying with any of the provisions
of the Act are held responsible for contravention of any of the provisions of
the Act. However, in case of Board managed company, the Board may specify any
Director in this behalf failing which all the Directors will be liable to the
penalties.
A director cannot be made
liable without averment in the plaint that he was responsible for the affairs
of the company or that the offence was committed with his consent or
connivance. Sunil Kumar Chhaparia v. Dakka Eshwararaiah, (2002) 108 Com Cases
687 (AP).
Definition of Company Secretary brought in line with definition in
Company Secretaries Act
The Companies (Amendment)
Act, 1988, has brought the definition of 'Secretary' in line with the
definition of 'Company Secretary' in the Company Secretaries Act, 1980, and
includes an individual possessing prescribed qualifications.
Only individual to be appointed as Secretary
Section 2(45) now defines a
Company Secretary as a person who is a member of the Institute and includes any
other individual possessing the prescribed qualifications and appointed to
perform the duties which may be performed by a Secretary under this Act and any
other ministerial or administrative duties.
Companies to have whole-time secretary
Every company having a paid-up
share capital as may be prescribed" by the Government shall have a whole-time
Company Secretary. Provided that every company not required to employ a whole-time
secretary under sub-section (1) of section 383-A and having a paid-up
share capital of Rs. 10 lakhs or more should file with the Registrar of
Companies a certificate from a secretary in whole-time practice in such
form and within such time and subject to such conditions as may be prescribed
as to whether the company has complied with all provisions of the Act or not.
Under newly inserted proviso
to sub-section (1) to section 383-A by the Companies (Amendment)
Act, 2000. The said certificate should be in the Form appended to the Companies
(Compliance Certificate) Rules, 2001 which should be filed with the Registrar
of Companies within 30 days from the date on which the annual general meeting
of the company is held. Where the annual general meeting of a company is not
held the said certificate should be then filed with the Registrar of Companies
within 30 days from the latest day on or before which that meeting should have
been held in accordance with the provisions of the Act.
Penalty for non-appointment of whole-time Company
Secretary
The Companies (Amendment)
Act, 1988, has added a new sub-section (1A) in section 383A providing
therein penalty for non-appointment of whole-time Company
Secretary. It has been provided therein that if a company fails to comply with
the statutory provision of compulsory appointment of whole-time Company
Secretary, the company and every officer of the company who is in default shall
be punishable with fine which may extend to five hundred rupees for every day
during which the default continues.
It is obligatory on every
company having the prescribed paid-up share capital to appoint a
Secretary to perform the statutory functions as listed below:-
|
Section of the Act |
Secretary's role |
||
|
(i) Section 5-Officer who is in default
regarding filing of return |
Filing
with the Registrar a return in Form 1AA to the Companies (Central
Government's) General Rules and Forms, 1956, under clause (g). |
||
|
(ii) Sections 17, 17A and 21-Alteration of
memorandum of association in respect of change in situation of registered
office, objects or name. |
If the company has altered the provisions of its
memorandum of association with respect to change in situation of registered
office or objects or name then passing of special resolution for that and
filing with the Registrar of Companies (ROC) in Form 23 within 30 days of
passing thereof. If the change in situation of registered office is within the
same state but from the jurisdiction of one ROC to another then obtaining
confirmation of the Regional Director and if the change of registered office
is from one State to another then obtaining confirmation from the Company
Law Board and in both the above two cases filing of Form 21 with the ROC
within 2 months and 3 months respectively from the date of order of
confirmation along with a printed copy of the memorandum of association as
altered and also filing of Form 18 with ROC within 30 days of the change of
the registered office. In case of change in name of the company obtaining
fresh certificate of incorporation in the changed name and adopting new
common seal of the company. |
||
|
(iii) Section 31-Alteration of articles of
association. |
Passing of special resolution and filing of a copy
of such special resolution with the ROC within 30 days along with Form 23 and
incorporating the alterations in all copies of the articles of association. |
||
|
(iv) Section 33-declaration of Compliance. |
Statutory declaration as to compliance in respect
of incorporation. |
||
|
(v) Section 49 regarding Investment held by the
company. |
Under section 49 the secretary
should check whether all investments of the company are held in its own name
or not and if not then maintaining a register of investment not held in company's name and
including the particulars of such in vestments. |
||
|
(vi) Section 58A read with Rule 7 of the Companies
(Acceptance of Deposits Rules, 1975 |
Maintaining a register of deposits and entering therein particulars of each depositor and preserving the said register in good order for a period of 8 calendar years. Filing of return of deposits on or before 30th June of every year with the Registrar in the form annexed to the said Rules. |
||
|
(vii) Section 75-regarding return of
allotments and contracts relating to allotment of shares for consideration
other than cash. |
Pursuant to section 75(l), a
Secretary of the company (also a Director, Managing Director or Manager) may
sign the return of allotment in Form No. 2. He may also sign the accompanying
certificate to the effect that the conditions, if any, imposed by the
Securities and Exchange Board of India (SEBI) to the issue of capital
represented by the issue of shares comprised in the return, have been duly complied with. |
||
|
(viii) Section 58AA regarding deposits accepted
from small depositors |
If deposits have been accepted from small depositors then whether there is any default in repayment of any such deposits and if so then sending an intimation to the regional bench of the Company Law Board within 60 days from the date of default on monthly basis. |
||
|
(ix) Section 77A regarding buy-back of
securities |
If securities have been bought
back by the company then maintaining a register of securities bought back and
entering all the particulars
as prescribed in Form 413 of the Companies (Central Government's) General
Rules and Forms, 1956 and Annexure B to the Private Limited Company and
Unlisted Public Limited Company (Buy-Back of Securities) Rules, 1999,
and filing with the Registrar of Companies of Form No. 4A and 4C under the
aforesaid Rules and a return in the form given in Annexure A of the above-mentioned
buy-back rules. |
||
|
(x) Sections 79, 79A, 80, 80A, 81- Regarding
Issue of shares and redemption of preference shares |
Where the company has issued shares whether equity shares or preference shares or sweat equity share and whether they are at premium or discount. Passing of proper general meeting resolution whether ordinary or special as the case may be and filing it with the ROC within 30 days of passing thereof in Form No 23. If shares are issued in discount then obtaining sanction of Company Law Board and filing of the Company Law Board's order sanctioning the discount within one month of the date of order along with a copy of the order. Where preference shares have been redeemed by the company complying with all the provisions of section 80A. |
||
|
(xi) Sections 84 and 113 read with rule6 of the
Companies (Issue of Share Certificates) Rules, 1960. |
Every share certificate has to be issued under the seat of the company, affixed in the presence of two Directors or their attorney and the Secretary and signed by such persons. Similarly debenture or debenture-stock certificate is required to be signed in the same away. |
||
|
(xii) Section 86-Regarding Issue of shares
with differential rights as to dividend, voting or otherwise |
Where the company has issued such share capital
complying with the provisions of the Companies (Issue of Share Capital with
Differential Voting Rights) Rules, 2001. |
||
|
(xiii) Notice of increase of share capital of
members under section 97 of the Companies Act read with section 54. |
Return of increase of capital
beyond the authorised capital of the company is to be filed with the
Registrar of Companies under the signature of Director, Managing Director,
Manager or Secretary. |
||
|
(xiv) Sections 117, 117A, 117B & 117C-
Regarding issue of debentures, preparation debenture trust deed, appointment
of debenture trustees and creating security and debenture redemption reserve |
Where the company has issued debentures having a
trust deed securing the said debentures prepared in the prescribed form and
also executed within the prescribed time and appointing a debenture trustee
and also creating security and debenture redemption reserve for redemption
of the debentures so issued |
||
|
(xv) Ss. 125, 127, 128, 135, 139 read with Rule 6
of the Companies(Central Government's) General Rules and Forms, 1956. |
For filing return as to creation/modification/satisfaction
of any charge on the assets of the company, a copy of every instrument or
deed creating or evidencing the charge is required to be filed with the Registrar
after the same is duly verified by any responsible officer of the company
including secretary, if any. |
||
|
(xvi) Sections 136 and 143-Regarding keeping
of instrument creating charge
and the company register of charges at the registered office |
Where any charge on the assets of the company has
been created or modified or satisfied, keeping all the instruments creating
or modifying or satisfying such charge and also the register of charges at
the registered office of the company. |
||
|
(xvii) Section 149 regarding certificate of
commencement of business. |
Pursuant to section 149, one of the Directors or
the Secretary of a public limited company has to file with the Registrar of
Companies a duly verified declaration in Form No. 19 or Form No. 20, as the
case may be, to commence business after getting the certificate of
incorporation. |
||
|
(xviii) Sections
150, 151, 152, 152A Regarding register of members, index of members, register
and index debenture holders, and register and index of beneficial owner |
Maintaining register of members
of each class shares in the form as given under Rule 7 of the Companies
(Issue of Share Certificate) Rules 1960, and entering the changes therein
within 14 days of
the change and maintaining index of members where the number of members is
more than 50. Maintaining register of debenture holders of each class or
series and also index thereof where the number of debenture holders exceed 50
and entering therein the changes within 14 days Where the shares of the
company are dematerialised supervising that register and index of beneficial
owners is maintained by a depository under section 11 of the Depositories
Act, 1996. |
||
|
(xix) Section 154 regarding closure of register of
members or debenture holders |
Where register of members or debenture holders is closed during the year ensuring that it is not closed for more than 45 days in the aggregate in a year and not more than 30 days at any one time. Giving of 7 days previous in notice by advertisement in newspaper for closure. |
||
|
(xx) Sections 157 and 158 regarding keeping of
foreign register of members and debenture holders |
Where the company has a foreign register of members or debenture holders resident in the foreign state, filing with the ROC within 30 days from the date of opening the said foreign register a notice of the situation of the officer where such register is kept also file a notice for change or discontinuance in such situation with ROC within 30 days. Closing the said foreign after giving the same previous notice by giving advertisement in the newspaper of that foreign state and within the specific period as is done for the principal register of members and debentures. Transmitting to the registered office in India a copy of every entry in any foreign register as soon as may be after the entry is made therein and keep at the registered office of the company a duplicate of every foreign register duly entered up from time to time. |
||
|
(xxi) Sections 159, 160, 161 and 162 regarding
filing of Annual Return. |
Preparing the annual return in form given in Schedule V Part I and Part II and signing annual return and certifying the documents annexed thereto along with a Director for filing with Registrar of Companies and also having the said annual return signed by a secretary in whole time practice before filing it with ROC in case the annual return is of a listed company. |
||
|
(xxii) Section 163-regarding place of
keeping, and inspection of registers and returns |
Maintaining register of members commencing from the date of the registration of the company and its index and register and index of debenture holders and copies of all annual returns together with the copies of certificates of documents required to be annexed thereto at the registered office of the company. If the aforesaid documents and papers are to be maintained at any other place within the city, town or village in which the registered office is situate then seeing that a special resolution is passed for this purpose and a copy of such special resolution is given to the ROC in advance. Allowing the aforesaid documents and papers to be open for inspection during business hours subject to imposition of reasonable restrictions except when the registers are closed, to any member or debenture holder without fee and any other person on payment of prescribed fee, and also allowing them to make extracts from any of these documents with out fee or additional fee as the case may be and giving them a copy of any of them on payment of prescribed fee within 10 days. |
||
|
(xxiii) Section 165-regarding holding and
conducting of statutory meeting |
For public limited companies holding not less one month or meeting not more than 6 months from the date of commencement of business and for warding statutory report to every member of the company at least 21 days before the meeting after preparing it as per the provisions of sub-section (3) of this section and having it certified by two directors and the auditors of the company. Also sending a certified copy of the statutory report to the ROC after it is sent to the members. |
||
|
(xxiv) Section 166 regarding holding of annual
general meeting |
Convening, conducting and holding annual general
meeting (AGM) each year at the registered office of the company or at any
place in the same city, town and village during business hours on a day not
being a public holiday after giving due notice to the members of the company
and duly recording the resolutions passed thereat in the minutes book.
