- Can a company be incorporated without a registered office?
As per the Companies Act 2013, a Company shall have its registered office within 30 days of its incorporation.
- What is the due date to intimate the ROC for change in the situation of registered office of the company?
As per Companies Act, 2013 every change in the situation of registered office of the company is required to be given to the ROC within 30 days of the change
- Can a non-resident become a member of an OPC?
In terms of Rule 3 of the Companies (Incorporation) Rules, 2014, only a natural person who is an Indian citizen and resident in India is eligible to incorporate an OPC. Therefore, a non-resident cannot become a member or nominee of an OPC. For the purposes of this rule, the term “resident in India” means a person who has stayed in India for a period of not less than one hundred and eighty two days during the immediately preceding one calendar year.
- How many OPCs can be incorporated by a person or in how many OPCs, he shall be eligible to be a nominee?
A natural person shall not be member of more than an OPC at any point of time and the said person shall not be a nominee of more than an OPC.
- Whether a private Company having paid-up share capital â‚¹ 45 lakh and& turnover of â‚¹ 20 crore as per last audited balance sheet will be treated as small company or not?
Ans: It is not a small company. Section 2(85) defines a small company as a company other than a public company —
- Paid-up share capital of which does not exceed â‚¹ fifty lakh rupees or such higher amount as may be prescribed which shall not be more than five crore rupees; or
- Turnover of which as per its last profit and loss account does not exceed â‚¹ 2 crore rupees or such higher amount as may be prescribed which shall not be more than twenty crore rupees:
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- A holding company or a subsidiary company;
- A company registered under section 8; or
- A company or body corporate governed by any special Act.
This means that a company shall not be small company if it has a paid up share capital of â‚¹ 50 lakhs or more OR if its turnover exceeds â‚¹ 2 crores. Since the turnover of this company is more than â‚¹ 2 crores i.e. â‚¹ 20 Crore it will not be a small company.
Sub-section (9) of Section 5 provides that nothing in this section shall apply to the Articles of a company registered under any previous law unless amended under the Act.
Hence, although it is not mandatory to alter the Articles of Association, it is advisable given that certain provisions of Companies Act, 2013 require specific clauses in the Articles to carry out operations of any organisation, such as for issuance of bonus shares.
Yes, a company is required to pass a special resolution for altering its MOA except for the alteration of capital clause of memorandum which could be altered by passing ordinary resolution.
Section 464 of the CA, 2013 provides that no association or partnership can be formed with the number of members exceeding hundred (100) subject to the Rules prescribed under this Act. Rule 10 of Companies (Miscellaneous) Rules provides that no association or partnership can be formed with the number of members exceeding fifty (50). Therefore, the limit of number members for formation of association or partnership of persons is fifty (50).
Section 465 (2) of the Companies Act 2013 provides that the notification, circulation rules, orders issued under Companies Act 1956, insofar as it is not inconsistent with the provisions of Companies Act, be deemed to have been done or taken under the corresponding provisions of Companies Act 2013. It further provides that it shall continue to be in force, if it was in force at the commencement of CA, 2013 and shall have effect as if made, directed, passed, given, taken, executed, issued or done under or in pursuance of this Act. Considering the aforesaid, notifications, circulars, rules, orders issued for certain type of companies under Companies Act 1956 will also be applicable for those companies under the Companies Act 2013.
No, as per the Companies (Amendment) Act 2015, the companies are not mandatorily required to have common seal. Further, the existing companies may amend their Articles of Association to this effect.
As per notification (FNo1/1/2014-CL.V) dated 5 June 2015 issued by MCA, Section 43 pertaining to kinds of share capital is not applicable to private company and hence, private company can issue shares with differential voting rights without following the conditions prescribed for issue of shares with differential voting rights.
As per Section 19 of the CA, 2013, subsidiary company cannot hold shares in its holding company and any such holding shall be void. A subsidiary company may hold shares in its holding company only in the following circumstances: (a) where the subsidiary company holds such shares as the legal representative of a deceased member of the holding company; (b) where the subsidiary company holds such shares as a trustee; (c) where the subsidiary company is a shareholder even before it became a subsidiary company of the holding company
As per Section 53 of CA, 2013, no company shall issue shares at a discount other than issue of sweat equity shares. However, a company may issue shares at a discount to its creditors when its debt is converted into shares in pursuance of any statutory resolution plan or debt restructuring scheme in accordance with any guidelines or directions or regulations specified by the Reserve Bank of India under the Reserve Bank of India Act, 1934 or the Banking (Regulation) Act, 1949.
