eGovernance & Companies Act, 2013
Agenda What is eGovernance. Extensive use of IT under Companies Act, 2013 Key Provisions facilitating eGovernance Rationale behind introducing eGovernance
What is eGovernance? eGovernance in the context of companies, is commonly understood as technology driven governance by application of information and communication technology for automation of process, which facilitates efficient functioning, transparency and accountability.
Extensive use of IT terms under Companies Act, 2013 S No. Words Used in Act Used in Rules Total Video Conferencing 3 18 21 1. Audio Visual Means 3 17 20 2. Electronic Form (e-form) 14 70 84 3. Electronic Mode 10 30 40 4. Electronic Means 6 20 26 5. Electronic Record 1 18 19 6. Databank /Database 2 5 7 7. for Independent Directors (150) For Interim administrator(259) Electronic Inspection 1 0 1 8.
Extensive use of IT terms under Companies Act, 2013 (contd.) S No. Words Used in Act Used in Rules Total Voting by electronic means and 2 7 9 9. electronic voting system Electronic Filing - - Almost all the 10 filings in the Act is e-filing Information to be put on 12 39 51 11. website(s) Electronic evidence (397) 1 1 12. Director Identification Number 9 65 74 13. Electronic Mail 1 75 76 14. Digital signature certificate Used in filing 15. all the e-forms
Extensive use of IT terms under Companies Act, 2013 (contd.) S No. Words Used in Act Used in Rules Total Electronic Registry 0 12 12 16. Electronic Transmission 0 4 4 17. Electronic Request 0 1 1 18. Electronic link or Uniform 2 2 19. Resource Locator Electronic System 0 1 1 20. Electronic Recording Mechanism 0 1 1 21. Electronic Register and entries 1 0 1 22. therein Electronic Media 1 0 1 23.
Key provisions facilitating eGovernance Board Meeting eRecords eVoting through video conferencing Sending Issuance of notice of financial statement – meeting via e-mail e-mode Database for Disclosures eFiling/ Independent on the eInspection Directors website
eRecords - Eligibility Section 120 Any document, record, register, minutes required to be kept by any company or allowed to be inspected or copies to be given to any person, may be kept copied and inspected, in electronic form in such form and manner as may be prescribed. “ Every Listed Company or a company having 1000 or more shareholders , debentures holders and other security holders, may maintain its records in electronic format ” Section 128 Any company may keep its books of accounts and other relevant books and papers and financial statement for every financial year in electronic mode.
eRecords – Key Requirement The eRecords shall be maintained in the manner as the Board may think fit. Maintained in the same formats and in accordance with the requirements of the Act and rules; Must be capable of being readable, retrievable and reproducible in simple form; Must be capable of being dated and signed digitally; Once dated and signed, shall not be capable of being edited or altered; Must be capable of being updated and the date of updating shall be capable of being recording on every updating. Security of eRecords The Managing Director, Company Secretary or any other director or officer of company as the Board may decide shall be responsible for the maintenance and security of eRecords.
eRecords – Key Requirement Manner of books of accounts to be kept in electronic mode Books of accounts and other relevant books and papers maintained in e-mode shall remain accessible in India so as to be usable for subsequent reference; Books of accounts shall be retained completely in the format they were originally generated, sent or received; The information received from branch offices shall not be altered and shall be kept in a manner where it shall depict what was originally received from the branches;
eRecords – Key Requirement Manner of books of accounts to be kept in electronic mode eRecords of books of accounts shall be capable of being displayed in legible form; The company shall intimate to Registrar on annual basis at the time of filing financial statement- • Name and IP address of service provider; • Location of service provider • Where the books are maintained on cloud, such address as provided by the service provider.
eVoting - Eligibility Every Listed Company; or Every company having not less than 1000 shareholders. Shall provide to its members facility to exercise their right to vote at general meetings by electronic means. (Sec 108)
eVoting – Key Requirements The notice of the meeting shall- • clearly mention that the business may be transacted through electronic voting system and the company is providing such facility; • Indicate the process and manner for voting, time schedule and shall provide login ID and create facility for generating password and keeping it secure. An advertisement to be published at least 5 days before the beginning of voting period stating the matters provided in the Act; The voting shall be kept open for minimum 1 day and maximum 3 days. The voting shall be completed 3 days before the date of the meeting.
eVoting – Key Requirements Once the vote on the resolution is cast, it cannot be changed subsequently. Board shall appoint one scrutinizer to scrutinize the e- voting process in a fair and transparent manner; Scrutinizer shall within a period of 3 days from the conclusion of e-voting period, unblock the votes in presence of atleast 2 witnesses and make a scrutinizer’s report to the chairman.
eVoting – Key Requirements Scrutinizer shall maintain a register to record the assent or dissent received, mentioning the particulars of the shareholders; The register and all other papers shall remain in the safe custody of the scrutinizer until the chairman considers, approves and signs the minutes; The results declared along with the scrutinizer’s report shall be placed on the website of the company and agency within two days of passing resolution at the relevant meeting; Subject to the receipt of sufficient votes, the resolution shall be deemed to be passed on the date of the relevant general meeting of members. The e-voting facility provided under the poll and postal ballot shall comply with the same requirements as provided above.
Board Meeting through video conferencing - Eligibility A director may participate in the meeting of the board of directors in person or through video conferencing or other audio visual means. (Sec 173)
Board Meeting through video conferencing – Key Requirements • Every company shall make necessary arrangements to avoid failure Company of video or audio visual connection. • Chairperson of Safeguard the integrity of meeting by securing sufficient security meeting and and identification procedures; Company Secretary, if any • Ensure availability of proper equipment or facilities for providing transmission of communication for effective participation; • Record proceedings and prepare minutes of the meeting; • To store for safekeeping and marking the tape recordings as part of the records of the company; • To ensure no person other than director are attending or have access to proceedings; • To ensure that participants are able to hear and see other participants clearly during the course of meeting.
Board Meeting through video conferencing – Key Requirements • Director intending to participate through video conferencing or audio visual means shall communicate his intention to chairperson or company secretary of the company; • The director who desire to participate may intimate his intention of participation through electronic mode in the beginning of the calendar year and such declaration shall be valid for one calendar year; • Every meeting conducted through electronic mode, the scheduled venue of the meeting as set forth in the notice, shall be deemed to be place of the said meeting and all recordings of the proceeding at the meeting shall be deemed to be made at such place;
Board Meeting through video conferencing – Key Requirements • Chairman required to make a roll call with respect to every director participating through video conferencing; • Company to send draft minutes to all directors within 15 days of the meeting; • Confirmation of accuracy of draft minutes by every directors who attended meeting within 7 days (or some reasonable time decided by the Board) of receipt of draft minutes, failing which it will be deemed approved.
Matters not to be dealt through video conferencing Matters not to be dealt in meeting through video conferencing To approve the annual financial statements; To approve the board’s report; To approve prospectus; To approve merger, amalgamation, demerger, acquisition and takeover; and The audit committee meetings for consideration of financial statement including consolidated financial statement, if any, to be approved by the Board under the Act.
Whether it is necessary to provide the option of video conferencing No, it is necessary to provide the option of video conferencing or audio visual means facility.
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