Ensuring that the 1st AGM is held within 18 months from the date of
incorporation of the company and subsequent AGMs are held not more than 15
months or the period extended by ROC. Complying with the provisions of
section 210 and also with section 171 to 193 and other section with regard to
notice, quorum, chairman, proxy, reading of auditors' report, placing
instrument of proxy, proxy register and register of directors' shareholding,
and preparation and signing of minutes. |
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(xxv) Section 169-regarding extra-ordinary
general meeting |
Convening, conducting and
holding extraordinary general meeting (EGM) during the year whenever required
after giving due notice to the members of the company and duly recording the
resolutions passed thereat in the minutes book; where the EGM is being held
on requisition, proceeding to hold it within 21 days if deposit of a valid
requisition and holding it not less than 45 days from the date of deposit of
requisition ensuring that the said requisition sets out the matters for
consideration and is signed by members holding not less than one tenth of the
paid up capital with voting rights or one tenth of the total voting power as
the case may be, where the EGM is called by requisitionists, reimbursing
reasonable expenses incurred by them for holding the meeting and recovering
the said expenses from the defaulting directors. |
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(xxvi) Sections 171 and 172-regarding length
of notice of calling a general meeting and contents and manner of service of
such notice and the persons to be served |
Calling a general meeting by going not less than 21 days notice in writing and in case shorter notice is to given then giving it after taking consent of all the members if it is AGM notice and in any other case by taking consent from members holding 95% of paid up share or from holding 95% of the total voting power where the company has no share capital specifying the place and the day. |
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(xxvii) Section 173-regarding attaching
explanatory statement notice |
Preparing explanatory statement
of all special businesses to be transacted at a general meeting to be annexed
to the notice of that meeting, setting out all material facts concerning
each such item of business
including in particular the nature of the concern or interest, if any,
therein of every director and the manager if any. Setting out also in the
explanatory statement the extent of shareholding interest in any other
company that relates to affects any special business, of every director or
the manager if any if the extent of shareholding interest is not less than
20% of the paid up share capital of the other company. Also specifying in the
explanatory statement. |
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(xxviii) Section 174- regarding quorum for
meeting |
Maintaining a quorum of 5 members personally present in the general meeting of a public company and 2 members personally present in the case of any other company. Dissolving the meeting called by requisitionist if the said quorum is not Present within half an hour from the time appointed for holding the meeting. Adjourning the meeting in any other case to the same day in the next week at the same time and place or to such other day and at such other time and place as the Board of Directors may determine. Seeing that the members present at the adjourned meeting will be the quorum if at the adjourned meeting also a quorum is not present within half an hour. |
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(xxix) Section 176 regarding proxies |
Seeing that the proxy holders do not speak in the meeting and they vote only on a poll and not otherwise. Ensuring that a member of a private company does not appoint more than one proxy to attend on the same occasion. Verifying all the instruments of proxy as per the provisions of sub-section (5) of section 176. Allowing inspection of proxies lodged to every member who has given 3 days notice in writing in advance to do so, during the period of 24 hours before the meeting and till the conclusion of the meeting. Ensuring that the instruments of proxies are lodged at least 48 hours before the meeting. |
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(xxx) Sections 179 to 185 regarding demand for
poll |
I Ensuring that the provisions of sections 179 to 185 are complied with for demanding a poll on any resolution, time of taking poll, right of members to use their votes differently on poll, scrutineers at poll and the manner of taking poll and result thereof and helping the Chairman of the meting in conducting the meeting. |
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(xxxi) Section 187 regarding representation of
corporation at meetings of companies and of creditors |
Checking whether there is a valid Resolution of the Board of Directors or other governing body of a body corporate who is a member or creditor of the company authorising a person as its representative at any meeting of members or creditors of the company or at any meeting of any class of members or creditors of the company. Allowing the said representative to exercise same rights and powers including the right to vote by proxy on behalf of the body corporate as if it were an individual member, creditor or debenture holder of the company. |
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(xxxii) Section 188 regarding circulation of
members' resolution |
Verifying whether adequate number of members necessary for giving a requisition in writing of moving a resolution at a general meeting and also whether a copy of the requisition signed by the requisitionists is deposited at the registered office of the company not less 6 weeks or not less than 2 weeks before the meeting as the case may be. Checking whether reasonable sum sufficient to meet the company's expenses in giving notice of resolution or circulating any statement has been deposited or tendered with such requisition. Giving notice of the proposed resolution or circulating any statement of not more than 1000 words with respect to any matter referred to any proposed resolution only to those members entitled to receive notice of the next annual general meeting or any other general meeting in any manner permitted for service of notice of the meeting and at the same time as notice of the meeting is served. |
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(xxxiii) Section 189 regarding ordinary and
special resolution. |
Identifying which resolution is to be proposed an ordinary resolution and which resolution is a special resolution and in case of a special resolution verifying whether the intention to propose the resolution as a special resolution has been duly specified in the notice calling the general meeting or other intimation given to the members of the resolution and also whether the notice required under the Act has been duly given of the general meeting. Having the ordinary resolution passed by simple majority and the special resolution passed by three-fourths majority. |
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(xxxiv) Section 190 regarding resolutions
requiring special notice. |
Verifying whether a resolution proposed to be passed requires a special notice either under the provisions of the Act or under the articles of association of the company. Ensuring that for such a resolution 14 days prior notice have been given to the company. On receipt of such notice of such resolution giving to the members notice of the resolution in the same manner as it gives notice of the meeting or if that is not practicable giving notice thereof either by advertisement in a newspaper or in any other mode allowed by the articles of association not less than 7 days before the meeting. |
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(xxxv) Section 192 regarding registration of
certain resolutions and agreements |
Filing certified copies of resolutions and agreements mentioned in sub-section (4) of section 192 with the ROC in Form 23 within 30 days if passing thereof, after having then printed or type written under the signature of an officer of the company. |
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(xxxvi) Section 192A regarding passing of
resolution by postal ballot |
Complying with the provisions of section 192A if
the company is a listed company and passing those resolution mentioned in
Rule 4 of the Companies (Passing of the Resolution by Postal Ballot) Rules,
2001. Sending notices for passing resolution by postal ballot in the manner
given in Rule 2A of the said rules. Advertising in a leading English
newspaper and in one vernacular news paper circulating in the State in which
the registered office of the company is situated about having despatched the
ballot papers. |
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(xxxvii) Sections 193 to 197 regarding minutes of
proceedings of board meetings
and general meetings |
Complying with the provisions
of section 193 in keeping minutes of the Board and general meetings the time
within which such minutes are to be entered in minutes books and the manner
in which they are signed and initialled. Maintaining the provisions that
such minutes are evidence of the proceedings recorded therein and what
presumptions can be drawn from such minutes, inspection of minutes books of general
meetings and prohibition of circulating or advertising at the expense of the
company any report of the proceedings of any general meeting. |
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(xxxviii) Sections 205, 205A, 206 and 206A
regarding dividends |
Complying with the provisions of sections 205 and 205A in payment of divided including interim dividend. Deposing dividend including interim dividend in a separate bank account within 5 days from the date of declaration. Transferring the total amount of dividend unclaimed or unpaid after the expiry of 30 days from the date of declaration to a special account opened by the company to be called Unpaid Dividend Account of _______Ltd. or (P.) Ltd., as the case may be. Transferring the amount in unpaid dividend account remaining unpaid or unclaimed for a period of 7 years from date of such transfer within 30 days to the Investor Education and Protection Fund in the concerned branches of the Punjab National Bank. Furnishing a statement in Form No. 1 containing the amount of all sums transferred to the said fund the nature of the sums, the names and addresses of persons entitled to receive such sums and such other particulars as prescribed by the Investor Education duly certified by 4 Chartered Accountant or a Cost Accountant or a Company Secretary practising in India or by the statutory auditors of the company to the ROC. Ensuring that dividend is paid only to registered shareholders or to their order or to their bankers. Holding in abeyance the amount of dividend, right shares and loans shares pending registration of transfer of shares. |
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(xxxix) Section 209 regarding books of account to
be kept by a company |
Ensuring that proper books of account as mentioned in section 209 have been kept at the registered office of the company and if not so kept then should be kept at such place in India with the permission of the board of directors and filing with ROC within 7 days of such decision a statement in Form 23AA in writing giving the full address of that other place. Preserving the said books of account in good order together with relevant vouchers for not legs than 8 years immediately preceding the current year. Keeping such books of account open for inspection open to inspection by any director during business hours. |
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(xl) Section 210 regarding Annual Accounts and
Balance-sheet |
Laying before each annual
general meeting of the company a balance-sheet and a profit and loss
account for the period beginning with the incorporation of the company and
ending with a day not preceding the day of the said meeting by more than 9
months in case of 1st annual general meeting and in case of subsequent
annual general meeting for the period beginning with the day immediately after the period for which
the account was last submitted and ending with a day which should not precede
the day of the meeting by more than 6 months. Ensuring that the said period
does not exceed 15 months or 18 months with special per mission of ROC. |
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(xli) Section 215 regarding authentication of
balance-sheet and profit & loss account |
In the case of any company, other than a banking company, authentication should be done by not less than two Directors of the company, one of whom shall be a Managing Director (where there is one) and Manager or Secretary of the company, if any. |
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(xlii) Section 217 regarding Board of Directors
report |
Preparing the Board's Report ensuring that
all the particulars required under section 217 are contained therein and attaching it to every balance
sheet laid before the annual general meeting of the company. |
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(xliii) Section 219 regarding right of member to
copies of balance-sheet and auditors' report |
Sending to every member of the company and to
every trustee for the holders of any debentures if any issued by the company,
and also to all persons other than the above who are entitled a copy of every
balance-sheet and profit and loss account and the auditors' report and
every other document required by law to be annexed or attached thereto which
is to be laid before a general meeting, not less than 21 days before the date
of the meeting. Furnishing free of cost a copy of these above documents and
papers to any member or holder of debentures of the company on demand and
also to any person from whom the company has accepted a sum of money by way
of deposit. |
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(xliv) Section 220 regarding filing with ROC three
copies of balance-sheet etc. |
Filing with the ROC within 30 days from the date
on which the balance-sheet and profit and loss account is laid before
the annual general meeting (AGM) or where the AGM for any year has not been
held within 30 days from the latest day on or before which that meeting
should have been held, 3 copies of balance-sheet and profit and loss
account signed by the managing director, manager or secretary of the company
or if there be none of these by a director of the company together with 3
copies of all documents which are required by the Act to be annexed or
attached to such balance-sheet and profit and loss account. Annexing to
the balance-sheet a statement of the fact that the AGM has not adopted
the balance-sheet or the AGM was adjourned without adopting the balance
sheet or that the AGM has not been held for any year. |
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(xlv) Sections 252 to 259 regarding number and
appointment of directors |
Maintaining minimum number of
two and three directors who are individually to be appointed for a private
company and a public company respectively in a general meeting. Having a
director elected as
per the Companies (Appointment of the Small Shareholders' Director) Rules,
2001, by small shareholders of a public company having a paid-up share
capital of Rs. 5 crores. Having two thirds of the total number of directors
appointed liable to retirement by rotation unless the articles of association
provide for the retirement of all directors. Making one third of such two
thirds of the directors appointed retire at the lst AGM held after their
appointment and also at subsequent AGMs. Checking whether a notice proposing
the name of director other than the retiring director along with Rs. 500/-
has been received by the company 14 days before the meeting and if so then informing
the members of the candidature of such a person as the director by serving
individual notices to them not less than 7 days before the meeting, or giving
an advertisement not less than 7 days before the meeting in at least two news
papers one english and one regional language, circulating in the place of
the registered office of the company. Increasing the number of directors by
ordinary resolution within the limits fixed by the articles of association
and if such increase exceeds 12 or beyond the number fixed by the said
articles obtaining Central Governments' approval. |
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(xlvi) Sections 260 and 262 regarding appointment
of additional and casual vacancy directors |
Checking whether provisions in the articles of association is present for appointment of additional directors and filling up of casual vacancy of directors. Having additional directors appointed and casual vacancy created by directors filled up by the Board of Directors of the company and filing Form No. 32 in duplicate and Form No. 29 if required with ROC within 30 days of such appointment of filling up. Ensuring that the number of additional directors so appointed does not exceed the maximum strength fixed for the Board of Directors by the articles of association. |
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(xlvii) Section 263 regarding manner of voting in
appointment of directors |
Making a motion at a general meeting of a
public company or a private company which is a subsidiary of a public company, for appointment of
two or more persons as directors by two separate resolutions and not by