No, as per Rule 4(3) of Companies (Share Capital and Debenture) Rules 2014, company cannot convert its existing shares into shares with differential voting rights and vice versa.
Sweat equity shares means shares issued at a discount or for consideration other than cash to the Directors and employees for providing know-how or making available rights in the nature of intellectual property rights or value addition.
Sweat equity shares can be issued to employees of the company i.e. permanent employee of the Company (or of a subsidiary or of a holding of the company) who has been working in India or outside India, for at least one year, a Director of the Company (or of a subsidiary or of a holding of the company).
Such sweat equity shares issued to the employees or Directors of the Company shall be locked-in for a period of 3 years from the date of issue.
Ans: The definition of deposits under Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014 starts with "Deposit includes any receipt of money by way of deposit or loan or in any other form by a company, but does not include 2(1)(c) (viii) any amount received from a person who, at the time of the receipt of the amount, was a director of the Company."
The usage of the words "But does not include" provides exemption to items listed thereof and the words "any amount received from a person who, at the time of the receipt of the amount, was a director of the Company." makes it clear that any amount received from a person who was a director at the time of receipt of the amount is exempt irrespective of the fact that he might be a shareholder also.
Ans: It has been clarified by MCAvideGeneral Circular 20/2014 dated 17th June, 2014 that a person who has voted through e-voting mechanism in accordance with Rule 20 shall not be debarred from participation in the general meeting physically. But he shall not be able to vote in the meeting again, and his earlier vote (cast through e-means) shall be treated as final.
Ans: According to Section 120 the documents, records, registers, minutes may be kept and inspected in electronic form. As per Rule 27 of Companies (Management and Administration) Rules, 2014, it is mandatory for every listed company or a company having not less than one thousand shareholders, debenture holders and other security holders, to maintain its records, as required to be maintained under the Act or rules made there under, in electronic form.
Ans: As per Rule 27 of the Companies (Management and Administration) Rules, 2014 every listed company or a company having not less than 1000 shareholders, debenture holders and other security holders, shall maintain its records in electronic form. In case of existing companies, data shall be converted from physical mode to electronic mode within six months from the date of notification (w.e.f 1-4-2014 therefore by 30-09-2014).
Ans: As per proviso to Section 124(6) claimant of shares shall be entitled to claim the transferred shares from IEPF and the procedure for that would be specified in the IEPF Rules. The Rules are yet to be notified.
Ans: As per section 134(1), Financial Statement is required to be signed by:
- The chairperson of the company where he is authorised by the Board or by two directors out of which one shall be managing director;
- The Chief Executive Officer, if he is a director in the company,
- The Chief Financial Officer; and
- The company secretary of the company, wherever appointed,
In the case of a One Person Company, the Financial Statement is required to be signed only by one director.
Ans: No, the activity undertaken in pursuance of any law would not be considered as CSR activity.
In this regard, please refer to the Ministry of Corporate Affairs Circular No. 21/2014 dated June 18, 2014 where it is clarified that expenses incurred by companies for the fulfilment of any Act/ Statute of regulations (such as Labour Laws, Land Acquisition Act etc.) would not count as CSR expenditure under the Companies Act, 2013.
Ans: If the hospitals and educational institutions are part of the business activity of the company they would not be considered as CSR activity. However, if some charity is done by these hospitals or educational institutions, without any statutory obligation to do so, then it can be considered as CSR activity.
Ans: In terms of Rule 3(1) of the Companies (Corporate Social Responsibility Policy) Rules, 2013, a foreign company having its office or project office in India which fulfils the criteria specified in Section 135(1) is required to comply with the provisions of Section 135 of the Act and the Rules thereunder.
The networth, turnover or net profit of a foreign company is to be computed in accordance with the balance sheet and profit and loss account of the foreign company prepared with respect to its Indian business operations in accordance with schedule III for each financial year.
Therefore foreign company having its branch office or project office in India which fulfils the criteria specified under section 135(1) is required to constitute a CSR Committee and comply with the spending of 2% of average net profits as per financial statement of its Indian business operations in CSR activities in India.
Ans: As per the provisions of section 135 of the Act, any one of the three criteria has to be satisfied to attract Section 135. Therefore, if a company satisfies the criterion of turnover although it does not satisfy the criterion of net profit, it wil have to comply with the provisions of Section 135 and the Companies (CSR Policy) Rules, 2014.
Ans: Explanation to Rule 3(7) of the Companies (Audit and Auditors) Rule 2014 explains that in case the appointment is not ratified by the members of the company, the Board of Directors shall appoint another individual or firm as its auditor or auditors after following the procedure laid down in this behalf under the Act.
