CHAPTER XII CHAPTER XII MEETINGS OF BO MEETINGS OF BOARD AND ITS PO ARD AND ITS POWERS WERS UNDER UNDER THE COMP THE COMPANIES A ANIES ACT, 20 2013 S C O SECTI TION 1 N 173 T 3 O TO 1 195) 95) 95) 95)
Mee Meetings of the Boar Mee Meetings of the Boar ings of the Board (S:1 ings of the Board (S:1 d (S:173) (R : 3&4) d (S:173) (R : 3&4) 73) (R : 3&4) 73) (R : 3&4) � First Meeting within 30 days from incorporation � Minimum four meetings in a year with a gap of not more than 120 days between the two meetings. between the two meetings � Participation of Directors may be either in person, through video p y p , g conferencing or through audio visual means. � An OPC, Small Company and Dormant Company shall hold at least one Board Meeting in each half of calendar year such that gap between two meeting is not less than 90 days g y
No Notice of the Mee tice of the Meetin ing g � Minimum 7 days notice for calling Board Meeting. � Notice can be sent by hand delivery, post or electronic means. � Shorter notice is allowed only if at least one Independent Director is present at the meeting. � Notice shall indicate the option of participating through video conferencing or other audio visual means. g � In the absence of Independent Director, decisions taken at such meeting shall be circulated to all the directors and shall be final only on ratification by at least one Independent Director.
Matt Matter ers no s not t t to be dealt in a meeting be dealt in a meeting thr t t hroug ough vi oug o h video deo co deo co conf nferencin e e c g a d ot e aud o ing and ot other r aud audio visual means. visual means. � Approval of annual financial statements; � Approval of Board’s Report; pp p � Approval of prospectus; � Audit Committee Meetings for consideration of Accounts; � Approval of matters relating to amalgamation, merger, demerger acquisition and takeover.
Quorum of the Meeting (S:174) � 1/3 rd of total strength or 2 directors whichever is higher. (Participation of directors through video conferencing or other audio visual means shall also be counted for the purpose of quorum. � If number of Interested Directors is 2/3 rd or more of total directors than, � If b f I t t d Di t i 2/3 rd f t t l di t th the other directors not less than 2 shall be the quorum for that time. � For this section fraction shall be rounded off as one. � If the Board meeting could not be held for want of quorum, then the meeting shall automatically adjourned to the same day same time same place next week place, next week.
Passing of Resolution by Circulation (SEC-175) (R : 5) (SEC-175) (R : 5) � A draft resolution shall be circulated to all the directors at their registered address for seeking their approval, even by electronic means i.e. by Email dd f ki h i l b l i i b E il or Fax. � Where 1/3 rd or more directors require the said resolution to be decided at the meeting, the Chairman shall put the same to be decided at the meeting.
Committees of the Board (S :177 & 178) ( R : 6 & 7) (S :177 & 178) ( R : 6 & 7) � Following are the mandatory Committee that are to be constituted by the Companies given below: Companies given below: 1. Audit Committee 2. Nomination and Remuneration Committee 3. Stakeholders Relationship Committee (if number of shareholders, debenture holders or deposit holders are more than 1000)
Following Companies to have Audit Committee, Nomination and R Remuneration Committee:- i C i • Every Listed Company; • All Public Companies with a paid up capital of 10 crores or more, turnover of 100 crores or more; turnover of 100 crores or more; • All Public Companies having outstanding dues exceeding fifty crores or more. • (Note: All this figures shall be taken as existing on the date of last audited financial statements)
• The Audit Committee shall consists of minimum of three directors with majority of Independent Directors. j i f I d d Di • The Chairman of theAudit Committee shall be Independent Director. • Nomination and Remuneration Committee shall consists three or more non – executive directors with not less than one half of members of the non executive directors with not less than one half of members of the Committee shall be Independent Directors
Stakeholder Relationship Committee p � The Board of a company which consist of more than 1000 shareholders, debenture holders, and deposit holders or any other security holder any time during the financial year shall constitute a stakeholder relationship committee with a chairperson to be non-executive director and such other p members as may be decided by the Board of directors. � Non consideration of resolution of any grievance in good faith shall not constitute contravention of this Section.