single resolution unless a resolution for doing so has been first agreed to
by the meeting without any vote being given against it. |
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(xiviii) Section 265 regarding appointment of
directors by proportional representation |
Having not less than two thirds
of the total number of directors of a public company or of a private company
which is a subsidiary of a public company appointed in every 3 years
according to the principle of proportional representative if such a provision
is present in the articles of association either by single transfer able
vote or by a system of cumulative voting or otherwise. |
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(xlix) Section 268 regarding amendment of any
provision relating to man aging, whole-time or non-rotational
directors |
Whenever there is an amendment of any provision relating to the appointment or re-appointment of a managing or whole-time director or of a director not liable to retire by rotation making an application to the Central Government in Form No. 25-B. |
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(l) Section 269-Appointment of
Managing/Whole-time Director. |
Filing of Certificate in Form No. 25C within 90 days as to compliance of requirements of Schedule XIII |
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(li) Sections 285 to 289 regarding meeting of
Board |
Convening board meetings at least once in every 3
months so that 4 such meetings are held in each year. Giving notice of the
board meeting in writing to every director for the time being in India and at
his usual address in India to every director. Maintaining quorum of one third
of total strength of the Board of Directors or two directors whichever is
higher in the board meetings. Adjourning a meeting of the Board not held for
want of quorum till the same day in the next week at the same time and place
or if that day is a public holiday till the next succeeding day which is not
a public holiday at the same time and place. Circulating draft Board Resolution
together with necessary papers, if any to all the directors of the company or
to all members of the committee then in India not being less in number than
the quorum fixed for a Board Meeting or Committee Meeting in case of passing
of resolution by circulation and to all the directors or committee members
at their usual address in India and have it approved by such of the directors
who are in India or a majority of them as are entitled to vote on the resolution. |
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(lii) Section 292 regarding powers of the Board to
be exercised only at a Board Meeting |
Convening and holding a Board Meeting for having
the power specified in sub-section (1) of section 292 exercised only by
passing resolutions in that Board Meeting. Having only the powers specified
in clause (c), (d), (e) of sub-section (1) of section (1) delegated to
a committee of directors, the managing director, manager or any other
principal officer of the company. |
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(liii) Section 292A regarding constitution of
Audit Committee |
Having an Audit Committee of the Board of
Directors constituted for a public company having a paid up share capital of Rs. 5 crores or more
consisting of not less than 3 directors and such number of other directors of
the company of which two-thirds should be directors other than managing
or whole-time directors. Electing a chairman of the aforesaid audit
committee and hold meetings of such audit committee. Allowing the auditors,
the internal auditor if any and director in charge of finance to attend the
audit committee meetings but not allowing them to vote thereat. |
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(liv) Section 293 regarding restrictions on powers
of the Board |
Holding a general meeting for the purpose
of taking the consent of the member for matters specified under sub-section (1) of section 293
immediately after holding a board meeting therefor in case of a public
company or a private company which is a subsidiary of a public company.
Filing a copy of the general meeting resolution with ROC in Form No. 23
within 30 days of passing there of where such approval relates to clauses
(a)(d) and (e) of sub-section (1) of section 293. |
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(lv) Sections 294, 294-A and 294AA regarding
appointment of sole selling or buying agent |
Holding a general meeting
immediately after the board meeting which has appointed any sole selling or
buying agent of the company for the approval of the members. Ensuring that
such appointment is made for a term not exceeding 5 years for any area.
Filing with ROC a copy of the general meeting resolution in Form No. 23
within 30 days of passing thereof. Allowing the company to pay compensation
to a sole selling agent for loss of office only in cases other than those
mentioned in sub-section (1) of section 294A. Checking whether there is
any bar for sale of any goods for any period by a sole selling agent imposed
by the Central Government. Obtaining Central Government's approval before appointing
any sole selling agent of a company, who or which has a substantial interest
in the company. Passing a special resolution for appointment of a sole selling
agent and also obtaining approval of the Central Government in case the company
share capital is Rs. 50 lakhs or more. Filing a copy of the general meeting resolution appointing
sole selling agent with ROC in Form No. 23 within 30 days of passing thereof.
Following the provisions of the Companies (Appointment of Sole Agents)
Rules, 1975. Making application to the Central Government in Form I of the
said Rules for the appointment of sole selling agents of goods and in Form 11
for the appointment of sole agent for buying or purchasing of goods of the
company. |
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(lvi) Section 295 regarding loans to directors |
Obtaining previous approval of the Central Government only in case of a public company or a private company which is a subsidiary of a public company for giving loan or giving guarantee or providing any security in connection with a loan to any director of the company or holding company etc. as specified under sub-section (1) of section 295. Following the guidelines issued by the Central Government for making such application. Do not obtain the said approval if your company is making such loan or giving any guarantee or providing any security in respect of any loan to its subsidiary. |
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(lvii) Section 297 regarding contracts in which
directors are interested |
Passing a Board Resolution at a meeting of the Board for entering into contracts by a director of the company or his relative or firm in which such a director or relative is a partner or any other partner in such firm or a private company in which the director is a director or member with the company. Obtaining previous approval of the Central Government (Regional Director) by making an application in Form No. 24A for entering into the contracts as specified in clauses (a) and (b) of sub-section (1) with the aforesaid persons, immediately after obtaining consent of the Board. |
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(lviii) Section 299 regarding disclosure of
interest by a director |
Obtaining a notice in Form 24AA disclosing the nature of concern or interest of all the directors in any contract or arrangement or proposed contract or arrangement entered into or to be entered into by or on behalf of the company, at a Meeting of the Board of Directors. Having such a notice renewed after the expiry of every financial year for a further period of one financial year. |
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(lix) Sections
300 and 301 regarding non-participation in the Board proceedings of an
interested director and register of contracts of companies and firms in which
directors are interested |
Do not allow any interested director to take part in the discussion of or to vote on any contract or arrangement entered into or to be entered into by or on behalf of the company and also do not count such interested director's presence for the purpose forming a quorum except in the cases mentioned under clauses (a) to (e) of sub-section (2) of section 300. Maintaining one or more registers in which separate particulars of all contracts or arrangements to which section 297 or 299 applies should be entered within 7 days of the Board Meeting or within 7 days of the receipt of such contract or arrangement at the registered office of the company. Placing such register at the next board meeting and having the signature of all the directors present at the meeting. Keeping the said register at the registered office of the company and have it opened for inspection to any member of the company who may take extracts therefrom or copies thereof on payment of prescribed fee as per section 163 relating to register of members. |
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(lx) Section 303 regarding register -of
directors |
Maintaining register of the directors, managing director, manager and secretary of the company at the registered office of the company and entering therein the particulars specified under clauses (a) to (e) of sub-section (1) of section 303. Filing with the ROC a return in Form No. 32 in duplicate within 30 days from the appointment of persons containing the particulars and also a notification specified in the said register in the same form in duplicate of any change among them also within 30 days of such change specifying therein the date of such change. |
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(1xi) Section 305 regarding duty of directors to
make disclosure |
Obtaining intimation from every director, managing director, manager or secretary of the company who is appointed to or relinquishes such office within 21 days from the date of appointment or relinquishment the particulars relating to the office in the other body corporate which are required to be specified under section 303(l). |
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(1xii) Section 307 regarding register of directors' shareholding |
Maintaining a register showing the number, description and amount of shares or debentures held by each director in the company or in any other body corporate being the company's subsidiary or holding company or a subsidiary of the company's holding company. Keeping such register at the registered office of the company and keep it open for inspection during business hours. Specially keeping this open for inspection of the members and debenture holders during the period beginning 14 days before the date of the AGM and ending three days after the date of its conclusion. Producing the said register at the commencement of every AGM of the company and keeping it open and accessible during the continuance of the meeting to any person having the right to attend the meeting. |
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(lxiii) Section 313 regarding appointment of
alternate director |
Having a alternate director appointed by the Board of Directors of the company to act for the original director if such appointment is authorised by the articles of association. Passing a general meeting resolution for such appointment of an alternate director if such in the articles of association is not present. Complying with all the provisions of section 313 with regard to his holding and vacation of office. |
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(lxiv) Section 314 regarding director's holding of
office or place of profit |
Passing of special resolution for holding an office or place of profit carrying a total monthly remuneration of Rs.10,000/- or more in the cases specified under clauses (a) and (b) of sub-section (1) of section 314. Passing of special resolution and also making an application to Central Government for its approval if such office or place of profit carries a total monthly remuneration of Rs.20,000/- or more in the circumstances specified in clauses (a), (b) and (c) of sub-section (1-B) of section 314. Filing of the special resolution so passed with ROC in Form No. 23 within 30 days of passing thereof. |
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(lxv) Section 372A regarding inter-
corporate loans and investments |
Complying with the provisions of section 372A, starting with the exemptions given under this section passing of Board Resolution with the consent of all the directors up to a certain limit as mentioned then if loan or investment exceeds that limit passing of special resolution after drafting the notice of the general meeting suitably under sub-section (1) third proviso and filing of the special resolution with ROC in Form No. 23 within 30 days of passing thereof, maintaining a register for such loans and investments and entering therein the particulars within 7 days of the making of the loan or investment. Do not allow the company to make such loans or investments if the company has defaulted in complying with the provisions of section 58A. |
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(lxvi) Section 383-A(l) proviso"
Certificate of compliance |
Filing of a certificate in such form and within such time and subject to such conditions as prescribed by the companies (compliance certificate) Rules, 2001 as to whether a company having a paid-up share capital of less than Rs. 2 crores but of Rs. 10 lakhs and more has complied with all provisions of the Act or not. |
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(1xvii) Sections 417 and 418 regarding keeping of
employees security de posit and provident fund contribution |
Depositing amounts received as security from the employees of the company in pursuance of their contract of services in any of the accounts mentioned in clauses (a) to (c) of sub-section (1) of section 417 within 15 days of its receipt. Utilising such money or securities only for the purposes agreed to in the contracts of service. Having a Provident Fund constituted for the employees of the company and depositing all the moneys contributed to such fund by the employees as well as by your company within 15 days of such deposit in any account as mentioned under clause (a) of sub-section (1) of section 418 or invest in any of securities mentioned in clause (b) of sub-section (1) of section 418. |
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(1xviii) List of prosecutions initiated against or
show cause notices |
Placing before the Board of Directors the notices of prosecution or show cause if any received by the company and how they are tackled and also the inspection or investigation order if any made under the Act and the status of such investigation or inspection. Maintaining a list of fines and penalties or any other punishment imposed on the company. Complying with the order if any passed for compounding of offences. |
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(lxix) Section 454 regarding Statement of Affairs
to be made to Official Liquidator |
Statements covering various information about a company in liquidation submitted to the Official Liquidator are required to be verified by one or more of the persons who are at the relevant date, the Directors and by the person who is on that date the Manager, Secretary or other chief officer of the company. |
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(lxx) Summoning of the meeting of the Board (a common practice pursuant
to the provisions in the Articles of Association of a Company) |
A Director may, and the Manager or Secretary on the requisition of a Director shall, at any time, summon a meeting of the Board of Directors. |
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(lxxi) Secretary's duties as an 'officer' of the
company. |
According to section 2(30), an 'officer' includes any Director, Manager or Secretary or any person in accordance with whose directions or instructions the Board of Directors or any one or more of the Directors is or are accustomed to act. Almost every section in the Act casts obligation on the officers of the company. |
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(lxxii) Duty
to maintain statutory registers etc. |
Secretary is also required to maintain the several
registers required to be maintained under various sections of the Act. |
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(lxxiii) Approvals of Company Law Board, Central
Government, Regional Director or such other authorities |
Taking these approvals necessary under different
sections of the Act within time in prescribed Forms if any and supported by
duly authorised Board Resolution or General Meeting Resolution. |
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"RESOLVED that pursuant to article_______ of the Articles of Association of the company and to all other applicable provisions of the Companies Act, 1956, Mr. ABD, a member of the Institute of Company Secretaries of India, who has the requisite qualification, as prescribed under the Companies (Appointment and Qualifications of Secretary) Rules, 1988, be and is hereby appointed as the Secretary of the company for a period of three years with effect from _________ 2002 _____ at a remuneration of Rs _______ and other benefits as per the statement placed before the meeting and approved and he is to perform all those duties usually performed by a Secretary under the Companies Act, 1956, or any other ministerial or administrative duties which the Managing Director or the Board of Directors may assign to him."