Ans: Yes, as per Rule 6(3) of Companies (Audit and Auditors) Rules, 2014, the period for which the individual or the firm has held office as auditor prior to the commencement of the Act shall be taken into consideration for the purpose of rotation of auditors.
Note : As per Section 139(2) of the Companies Act 2013, every company, existing on or before the commencement of this Act which is required to comply with the provisions of this sub-section, shall comply with the requirements of this sub-section within three years from the date of commencement of this Act i.e. March 31, 2017.
Ans: Yes, an Independent Director of a Company can be appointed as Independent Director of its Associate/sister concern.
Also, as per clause 49 III.(i) of the listing agreement, at least one independent director on the Board of Directors of the holding company shall be a director on the Board of Directors of a material non listed Indian subsidiary company.
Ans: Ministry has,videits General Circular 14/ 2014 dated June 9, 2014, clarified that the appointment of an Independent Director for a term less than five years would be permissible, appointment for any term (whether for five year or less) is to be treated as a one term under section 149(10) of the Companies Act, 2013.
Further, section 149(11) provides that no person can hold office of Independent Director for more than ‘two consecutive terms’. Such a person shall have to demit office after two consecutive terms even if the total number of years of his appointment in such two consecutive terms is less than 10 years.
Ans: Section 152(6) of the Companies Act, 2013 provides that unless the Articles of Association provide for retirement by rotation of all directors at every annual general meeting, at least two-thirds of the total number of directors of a public company shall be persons whose office is liable to retirement by rotation and sub-section (7) provides that one-third of such directors shall retire by rotation at each annual general meeting of the company after the first annual general meeting. However, as per section 149 (13), the provisions of sub-sections (6) and (7) of Section 152 in respect of retirement of Directors by rotation shall not be applicable to appointment of independent directors. Hence, the requirement of retirement by rotation is also not applicable to independent directors.
Ans: In such situations it is advised that companies appoint such number of non-executive directors whose office is liable to retire by rotation and thereby ensure compliance of Section 152(6) and (7).
Ans: As per Section 117(3)(g), resolutions passed in pursuance of section 179(3) is required be to filed in e-form MGT-14 within 30 days of passing the resolution. Section 179(3) deals with the powers of the boards which may be exercised at board meetings only and as per Section 179(3)(k) the rules may prescribe additional matters and Rule 8 of Companies (Meeting of Board & its Power) Rules, 2014 requires that the disclosure of directors’ interest and shareholding should be taken Note of only by means of a resolution passed at board meeting. Therefore a company is required to file resolution for taking Note of disclosure of director’s interest and shareholding in Form MGT-14.
Ans: As per the provisions of Section 185, no company shall, directly or indirectly, advance any loan, including any loan represented by a book debt, to any of its directors or to any other person in whom the director is interested or give any guarantee or provide any security in connection with any loan taken by him or such other person. However any loan made by a holding company to its wholly owned subsidiary company or any guarantee given or security provided by a holding company in respect of any loan made to its wholly owned subsidiary company is exempted from the requirements under this section; and any guarantee given or security provided by a holding company in respect of loan made by any bank or financial institution to its subsidiary company is exempted from the requirements under this Section.
The Statutory Registers are to be preserved in the following manner:
- Register of members: permanently
- Register of debenture holders & register of any other security holders: for 8 years from the date of redemption of debenture or securities as the case may be
- Foreign register of members: Permanently, unless it is discontinued and all the entries are transferred to any other foreign register or to the principal register
As per Section 2(41) of the CA, 2013, “financial year” in relation to any company or body corporate, means the period ending on the 31st day of March every year, and where it has been incorporated on or after the 1st day of January of a year, the period ending on the 31st day of March of the following year, in respect whereof financial statement of the Company or body corporate is made up.
The Financial Statements of a company is required to be signed as per the provisions of Section 134 of the CA, 2013 by Chairperson if he is authorized or two directors out of which one shall be MD, if any, the CEO, the CFO and the Company Secretary, wherever they are appointed.
As per fourth proviso to Section 136(1) of the CA 2013, every company having a subsidiary or subsidiaries shall place separate audited accounts in respect of each of its subsidiary on its website, if any. Further, there is no requirement of placing standalone financial statements of associates/joint ventures on the website of the company. However, if a Listed Company has a foreign subsidiary and:
- If the foreign subsidiary is statutorily required to prepare consolidated financial statement under the law of any country, the requirement shall be met if such consolidated accounts are placed on the website
- If the foreign subsidiary is not required to audit its financial statements, the Listed Company may place the unaudited financial statement on its website and if the language is not English, a translated copy of the same shall be placed on the website.