Establishment of Vigil Mechanism � Companies belonging to following class shall establish a vigil mechanism of their directors and employees to report their genuine concerns. f h i di d l h i i 1. All listed Companies 2 Companies which accepted deposits from the public 2. Companies which accepted deposits from the public 3. Companies which have borrowed money from banks and public financial institutions in excess of Rs. 50 Crores
Powers of Board (S:179)(R :8) • The Board of Directors of a Company shall be entitled to exercise all the powers and to do all the acts, as the Company is authorised to exercise. , p y • The Board of Directors shall exercise the following powers on behalf of Company: 1.To make calls on shareholders 2.To authorise buy back of securities 3.To issue securities including debentures 4.To borrow money 5.To invest funds of the Company 6.To grant loans or give guarantee or provide security in respect of loans 7 To approve financial statement and Board’s Report 7.To approve financial statement and Board s Report 8.To diversify the business of the company 9.To approve amalgamation, merger or re-construction 10 to take over a company or acquire a controlling or substantial stake in any 10. to take over a company or acquire a controlling or substantial stake in any Company.
R l 8 Rule 8 of the Companies (Meetings and Powers of Board) Rules, 2014 f h C i (M i d P f B d) R l 2014 provides for additional powers which shall also be exercised by the Board only at the Board Meeting. y g -To take note of appointment or removal of one level below the KMP; KMP; -To appoint internal auditor and secretarial auditor; -To buy, sell investments held by the Company constituting 5% or more of the paid up capital of the investee Company; f h id i l f h i C -To invite/accept/renew public deposits and related matters; -To review or change the terms and conditions of public deposit; -To approve quarterly/half yearly/annual financial statement or results.
Restrictions on powers of Board (S:180) (S:180) � Applies to all Companies (Earlier only public companies) � This section now requires special resolution instead of ordinary resolution to exercise specified powers i.e. to sell lease or otherwise dispose of the whole or substantially the whole of the undertaking, to invest otherwise in y g, trust securities, to borrow money, to remit or to give time for the repayment of any debt due from any director � Section 180 also defines the expression “ undertaking” and “substantially l d f h “ d k ” d “ b ll the whole undertaking” using 20% threshold criteria. � Section 180(1)(b) covers the power to invest the amount of compensation Section 180(1)(b) covers the power to invest the amount of compensation received as a result of any merger or amalgamation. � This sub-section shall not authorize the Company to reduce its share capital, except in accordance with the Act.
Company to contribute to bona fide and charitable funds, etc. (S:181) h it bl f d t (S 181) � This Section specifies the limit of 5% of its average net profits for the three immediately preceding financial year. h i di l di fi i l � There is no stipulation that net profits shall be calculated for this purpose as per section 198 of 2013 Act. p � Donations to charitable and other funds directly relating to the business of the Company or the welfare of its employees not so excluded from the ambit of Section 181 of the 2013 Act. b f f h � Prior permission of the members of the Company in general meeting is required in case amount of expenditure exceeds the limit of 5% as required in case amount of expenditure exceeds the limit of 5% as specified.
Prohibitions and restrictions regarding political contributions (S:182) political contributions (S:182) � A Non Govt. Company and a Company which is in existence for at least 3 financial years can make political contributions up to 7.5% of average net profits for three preceding financial years. There is no stipulation that net profits shall be calculated for this purpose as per Section 198 of the 2013 Act. � No such contribution shall be made unless resolution has been passed in the Board of Directors meeting for such contribution Board of Directors meeting for such contribution. � Company shall disclose name of the political party and amount of contribution in its P/L account. � Contribution made to a person who may affect support to political party Contribution made to a person who may affect support to political party, the same shall also be regarded as contribution to political party.
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