1. Appointment compulsory.-Every company whose paid-up share
capital is rupees two crores or more must have a full time secretary. The
amount of paid-up share capital of a company that will require
appointment of a secretary compulsorily is prescribed by the Central Government
from time to time under Rule 2(1) of the Companies (Appointment and
Qualifications of Secretary) Rules, 1988.
In case a company fails to
appoint a full time secretary then it can take the plea of reasonable efforts
being taken by the company or the lack of sound financial position of the
company for not appointing a full time secretary under proviso to sub-section
(IA) of section 383-A at the time of trial and cannot take such a plea as
a ground of having the criminal proceeding filed by the Registrar of Companies,
quashed. Sandur Investment Co. Ltd. v. ROC, (2001) 106 Com Cases 230.
2. Inserted by the Companies (Amendment) Act, 2000.-This Amendment Act has
inserted a new requirement as proviso to sub-section (1) of section 383-A
to be complied with by a company having a paid-up share capital of Rs. 10
lakhs or more, who do not require to employ a whole-time secretary.
The said requirement is that
of filing with the Registrar of Companies a certificate from a secretary in
whole-time practice in such form and within such time and subject to such
conditions as may be prescribed as to whether the company has complied with all
provisions of the Act or not.
3. Procedure.-On appointment of a full time secretary the company
should file Form No. 32 in duplicate with the Registrar of Companies along with
requisite filing fees as prescribed by Schedule X.
4. Penalty for default.-For non-compliance of the provisions of sub-section
(1) of section 383-A, the company and every officer of the company who is
in default will be punishable with fine of up to Rs. 500/- for every day
during which the default continues.
Appointment of secretary in whole time practice
S. 383-A(l) proviso-Appointment of Secretary in whole-time practice Board Resolution
RESOLVED that pursuant to
proviso to sub-section (1) of section 383-A of the Companies Act,
1956, Mr. ABC being a secretary in whole-time practice within the meaning
of sub-section (2) of section 2 of the Company Secretaries Act, 1980 and
who is not in full-time employment be and is hereby appointed for a
period of two years with effect from 2002
at a remuneration Rs _____ to issue a compliance certificate for the company as
per the Companies (Compliance Certificate) Rules, 2001.
1. Filing of Compliance Certificate Mandatory.-Every company having a paid
up share capital less than Rs. 2 crores but equal to or more than Rs. 10 lakhs
must appoint a secretary in whole-time practice and obtain from him a
Compliance Certificate in the form appended to the Companies (Compliance
Certificate) Rules, 2001 to be filed with the Registrar of Companies.
2. Time of Filing.-The Compliance Certificate should be filed with the
Registrar of Companies in respect of each financial year within 30 days from
the date on which the company's annual general meeting was held.
Where the annual general
meeting for any year has not been held, the such Compliance Certificate must be
filed with the Registrar of Companies within 30 days from the latest day on or
before which that meeting should have been held in accordance with the
provisions of the Act.
3. Access to book and papers.-Every secretary in whole-time practice
appointed for the issue of Compliance Certificate should have right to access at
all times to the registers, books, papers, documents and records of the company
whether kept in pursuance of the Act or any other Act or otherwise and whether
kept at the registered office of the company or elsewhere and should be
entitled to require from the officers or agents of the company such information
and explanations as the secretary in whole-time practice may think
necessary for the purpose of such certificate.
4. Laid before AGM.-The Compliance Certificate obtained from the
secretary in whole-time practice and filed with the Registrar of
Companies as per the Companies (Compliance Certificate) Rules, 2001 read with
section 383A(l) proviso should be laid by the company in its annual general
meeting.
"The manufacturing licence No. ________, dated the ______, 19 _____, issued by the Government of India in the name of Mr. BCD but meant to be in favour of the company, permitting the company to establish a new industrial undertaking with an installed capacity to manufacture griding balls 10,000 tonnes per annum, graded castings 10,000 tonnes per annum on single shift working basis, as produced before the meeting, be and is hereby noted."
1. License under I (D&R) Act.-Under the Industries
(Development & Regulation) Act, , 1951, no person or authority (other than
the Central Government) shall, after the commencement of the Act (8th May,
1952), establish any new industrial undertaking, except under and in accordance
with the licence issued in that behalf by the Central Government, unless
exempted under Schedule I to the notification of the Government of India in the
Ministry of Industry (Department of Industrial Development) dated 25th July,
1991 revised from time to time. This Schedule I to the said notification has
been amended by Notification No. Nil (F. No. 7(4)/2000-IB) dated 3-1-2002
of the Department of Industrial Policy and Promotion omitting Item No. 1 of
that Schedule relating to drums and animation and allied items of defence
equipment, defence aircraft and warships.
2. Licence or Permission.-A licence or permission under sub-section (1)
of section 11 of the said Act may contain such conditions including, in
particular, conditions as to the location of the undertaking, and the minimum
standards in respect of size to be provided therein as the Central Government
may think fit to impose in accordance with the rules framed under the aforesaid
Act.
3. Industrial Licence.-Obtaining of an industrial licence is often the
result of efforts made by a promoter of a proposed company. Under the licensing
rules, an application for licence or permission for the establishment of a new
industrial undertaking or the production or manufacture of any new article in
an industrial undertaking before the Central Government is a 'must' before any
of the following steps are taken:
(a) Raising from the public any part of the capital required for the undertaking or the production or manufacture of the new article;
(b) Commencing the
construction of any part of the factory building for the undertaking;
(c) Placing an order for any
part of the plant and machinery required for the undertaking or expansion.
4. Application to Central Government.-In the application to the
Central Government for the issue of licence for the setting up of an industrial
undertaking and for the manufacturing of a product which does not come under
the exemption the applicant may represent himself as one of the promoters of a
new company to be floated for the purpose of undertaking and implementing the
work of setting up of a factory for manufacture of the item for which licence
has been applied for. At the first Board Meeting, the obtaining of such licence
from the Central Government should be recorded which, in effect, is the
starting point of the company's activities.
Appointment of Dealers by Company
"RESOLVED that M/s __________ carrying on business at be and are hereby appointed dealers of the company for products and for are upon the terms and conditions set out in the agreement accepted by the dealer aforesaid and tabled and initialled for the purpose of identification by the Chairman of the Board.
1. Board Resolution by circulation.-The aforesaid board
resolution need not be passed at a duly held board meeting but can be passed by
circulation under section 289 read with section 291 of the Act.
2. Sole Selling Agency.-If the agreement of dealership is on principal to
principal basis then section 294-A of the Act will not be attracted, but
if such agreement is on principal to agent basis, provisions of that section
should be adhered to.
3. Restrictive Trade Practice.-In case of dealership agreement being made on
principal to principal basis, care should be taken that such agreement does not
attract provisions of section 33 of the MRTP Act, 1969. Agreements mentioned
under sub-section (1) of section 33 of the said Act are registrable
agreements relating to restrictive trade practices as defined in section 2(o)
of the said Act.
Appointment of Committee technical Staff and Employees
"RESOLVED that a
recruitment committee consisting of Mr. NTN and Mr. PKW, the Directors of the
company, be and is hereby formed and constituted and presence of both the above
Directors shall constitute the quorum for the meeting of the committee and
within the power hereby conferred, such committee shall recruit both technical
and non-technical personnel and its recommendation, as to the candidature
of any person(s) for the appropriate job, shall be final."
1. Conclusiveness of Certificate-obtaining for Commencement of
Business.-Pursuant to the provisions of section 35 of the Companies Act, a
certificate of incorporation given by the Registrar to any association is a
conclusive evidence that such association has been duly registered under the
Act, but unless it is a private limited company as defined in section 3 of the
Companies Act, it cannot, until after obtaining a certificate from the
Registrar for the commencement of business provided under section 149 of the
Companies Act, commence business. Section 149 is specific in restraining a
company to 'commence business' or 'to exercise borrowing power' and subject to
those restrictions, a company can commence any business.
The words are very wide, but they evidently do not include the preliminary actions required to be taken by the company after incorporation including recruitment of Secretary, other technical and non-technical staff etc. The expression used in section 149 of the Companies Act, viz., "where a company having a share capital has issued a prospectus inviting the public to subscribe for its shares, issue of a prospectus or making of underwriting contracts for arranging subscription for its shares" cannot be construed as amounting to commencement of business within the meaning of section 149 of the Companies Act.
2. Committee of the Board.-Except the power to make calls on
shareholders in respect of money unpaid on their shares, the power to authorise
the buy-back of securities and the power to issue debentures, any power
of the Board which it is entitled to do on behalf of the company can be
delegated to any committee of directors, managing director, the manager or any
other principal officer of the company or its branch office on such conditions
as the Board may prescribe. Such delegation should be made by a resolution passed
at a board meeting and not by circulation.
Appointment of Financial and Technical Collaborators
Miscellaneous-Appointment of financial and technical collaborators Board Resolution
WHEREAS a draft of an
agreement to be entered into between the company and M/s. XYZ, Inc. U.S.A.
(hereinafter called 'the Foreign Collaborators') in connection with the
appointment of the latter company as the financial and technical collaborators
of the company was placed before the meeting;
AND WHEREAS the authority
was given to Mr. KKW in the said draft agreement who was also named as a
Director in the articles of the company and also as one of the promoters of the
company to enter into all correspondence in this behalf with any authority;
NOW THEREFORE IT IS-
"RESOLVED that subject
to such additions/alterations made by the Reserve Bank of India as may be
thereafter agreed upon by the said foreign collaborators, the terms of the
agreement (as tabled and authenticated under the initial of the Chairman of the
Board hereof) be and are hereby approved and the Secretary be instructed to
submit the same to the Reserve Bank of India."
1. Restrictions on appointment of certain persons and companies.-As a result of replacement
of the Foreign Exchange Regulation Act, 1973, by the Foreign Exchange
Management Act, 1999 w.e.f. 1st June 2000, Reserve Bank of India can by
regulation prohibit, restrict or regulate the establishment in India of a
branch, office or other place of business by a person resident outside India
for carrying on any activity relating to such branch office or other place of
business under section 6(6) of the said new Act.
2. Procedure.-The application under automatic route of Foreign
Collaboration should be made to the Regional Office of the Reserve Bank of
India in Form FT (RBI) in seven copies. One original application alongwith six
photocopies are acceptable. Proposals which do not come under the automatic
route would require the approval of the Secretariat for Industrial Assistance
(SIA) Ministry of Industry, Government of India, New Delhi and contain such
particulars as mentioned therein.
Purchase of Land
WHEREAS an agreement for the sale of land measuring ________ sq.m. by ________ sq.m. situated in Mauza ________ Thana _______ in the State of Maharashtra, as specifically indicated in the attached site plan and entered into between KCP, the proposed Vendor of the said plot of land and Mr. KKW was tabled, discussed;
AND WHEREAS the Board unanimously
agreed to ratify the aforesaid agreement for sale at a total value of
RS.________ lakhs;
"NOW THEREFORE IT WAS RESOLVED that Mr. VNR, a lawyer, be and is hereby authorised to communicate with the vendor's lawyers and arrange registration and mutation of the title to such land in favour of the company and to procure the necessary certificate of mutation and all the necessary papers and documents in connection therewith be handed over to him."
1. Execution of deed of conveyance of land.-Before obtaining the
certificate of commencement of business (except in the case of a private
company), an agreement for the purchase of land for the establishment of a
factory or manufacturing facility by a company is sure to hit the restrictive
provisions of section 149 of the Companies Act.
The usual practice is that a
promoter of a proposed company executes an agreement for sale of land making it
binding on the proposed vendor. After the necessary formalities, the vendor of
the land may execute a proper deed of conveyance to transfer the title to the
company.
2. Ratification of agreement etc.-It is within the competence
of the company (Board of Directors is referred to here) to ratify a commitment
or agreement made after its incorporation by some person professing to act on
its behalf only if the contract is one within the powers of the company intra
vires and in such a case, after ratification, the company is bound by it fully
and completely as if it had originally authorised such person to enter into
such contract on its behalf.
Purchase of premises by Company
Miscellaneous-Purchase of premises and for opening show-room-Board Resolution
"RESOLVED that Shri SKM, Managing Director of the Company be and is hereby authorised to negotiate and finalise acquisition of suitable premises or land in Kanpur and raise construction for setting up show-rooms and office on such terms and conditions as he may consider most appropriate and in the best interest of the company.
RESOLVED FURTHER that Shri
SKM be and is authorised to execute such documents and papers as may be
required for acquisition of the land/premises and to appear before such
authorities as may be necessary for giving effect to the said deal."
1. Power of Attorney.-Instead of authorising the managing director of the
company to buy and acquire land and business premises for the company a general
power of attorney is usually given to the managing director under the common
seal of the company to do such acts, which once executed binds the company.
2. Execution of deeds.-Section 48 of the Act provides that a company by
writ- ing under its common seal empower any person, either generally or
in respect of any specified matters, as its attorney, to execute deeds on its
behalf in any place either in or outside India. A company also by its articles
of association confer authority to the managing director of the company to
institute suits on behalf of the company and in such a case only a managing
director can institute a suit on behalf of a company and no other person even
holding a power of attorney given by the Board of Directors. Ferruccio Sias v.
Jai Manga Ram Mukhi, (1993) 12 CLA 212 (Delhi).
Issue of Shares to Foreign Collaborators
"RESOLVED that subject
to the approval of the Reserve Bank of India, Exchange Control Department if
any required and other statutory approvals, if any, it is agreed that ________
fully paid-up equity shares of Rs ______ each in terms of the agreement
dated the ______ _______ 2002 entered into between the company and the foreign
collaborators, be and are hereby allotted to M/s. XYZ Inc. U.S.A., the
financial and technical collaborators of the company for consideration other
than cash, against the consignment of machinery and equipment to be installed
at the company's factory at Thana in the State of Maharashtra in satisfaction
of purchase price of Rs _______
1. Expansion of list of industries eligible for automatic route.-1. In pursuance of
Government's commitment to early implementation of the second phase of the
economic reforms and with a view to further liberalising the FDI regime,
Government, on review of the policy on FDI, has decided to place all
items/activities under the automatic route for FDI/NRI and OCB investment
except the following:
(i) All proposals that require an industrial licence which includes (i) the item requiring an industrial licence under the Industries (Development and Regulation) Act, 195 1; (ii) foreign investment being more than 24 per cent. in the equity capital of units manufacturing items reserved for small scale industries; (iii) all items which require an industrial licence in terms of the vocational policy notified by Government under the New Industrial Policy of 1991.
(ii) All proposals in which
the foreign collaborator has a previous venture/tie up in India. The modalities
prescribed in Press Note No. 18, dated 14th December, 1998 of 1998 series,
shall apply in such cases except FDI proposals relating to Information
Technology sector and investments made by international institutions like ADB
IFC, CDC, DEG in domestic companies.
(iii) All proposals relating
to acquisition of shares in an existing Indian company in favour of a foreign/NRI/OCB
investor.
(iv) All proposals falling
outside notified sectoral policy/caps or under sectors in which FDI is not
permitted and/or whenever any investor chooses to make an application to the
FIPB and not to avail of the automatic route.
2.
All proposals for investment in public sector units as also for
EOU/EPZ/EHTP/STP units would qualify for automatic route subject to the above
parameters.
3.
The modalities and procedures for automatic route would remain the same and RBI
would continue to be the concerned agency for monitoring/reporting as per
existing procedure. The National Industrial Classification of all economic
activities (NIC), 1987 shall remain applicable for description of activities
and classification for all matters relating to FDI/NRI/OCB investment.
4. FDI/NRI/OCB investment under the automatic route shall continue to be governed by the notified sectoral policy and equity caps and RBI shall ensure compliance with the same.
5.
Areas/sectors/activities hitherto not open to FDI/NRI/OCB investment shall
continue to be so unless otherwise decided and notified by Government.
6.
Henceforth, any change in sectoral policy/sectoral equity cap shall be notified
by the Secretariat tor Industrial Assistance (SIA) in the Department of
Industrial Policy and Promotion.
7.
Press Note No. 2 (1997 Series), Press Note No. 14 (1997 Series), Press No. 2
(1998 Series) and Press Note no. 1 (1999 Series) stand superseded to the extent
as aforesaid."
2. Application to R.B.I. in prescribed form not required.-Applications for this
purpose are no longer required to be made to the Reserve Bank of India. Indian
Companies should with effect from 22-3-2000 file only a declaration
in Form FC (GPR) together with the required documents with the concerned
Regional Office of the RBI under whose jurisdiction the registered office of
the company is situated within 30 days from the date of issue of equity shares
to foreign investors/collaborators. In addition to the aforesaid declarations
Indian companies are also required to furnish to the regional office of the RBI
a report within 30 days from the date of receipt of remittance containing the
following particulars:-
(a) Name(s) of the foreign
investor(s);
(b) Country of residence or
incorporation of the foreign investor(s)
(c) Date of receipt of
remittance and its rupee equivalent.
(d) Name and address of the
authorised dealer in India through whom the remittance has been received.
3. Further liberation in Foreign investment under automatic route of
Reserve Bank.-1. Attention is drawn to paragraph 10A.1 of the Foreign Exchange
Management Manual (FEMM), regarding foreign investment under the 'Automatic
Route of Reserve Bank'.
2.
Government of Indian have since substantially expanded foreign investment under
the 'Automatic Route of Reserve Bank' to include all items/activities, except
certain items, for investment under foreign direct investment (FDI) and non-resident
Indian (NRI)/overseas corporate body (OCB) investment. The said liberalisations
have been announced through Ministry of Commerce and Industry's Press Note No.
2 (2000 Series) dated 11th February, 2000.
3.
In line with these liberalisations, Reserve Bank has granted general permission
under the Foreign Exchange Management Act, 1999 (FEMA) for issue of shares to
nonresidents (which includes FDI and NRI/OCB investments). Accordingly,
eligible Indian companies can issue shares to non-residents and submit
the prescribed documents to the Regional Office of the Reserve Bank, as
hitherto.
4.
In this connection, it may be observed that, in terms of Press Note dated 11th
February, 2000, Government have superseded earlier Annexure III items which
were linked to eligibility under the "Automatic Route of Reserve
Bank". In that context, present notification of Reserve Bank dated 22nd
March, 2000 has also been issued, in supersession of certain earlier
Notifications, to give effect to the liberalisation in line with Government's
Press Note dated 11th February, 2000.
Note: This
Press Note was further amended by Press Notes dated 29th August, 2000, 8th
September, 2000, 19th October, 2000, 2nd January, 2001, 21st May, 2001, 3rd
& 4th January, 2002.
5.
With regard to Reserve Bank's present notification granting general permission
for issue of shares under the FEMA, it is clarified as under:
(a) All items/activities not
covered by Lists A and B (mentioned in the notification) will be eligible for
foreign investment (FDI and NRI/OCB) under the 'Automatic Route of Reserve
Bank', upto even 100 per cent of capital subject to compliance of the
conditions of the Notification.
(b) Automatic route of
Reserve Bank will not be available in respect of items in list A. All such
investment proposals would come under SIA/FIPB route.
(c) Automatic route of
Reserve Bank will be available only upto the cap indicated in List B.
(Proposals beyond the cap would come under SIA/FIPB route).
(d) Investment by non-residents
(FDI and NRI/OCB) in EOUs/EPZ/EHTP/STP units have now been made eligible under
the 'Automatic route of Reserve Bank' in terms of paragraph 10A.1 of FEMM.
(e) The Automatic route of
Reserve Bank, hereafter, will be available only where non-resident
investment does not exceed Rs. 600 crore (FDI and NRI/OCB investments put
together).
(f) The general permission
granted by Reserve Bank is available only when the Indian company is issuing
shares to non-resident investors. Needless to mention where shares are to
be acquired from the existing shareholders, such proposals will require
clearance from SIA/FIPB and thereafter application will have to be made to the
Chief General Manager, Exchange Control Department. (Foreign Investment
Division), Reserve Bank of India, Central Office, Mumbai-400 001.
(g) In terms of item (ii) of
opening paragraphs of Government's Press Note No. 2(2000 Series) dated 11th February,
2000, all proposals in which the foreign collaborator has any previous
venture/tie up in Indian (through investment or technical collaboration or
trade mark agreement) in the same or allied field, are not eligible to be
covered under the 'Automatic Route of Reserve Bank' (as per Government Press
Note No. 18, dated 14th December, 1998). However, only foreign
companies/entities have been made ineligible vide paragraph 2(b) of
notification dated 22nd March, 2000.
(h) It is the responsibility
of the investee Indian companies to ensure that investment (i.e., FDI and
NRI/OCB investment) is eligible under the 'Automatic Route of Reserve Bank'.
Where there is a doubt or where it is clear that the proposal will not come
under the 'Automatic Route of Reserve Bank', such cases will require clearance
from SIA/FIPB.
(i) A new form, Form FC-GPR,
has now been prescribed (instead of earlier FCRIB) for reporting shares issued
in terms of the present Notification.
1. In
pursuance of clause (a) and clause (d) of sub-section (1) of section 19
read with clause (b) of sub-section (1) of section 29 of the Foreign
Exchange Regulation Act, 1973 (46 of 1973), the Reserve Bank is pleased to
permit a company incorporated in India-
(a) which is engaged or
proposing to engage in any activity/manufacture of items except those sectors
(for the time being in force) indicated in annexed List a (which may be amended
from time to time as notified by Government);
(b) which is a trading
company primarily engaged in export, and is registered as an
export/trading/star trading house, with the Ministry of Commerce, Government of
India.
to issue shares to non-residents
subject to the conditions mentioned in para 3, and to send such shares out of
India, to their place of residence or incorporation, as the case may be:
Provided that a company,
existing on the date of this notification, which is not engaged in the
activity/manufacture of items as per (a) above, shall be eligible to issue
shares, if it embarks on expansion programme in the said eligible
activities/manufacture of items, subject to the condition that the capital raised
by issue of shares to non-residents is utilised for such expansion:
Provided further that in the case of a newly set-up trading company primarily engaged in exports, issue of shares shall be subject to the condition that registration as an export/trading/star trading house is obtained before remittance of dividend to the foreign investor.
2.
The general permission granted herein shall not apply to or in respect of-
(a) a person who is a
citizen of, or a company incorporated in Pakistan, Bangladesh or Sri Lank;
(b) investment proposal in
which the foreign company/entity has an previous venture/tie up in India
(through investment or technical collaboration or trade mark agreement) in the
same or allied filed.
(c) A Company-
(i) being an SSI unit seeking investment more than
24 per cent of capital, or
(ii) being unit
manufacturing items which require an industrial licence under the Industries
(Development and Regulation) Act, 1951 or which require an Industrial Licence
in terms of the locational policy notified by Government under the New
Industrial Policy of 1991, or
(iii) having a proposal
exceeding Rs. 600 crore.
3.
The general permission granted herein to issue shares is subject to the
following conditions, namely:
(i) where the issuer company
is a trading company, non-resident investment therein shall not exceed 51
per cent of its capital and in respect of activities/area specified in the
annexed List B, the cap for non-resident shareholding indicated thereat
shall be observed;
(ii) in the case of issue of
shares by an existing company,
(a) Board resolution has
been passed in connection with preferential allotment of shares, if any, to
foreign investor, indicating the issue price;
(b) special resolution has
been passed under section 81(1A) of the Companies Act, 1956, wherever
applicable, in connection with preferential allotment, indicating the issue
price;
(c) in the case of a listed
company, the price for the issue is worked out according to SEBI guidelines and
is duly certified by the company's fair value of shares (as per erstwhile CCI
guidelines) is made by an independent chartered accountant; and the issue price
shall not be less than that calculated price;
(iii) approval, wherever
necessary, from any authority, statutory or otherwise, required for the project
or for issue of shares is obtained by the company;
(iv) payment for the shares
to be issued to the foreign investor has been received by remittance from
abroad through normal banking channels and/or from the NRE/FCNR accounts of
eligible holders;
(v) in the case of issue of
convertible preference shares, the valuation procedure shall conform to the
guidelines issued by the Reserve Bank or SEBI, as the case may be besides
observing the equity cap prescribed (after conversion);
(vi) the rate of dividend
payable in respect of preference shares shall not exceed SBI prime lending rate
(prevailing on the date of the Board meeting in which issued of shares as
recommended) plus 300 basis points;
(vii) remittance of dividend
in respect of 22 consumer goods industries specified in the Ministry of
Industry Press Note No. 12 dated 26th June, 1992, shall be subject to the
condition of balancing of dividend over a period of seven years to be reckoned
in the case of an existing company, from the date of issue of shares, and in
any other cases, from the date of commencement of production;
(viii) the issuer company
files with the Regional Office of Reserve Bank, not later than 30 days from the
date of receipt of remittance, a report containing the following;
(a) name of the foreign
investor;
(b) country of residence or
incorporation of the foreign investor;
(c) date of receipt of
remittance and its rupee equivalent;
(d) name and address of the
authorised dealer in India through whom the remittance is received.
(ix) the issuer company files with the Regional
Office of Reserve Bank, not later than 30 days from the date of issue of
shares, the following:
(a) a declaration as per annexed Form "FC-GPR"
(b) original foreign inward
remittance certificate (FIRC) evidencing receipt of funds from abroad or as the
case may be, from the eligible NRE/FCNR accounts of the investor;
(c) memorandum of articles
of association of the issuer company;
(d) particulars of shares
issued, date of issue, number of shares and the issue price duly countersigned
by a chartered accountant;
(e) certified copy each of
Board resolution, special resolution, statutory auditor's certificate, or the
chartered accountant's calculation, referred to in para 3(ii) above;
(f) such other particulars
and documents as may be required or specified by the Reserve Bank from time to
time.
4. This notification
supersedes the following notifications:
(i) No. FERA 180/98-RB, dated 13th January,
1998;
(ii) No. FERA 184/98-RB, dated 14th July,
1998;
(iii) No. FERA 187/98-RB, dated 3rd October,
1998;
(iv) No. FERA 190/98-RB, dated 2nd December,
1998;
(v) No. FERA 197/99-RB, dated 30th March,
1999.
1. Banking
2. NBFC's activities in financial services sector
3. Civil aviation
4. Petroleum including exploration/refiner/marketing
5. Housing and real estate development sector for
foreign investment, other than NRIs/OCBs.
6. Venture capital fund and venture capital company
7. Investing companies in infrastructure and service
sector
8. Atomic energy and related projects
9. Defence and strategic industries
10. Agriculture (including plantation)
11. Print media
12. Broadcasting
13. Postal services
1.
Telecommunications (i) In
basic cellular mobile, paging and value added services, and global mobile
personal communications by satellite, FDI is limited to 49 per cent subject
to grant of licence from Department of Telecommunications and adherence by the
companies (who are investing and the companies in which investment is being
made) to the licence conditions for foreign equity cap and lock-in-period
for transfer and addition of equity and other licence provisions.
Note: Operation of
Foreign Exchange Regulation Act, 1973 has been fully abolished with effect from
1st June 2002 and provisions of Foreign Exchange Management Act, 1999 will
prevail with the procedure given in Rules and Regulations made thereunder.
Authority to Company Secretary to furnish certified copies of Board
Resolutions
"RESOLVED that Shri
PQR, Secretary be and is hereby authorised to act as per Board's instructions
and also to furnish certified true copies of the Board Resolutions to various
authorities, institutions like banks in India and abroad etc., and it shall
constitute necessary authority for the said authorities, institutions, etc., to
rely upon and act according to the decisions as communicated in the said
resolutions."
1. Restriction in giving certified copies of board resolution.-To maintain the secrecy of
certain matters within the board of directors of a company, the board may only
allow the secretary to give certified copies of certain resolutions and not
each and every resolution.
2. Acceptance only of certified copies.-When copies of any document
or resolution is required to be filed with the Department of Company Affairs or
with the Company Law Board, or with any other authority they must be certified
as true otherwise they will not be accepted.
3. Inspection of minutes books.-Under section 196 although
inspection of minutes books of general meetings of a company is allowed to
members, minutes books of Board Meetings are not so allowed.
4. Secretarial Standard - Paragraph 8.7 of Secretarial Standard 1 provides
that extracts of minutes should be given only after the minutes have been duly
signed and certified true copies of any resolution passed at a meeting may be
issued even pending signing of the minutes by the chairman if the draft of that
resolution had been placed at the meeting and was duly approved.
Constitution of Purchase Committee
"RESOLVED that Shri ___________, General Manager (Production) and Shri ___________, General Manager (Finance), be and are hereby jointly appointed to constitute a Purchase Committee with power to make any long term contract with any reputed suppliers of raw materials, chemicals, or components etc. provided that such Purchase Committee shall refer to the Technical Committee of the Board in respect of purchase of any equipment, machinery or any replacement thereof."
"RESOLVED FURTHER that
the said Purchase Committee have the power to execute any document or paper
relating to purchase of raw materials, chemicals or components upto and
including rupees five lakhs."
1. Committee formation by passing resolution at board meeting.-According to first proviso
to section 292(l) for delegating any power to any committee, a board resolution
passed at a meeting is necessary.
2. Provision in Articles followed.-In constituting Committees
provisions given in the articles of association of the company should be
followed. If there is no provision in the articles and if the company is a
public company limited by shares, provisions given in Regulations 77 to 81 of
Table A of Schedule I.
3. Board of Directors, formation of quorum-Secretarial Standard 1
[ICSI-SS. 1].-Committee should meet at least as often as stipulated [Paragraph 2.2].
The presence of all the members of any committee constituted by the Board of
Directors is necessary to form the quorum for meeting of such committee unless
otherwise stipulated by the Board of Directors while constituting the
Committee. [Paragraph 3.21. The Board of Directors while constituting any
committee should also appoint the Chairman of that Committee unless such
appointment is to be made in pursuance of any other applicable guidelines,
rules or regulations [Paragraph 5.21. A resolution proposed to be passed by
circulation should be sent in draft together with the necessary papers
individually to all the members of the committee [Paragraph 6.11. Committee
meeting resolutions sent for passing by circulation should be noted along with
the decision thereof at the next meeting of the committee and recorded in the
minutes of such meeting. [Paragraph 6.4] Within 7 days from the date of the
meeting of the Committee of an adjourned meeting of the Committee, the draft
minutes thereof should be circulated to all the members of the Committee for
their comments [Paragraph 8.1]. The minutes of meetings of any Committee should
be circulated to the Board of Directors along with the agenda for the meeting
of the Board next following such meeting of the Committee and should be noted
at the board meeting. [Paragraph 8. 101. Wherever any approval of the Committee
is taken on the basis of certain papers laid before the Committee, proper
identification by initialling of such papers by the Chairman or any director
should be made and a reference thereto should be made in the minutes.
[Paragraph 9.4] The Annual Report of a company should disclose the number of
meetings of the Committee held during the year indirectly the number of
meetings attended by each director [Paragraph 11].
Constitution of Technical Committee
"RESOLVED that Shri __________, and Shri __________, the Directors of the company be and are hereby appointed to constitute a Technical Committee of the Board to deal with all technical problems involved in the production and maintenance of the plant and to guide the Purchase Committee in respect of the purchases made by it of any equipment, machinery or any replacements thereof."
See under Resolution No. 26.
Constitution of Audit Committee
"RESOLVED that Shri ___________, the Managing Director and Shri ____________, and Shri ____________, the Directors of the Company be and are hereby appointed to constitute an Audit Committee of the Board to deal with internal audit control systems, the scope of audit, review of half yearly and annual financial systems before their submission to the Board and also to ensure compliance of internal control systems.
RESOLVED FURTHER that the
said committee do have authority to investigate into any matter in relation to
areas specified above or referred to it by the Board and for this purpose will
have full access to information contained in the records of the company and
external professional advice, if necessary.
RESOLVED FURTHER that the
recommendations of the said committee on any matter relating to financial
management including the audit report be finding on the Board.
RESOLVED FURTHER that the
members of the said committee do elect a Chairman from amongst themselves to be
the Chairman of the said committee whose tenure of office will also be decided
by the members of the said committee.
1. Certain companies to constitute Audit Committee.-A company having a paidup
share capital of not less than Rs. 5 crores must constitute a committee of its
Board of Directors. The said committee should have at least three directors and
such number of other directors as the Board may determine of which two-thirds
of the total number of members should be directors other than the managing or
whole-time directors. [Section 292-A(1)]
2. Disclosure in Annual Report.-The annual report of a
company must disclose the composition of the Audit Committee constituted by
that company under section 292A.
3. Chairman of the Committee to attend AGM.-The Chairman of the audit
committee must attend the annual general meetings of the company to provide any
clarification on matters relating to audit.
4. Penalty for default.-If default is made in complying with section 292A,
the company and every officer of the company who is in default will be
punishable with imprisonment of one year or with fine of upto Rs. 50,000/-
or with both.
General Power of Attorney
"RESOLVED that Mr. ABC,
the General Manager (Commercial) be and is hereby authorised to act on behalf
of the company in all matters regarding procurement of contracts from any of
the companies whether Government, or in the private sector on such terms and
conditions as he may consider beneficial and in the interest of the company.
RESOLVED FURTHER that a General Power of Attorney, as per draft, placed before the meeting and initialled by the Chairman for purposes of identification, be executed for this purpose in favour of the aforesaid General Manager (Commercial) and the Managing Director of the company be and is hereby authorised to sign the same on behalf of the company."
1. Affixation of common seal.-General Power of Attorney is usually given by
a company under its common seal.
2. Effect of General Power of Attorney.-Once a General Power of
Attorney is executed any act done by the general power of attorney holder binds
the company and will have the same effect as if it were under the common seal
of the company.
General authorisation to Managing Director to sign and execute
different documents
"RESOLVED that Shri SKM, Managing Director of the Company be and is hereby authorised to sign and execute all agreements, undertakings, applications, returns, papers, receipts, all documents relating to excise, customs, sales-tax and all other document(s) including agreements relating to the purchase, as also sale of Company's products which require authentication in the name and on behalf of the Company and to do all or any of the acts, deeds, matters and things as may be considered expedient and necessary on behalf of the Company.
RESOLVED FURTHER that Shri
SKM, Managing Director be and is hereby authorised to appear and act on behalf
of and represent the Company in all matters before Central Government, State
Governments and similar other authorities, public bodies, public officers,
local self-government bodies, and all Government Officers and Officers of
the Allahabad Municipalities and other Municipalities and to sign and execute
all applications, returns, objections, documents, agreements and papers that
may be required for and on behalf of the Company in or in relation to any
matter in which it is interested or may be concerned in any way.
RESOLVED FURTHER that Shri
SKM, Managing Director of the Company be and is hereby authorised to incur such
expenditure for the conduct of the business of the Company such as payment of
salary to staff, rents for the building, electricity and water charges etc. and
such other expenditure as he may deem necessary and proper.
RESOLVED FURTHER that Shri
SKM be and is hereby authorised to sub-delegate all or any powers hereby
conferred to other Offlicer/Offlicers of the Company as he may think fit."
1. Board Resolution to accompany Power of Attorney.-A complaint filed by a
managing director through a power of attorney was held to be not competent as
there was no board resolution authorising the said managing director. M.
Lakshmi v. Shanmuga Priya Textiles (P.) Ltd., (2001) 107 Com Cases 121 (Mad).
2. Authority of managing director.-Where a complaint was filed
by the manager administration of a company under a power of attorney executed
by the managing director, the court held the complaint to be maintainable
saying that it was for the trial court to consider whether the managing
director was authorised by the Board of Directors or not. S. Sankaran v. Emkay
Aromatics Ltd., (2001) 107 Corn Cases 130 (Mad).
Delegation of Power of attorney to Managing Director
(Another format)
"RESOLVED that the draft Power of Attorney placed before the Meeting and signed by the Chairman for purposes of identification be issued in favour of Shri, SKM, the Managing Director of the Company. Shri. OPW, Chairman and Shri. AKM, Directors of the Company be and are hereby authorised to sign and execute the said power of Attorney and to affix thereon the Common Seal of the Company."
"RESOLVED FURTHER that
the Secretary of the company be and is hereby authorised to take necessary
action for registration of the Power of Attorney with the concerned
registration authorities."
1. Power of Attorney.-The General Power of Attorney should be prepared on
a nonjudicial stamp paper of the requisite value and should be sworn before the
Oath Commissioner or notarised by the Notary Public, after execution by the
deponent.
2. Effect of Power of Attorney.-Any deed signed by such a
power of attorney holder on behalf of the company and under his seal where
sealing is required will bind the company and will have the same effect as if
it were under the common seal of the company, as per section 48(2) of the Act.
Taking accommodation on lease for company
Miscellaneous--Agreement to take accommodation on lease-Board Resolution
"RESOLVED that the consent of the Board of Directors be and is hereby given to the company taking on lease premises No. 280, Green Park, New Delhi-110017, belonging to Mr. X comprising of two big halls and three rooms with a carpet area of 4000 sq.ft. on a monthly rental of Rs. 50,000/- for office use.
RESOLVED FURTHER that the
Secretary of the company be and is hereby authorised to execute the agreement,
as per the draft placed before the Board and initialled by the Chairman for
purpose of identification on behalf of the company with Mr. X, the landlord
subject to such modifications as may be suggested by the landlord."
1. Approval to lease agreement.-Although board approval is
necessary for taking any accommodation on lease by the company, most of the
time these transactions being
routine a special power of attorney is usually given to the secretary or any director of the company to do such routine acts.
2. Revocation of lease agreement.-Whenever such lease
agreement is revoked, it should be made through a board resolution.
Business hours of company
"RESOLVED that the
business hours of the company shall be from 9 A.M. to 5 P.M. on week days and
from 9. A.M to 1. P.M on Saturdays."
RESOLVED FURTHER that there
shall be a lunch break on all week days from 1 P.M. to 1.30 P.M.
1. Flexibility of business hours.-Board of directors of a
company may not only fix but can also vary or amend any business hours
previously fixed by passing a board resolution. Such a resolution should first
rescind the previous board resolution fixing the timing and then pass the
resolution varing the time of business hours.
2. Inspection of records.-Fixation of business hours is necessary specialty
with regard to inspection of certain records of the company at its registered
office by any member of the company or by any members of the public under
different sections of the Companies Act, 1956.
Appointment of Legal Advisor
WHEREAS M/s. X and Company,
Advocates and Solicitors have consented to be the legal advisers of the company
as per their letter dated ________ a copy of which was placed before the Board
for perusal,
AND WHEREAS the said
Advocates and Solicitors will be paid annual retainership fee of Rs _________
as per the agreement also placed before the Board;
NOW THEREFORE IT WAS
RESOLVED that M/s. X & Co., Advocates and Solicitors be and are hereby
appointed legal advisers to the company on an annual retainership of Rs
_________”
1. Necessity of Board Resolution.-If the managing director of
the company or any other director or any executive holds the general power of
attorney, he may appoint the legal advisors and in such an eventuality passing
of a board resolution is not necessary.
2. Director should not be a partner/member in the firm of Legal
Advisor.- While appointing any firm of advocates or solicitors or any company
providing consultancy services, it should be ensured that no director of the
company is a partner or member in such firm or company. If a director is so
interested then provisions of sections 297 and 314 of the Act should be adhered
to.
Appointment of Lead Managers, Co-Managers, Bankers, Trustees for
Public Issue
WHEREAS the Board considered the matter of appointment of lead Managers, co-managers, bankers, legal advisors, trustee for debenture holders and registrars for the proposed public issue of equity shares/debentures of Rs ________ each by placing the following letters before the Board:-
(1) Letter No _______ dated _______ and _______ dated _______ from _______ offering their services to act as lead managers to the issue.
(2) Letter No _______ dated _______ and _______ dated _______ from _______ offering their services to act as co-managers to the issue.
(3) Letter No _______ dated _______ from _______ offering their services to act as legal advisors to the issue.
(4) Letter No _______ dated _______ from _______ offering their services to act as trustees for debenture-holders.
(5) Letter No _______ dated _______ from _______ offering their services to act as registrars to the issue.
(6) Letter Nos
______________ dated _______ and _______ dated _______ from _______ offering their services to act as
bankers to the issue.
(7) Letter Nos ______________ dated _______ and _______ dated _______ from _______ offering their services to act as underwriters to the proposed issue.
(8) Letter Nos
______________ dated _______ dated _______ dated _______ and _______ dated _______ from _______ offering their services to act as collection agents of the
proposed issue.
AND WHEREAS the Board
considered the aforementioned letters and decided to approve the said letters
by passing resolutions;
NOW THEREFORE IT WAS
RESOLVED that ___________ and _______ be and are hereby appointed as lead
managers to the issue on the terms and conditions laid down in their letter No
_______ dated _______ and letter No
_______ dated _______ respectively.
RESOLVED FURTHER that ___________ and ________ be and are hereby appointed as co-managers to the issue in terms of their letter No ________ dated ________ and the letter No ________ dated ________ respectively.
RESOLVED FURTHER that ________ be and is hereby appointed as the legal advisors to the issue on the terms and conditions laid down in their letter No ________ dated ________
RESOLVED FURTHER that ________ and ________ be and are hereby appointed as bankers to the issue.
RESOLVED FURTHER that ________ be and are hereby appointed as registrars to the issue on the terms and conditions contained in their letter No ________ dated ________
RESOLVED FURTHER that _________________ be and are hereby appointed as trustees for holders of the proposed issue of debentures on the terms and conditions contained in their letter No ________ dated ________
RESOLVED FURTHER that _________________
be and are hereby
appointed as underwriters to the proposed issue of equity shares/debentures on
the terms and conditions contained in their letters No ________ dated ________
RESOLVED FURTHER that ________________
be and are hereby
appointed as collection agents to the proposed issue of equity shares of the
company on the terms and conditions contained in their letters No ________
dated ________
RESOLVED FURTHER that Mr ________________,
Managing Director, and
Mr ________________, Secretary of the company be and are hereby severally authorised to
convey to the aforementioned lead managers, co-managers, legal advisors,
bankers, registrars and trustees for debenture-holders underwriters and
collection agents the acceptance of their aforementioned appointments on behalf
of the company and to accept any modifications thereto.
1. Memorandum of Understanding with the Lead Managers.--Once the board of directors
decides about a particular lead manager a memorandum of understanding is
required to be entered into between and signed by the issuing company and the
lead manager.
The said MoU should contain
such clauses as are specified in Schedule I of SEBI (Disclosure and Investor
Protection) Guidelines 2000, and such other clauses as considered necessary by
the lead manager and the issuer company. Lead Manager so appointed decides
about the appointment of other intermediaries such as managers, co-managers,
underwriters and bankers etc. to the issue.
2. Informing the Stock Exchanges and SEBI.-Once Lead Managers, Co-Managers
and Bankers etc. are appointed Stock Exchange and SEBI should be informed.
"RESOLVED that consent
of the Board of Directors be and is hereby accorded to the company for
placement of orders on reputed suppliers in respect of capital items mentioned
below at a total estimated expenditure indicated against each:
Capital item Estimated
Expenditure."
1. General Power of the Board.-Approval of the Board for placing orders for
capital expenditure comes within the general powers of the Board under section
291 of the Act and this power can also be delegated to any committee of the
Board.
2. Depreciation on capital item.-Once a capital item is
bought, depreciation should be provided on it as per Schedule XIV of the Act.
Counter-Guarantees on behalf of company
Miscellaneous--Counter-guarantees on behalf of the company-Board Resolution
"RESOLVED that Shri
XYZ, the Managing Director or Shri RPS, General Manager (Finance) be and is
hereby authorised to sign and execute counter-guarantees in favour of the
State Bank of India on behalf of the company whenever the company has to get
guarantees issued by the said Bank for the purpose of giving quotations against
the tenders floated by any Central or State Government agencies or by any local
bodies or any other companies."
1. Section 295 whether applicable.-In case of a director of a
company for giving guaranteed provisions of section 295 relating to loan to
directors should be kept in mind unless the company is a private company.
2. Exceed the authority of director.-Giving of counter guarantee
in favour of a bank should be within the authority of the director and should
not exceed that authority.
3. Liability for contravention.-Persons who are knowingly
parties to any contravention of section 295(l) or (3) will be liable jointly
and severally to the lending company for making good the sum which the lending
company may have been called upon to pay in virtue of the guarantee given or
the security provided by such company. [Section 295(5)]
Signature and execution of Indemnity Bonds
"RESOLVED that Mr. ABC, General Manager (Commercial) or Shri RPS, General Manager (Finance) be and is hereby authorised to sign and execute indemnity bonds in favour of any Port Trust authorities at Mumbai/Calcutta or Custom/Excise authorities at Mumbai/Calcutta in getting the goods cleared from any of these authorities."
1. General Powers of the Board.-The power to give authority
to execute indemnity bonds comes within the general powers of the Board.
2. Special Power to Attorney.-The power to execute indemnity bonds can also
be given through a special power of attorney by the board of directors or by
managing director who himself holds the general power of attorney under the
common seal of the company.
Approval of Draft Statement in lieu of prospectus
"RESOLVED that the
draft statement in lieu of prospectus as produced before the meeting be and is
hereby approved and that it be signed by all the Directors and it be dated
________, 2002, and delivered to the Registrar of Companies for registration."
1. Filing of statement in lieu of prospectus.-According to section 70 of
the Companies Act, 1956, a statement in lieu of prospectus must be filed with
Registrar in two cases, namely,
(i) when a prospectus is not
issued by the company as a result of the required capital being obtained
internally from the promoters, and.
(ii) when a prospectus is
issued but the company has not proceeded to allot any shares to the public as a
result of the issue being fully underwritten and not a single application from
the public has been received by the company.
2. Time within which statement in lieu of prospectus is to be filed.-The minimum time limit to
file it is 'three days before any allotment of shares'. However, the section is
silent as to the maximum time of its filing. The form, contents and manner of
filing of the statement in lieu of prospectus are detailed in section 70 itself
which is as per Schedule III to the Companies Act, 1956.
3. Exemption.-Provisions of section 70 do not apply to a private company
or to a company which does not have share capital.
4. Penalty for default.-If a company acts in contravention of sub-section
(1) or (2) of section 70, the company and every director of the company who
wilfully authorises or permits the contravention, will be punishable with fine
of Rs. 10,000/-.
If a statement in lieu of
prospectus delivered to the Registrar of company includes any untrue statement,
then any person who authorised the delivery of it for registration will be
punishable with imprisonment for 2 years or with fine of upto Rs. 50.000/-
or with both. [Section 70(4) & (5)]
Custom House Documents etc.
Miscellaneous-Authorisation for transacting Custom House Documents etc.-Board Resolution
"RESOLVED that Shri
SKM, Financial Controller/the Secretary of the company be and is hereby
authorised to transact all business relating to Custom House at Mumbai/Calcutta
and to sign and execute all Custom House Documents, e.g., shipping and bills of
entry, refund vouchers/duty draw back bills, guarantee bonds and to receive
money and/or grant receipts in respect of import and export of goods on behalf
of the company."
1. General Power of the Board.-The Board of Directors of a company is
entitled to exercise all powers and to do all acts on behalf of the company as
the company is authorised to do except those required to be done by the company
in general meeting.
2. Authority given to others.-The Board of Directors of a company can by a
resolution authorise any person to do a particular act and such authority will
be valid till it is taken back again by the Board.
Authority to represent the company in Court matters and to sign all
papers/documents on behalf of the company
"RESOLVED that Mr. RPS,
the Secretary of the company be and is hereby empowered to sign all papers,
applications, plaints, petitions and all other documents etc. as well as
affidavits as may be required to be filed in the Small Cause Court/High
Court/Supreme Court or before any other Government authority, Tribunal and/or
local authorities in connection with any legal proceedings by or against the
company and to represent the company in all other matters incidental thereto as
may be considered necessary and expedient."
See under Resolution No. 40.
Signing of applications, documents etc., under the MRTP Act and the
rules made thereunder
"RESOLVED that the
Managing Director/the Secretary of the company be and is hereby authorised to
sign/authenticate all applications, papers and documents required to be
submitted by the company to the Central Government and/or before and Monopolies
and Restrictive Trade Practices Commission and the Director General,
Restrictive Trade Practices under the MRTP Act and the Rules framed
thereunder."
See under Resolution No. 40.
Assignment of Patents and Trade Marks
Miscellaneous-Assignment of Patents and Trade Marks-Board Resolution
"RESOLVED that consent
of the Board of Directors of the company be and is hereby accorded to the
Managing Director of the company to execute the Assignment Deed between the
company and ABC Limited in respect of Assignment of Patents and Trade Marks of
ABC Limited in favour of the company as per draft placed before the company and
initialled by the Chairman for purposes of identification."
See under Resolution No. 40.
Authorisation to deal with Sales-tax matters of company
Miscellaneous- Matters concerning sales tax-Board Resolution
"RESOLVED that Shri BKA, the Financial Controller of the company be and is hereby authorised and shall always be deemed to have been authorised to represent the company in all sales tax matters before the Sales Tax authorities and to sign all papers, documents, Sales Tax Declaration forms, returns etc. to be submitted before the said authority.
RESOLVED FURTHER that the
special power of attorney, as per draft placed before the meeting and
initialled by the Chairman for identification be issued in favour of Shri BKA,
the Financial Controller and the same be signed by the Managing Director of the
company."
See under Resolution No. 40.
Authority to deal-with Central/State Government or Local Bodies
Miscellaneous--Authority to deal with Central/State Government or local bodies-Board Resolution
"RESOLVED that Shri RSP, the Company Secretary of the company be and is hereby authorised to represent the company before any Central/State Government, local authorities, Income-tax and Sales Tax authorities, Custom/Excise authorities and to sign and execute all documents and papers as may be required by any such authority(ies) and to do all such acts and things as may be necessary or incidental thereto."
See under Resolution No. 40.
Borrowing of Moneys otherwise than on Debentures
"RESOLVED that the company's moneys up to a maximum limit of Rs ________ be borrowed otherwise than on debenture from time to time by the Company and Mr ___________ and Mr ___________ directors of the company be and are hereby jointly authorised to borrow them in the manner they think fit and proper for the company.
1. Total amount to be specified.-Sub-section (2) of
section 292 provides that resolution by which the power to borrow moneys
otherwise than on debentures is delegated, must specify the total amount
outstanding at any time up to which moneys may be borrowed by the delegate.
2. Bona fide use of delegation.-Power of delegation must be
used bona fide and directors cannot for a Committee to deal with the affairs of
the company just to exclude one or more of the directors from acting. Bray v.
Smith, (1908) 124 LTJO 293.
Investment of Funds and their nature
S.292(l)(d) and (3)-Delegation of power to invest funds-Board Resolution
"RESOLVED that the funds of the company up to a maximum limit of Rs ________ be invested from time to time by the company and Mr ____________ and Mr ____________ be and are hereby jointly authorised to invest them in the manner they think most beneficial for the company in following types of investments:
(i) Government securities;
(ii) Debentures floated by financial institutions;
(iii) Fixed deposits with scheduled banks."
1. Board Resolution to specify total amount to be invested and nature
of investment.-Section 292(l)(d) and (3) provides that the Board of Directors may
invest the funds of the company by passing a Board Resolution and such
resolution must specify the total amount up to which the funds may be invested
and the nature of the investments which will be made in due course.
2. Internal requirement.-Provisions made in section 292 will not affect the
right of the company in a general meeting to impose restrictions and conditions
on the exercise by the Board of Directors of the powers specified in sub-section
(1) of this section.
Making of loans
S. 292(l)(e) and (4)-Delegation of power to make loans-Board Resolution
"RESOLVED that loans upto a total amount of Rs _________ may be made by the company from time to time and Mr ____________ and Mr ____________ be and are hereby jointly authorised to make such loans for the following purposes for the respective maximum amounts
(1)
____________ Rs __________ (2)
____________ Rs _________
(3)
____________ Rs __________ (4)
____________ Rs _________
1. Board Resolution to specify total amount of loans.-Sub-section (4) of
section 292 provides that every resolution delegating the power to make loans
must specify the total amount upto which loans may be made by the delegate, the
purposes for which the loan may be made and the maximum amount of loans which
may be made for each such purpose in individual cases.
2. Opening of Current Account.-Opening of a current account by a non-banking
company with a banking company by placing money on deposit with the banking
company amounts to a making of loan by the non-banking company within the
meaning of section 292(l)(e).
3. Onus of proof on company.-The burden of proving that no resolution was
passed authorising the general manager to execute the agreement of loan of a
company is on the company itself specially when the books and minutes of the
company are not produced. Hoshiarpur Azad Transport Co. Ltd. v. Sutlej Land
Finance P. Ltd., (2001) 103 Com Cases 969. Section 292 of the Act being a
matter of internal management of the company the respondent company should have
proceeded on the assumption that the petitioner company had complied with the
provisions of section 292 in the absence of any specific evidence to the
contrary. Ferrom Electronics (P.) Ltd. v. Vijay Leasing Ltd., (2002) 109 Corn
Cases 467 (Kar).
Formation of Gratuity Trust
"RESOLVED that formation of Gratuity Trust for the purpose of gratuity as per the provisions of the Indian Income-tax Act, 1961, for the persons working in ABC Limited, as provisionally approved by Chairman and signed by the Secretary on behalf of the company and filed by the Trustees with the Income-tax authorities be and is hereby approved, ratified and confirmed.
RESOLVED FURTBER that the
Secretary of the Company be and is hereby directed to forward a certified copy
of this resolution to the concerned Income-tax authorities and other
authorities as may be required."
1. Indian Trusts Act, 1882.-While forming a gratuity trust, provisions of
the Indian Trusts Act, 1882 should be adhered to.
2. Trustees and the beneficiaries.-Who will be the trustees of
the Gratuity Trust and which employees should be eligible to be the
beneficiaries should be decided and the Trust Deed should be prepared and
approved by the Board of Directors of the Company.