FREQUENTLY ASKED QUESTIONS ON COMPANIES LAW
One of our client companies is a private company wants to make political contribution during the current financial year and has been in existence for 5 years, seeks advice regarding the provisions related to political contribution. Kindly advice.
As per Section 182 of Companies Act 2013, a company other than Government company and a company which has been in existence for less than 3 financial years, may contribute directly or indirectly to the political party.
But such amount shall not exceed 7.5 % of the average of net profits during the 3 immediately preceding financial years and such amount shall be shown on the expense side of profit and loss account.
Provided that such proposal shall be authorized by AOA and resolution be passed by the board in the board meeting.
Our client company had convened General Meeting last week and appointment of 2 directors on single motion and some directors raised objection regarding the appointment of directors should be voted individually. The company seeks advice on whether their objection is tenable or not?
As per section 162 of the Companies Act 2013, a motion for the appointment of 2 or more persons as directors by a single resolution shall not be moved unless such proposal is passed unanimously in the same meeting.
However, Section 162 shall not be applicable to a wholly-owned government company or any subsidiary of a wholly-owned government company and also to a private limited company.
Therefore, by virtue of exemption, a private companies may appoint directors by a single vote and hence, their objection is not tenable.
Whether advance taken from customers by real estate company on which no interest has been paid will be treated as advance or deposit as per the Companies Act, 2013?
As per the Rule 2(xii) of the Companies (Acceptance of Deposits) Rules, 2014, any amount received in the course of, or for the purposes of the business of the company – as advance, accounted for in any manner whatsoever, received in connection with consideration for property under an agreement or arrangement is exempted from the definition of the Deposits but if such advance is not adjusted against the property in accordance with the terms of agreement or arrangement then it will be treated as a deposit.
Further, whether interest is charged or not is immaterial. Thus, advance taken from customers by real estate company shall not be considered as deposits. But if it is not adjusted against the property in accordance with the terms of agreement or arrangement, then it will be treated as a deposit.
One of our clients is an individual and is holding directorship in 17 companies ( 10 pvt. cos. & 7 public cos.) and is desirous to become a director in other companies, he seeks advice regarding whether he may appoint in other companies or not?
As per Section 165 of the Companies Act 2013, an individual shall hold office as director including alternate directorship for maximum of 20 companies subject to the maximum ceiling of 10 public companies, therefore he shall not hold office as director for more than 10 public companies at the same time.
Provided that this section is not applicable to Section 8 companies and directorship in the dormant company shall not be included.
Therefore, he may be appointed as director for a maximum of 3 public companies or private companies.
How we can record the names of the directors who have attended the meeting through video-conferencing or how the directors participating in a meeting by video conferencing sign the attendance register?
The following provisions in the rules ensure the correct recording of the names of directors who are present through video conferencing:
Rule 3(4) of the Companies (Meetings of Board and its Powers) Rules, 2014 provides that at the commencement of the meeting, a roll call shall be taken by the chairperson when every director participating through video conferencing or other audiovisual means shall state, for the record, inter-alia, name, and location from where the director is participating.
Further Rule 3(11)(b) of the Companies (Meetings of Board and its Powers) Rules, 2014 provides that the minutes shall disclose the particulars of the directors who attended the meeting through video conferencing or other audiovisual means.
Notes: MCA modified Rule 4(2) of the Companies (Meetings of the Board and its Powers) to extend the time limit for the conduct of the Board of Directors through the Video Conference/Other Audio-Visual Means for the approval of financial statements, the Board’s report, the Prospectus, & other strictly limited agenda items as referred to in 4(1)from 31 Dec 2020 to 30 June 2021.
Whether the company has to compulsory send the notice of the Board meeting to the director who has waived his right to receive the notice?
As per Section 173 of the Companies Act, the company has to send notice to all the directors including the interested director, original director & alternate director at their addresses registered with the company even if any director has waived his right to receive the notice.
A company has outstanding debt instruments and wants to roll over them for a further period of time and is regularly paying interest obligations. As an expert, kindly advise on other conditions required for such rollover ?
A company may roll over its outstanding securities any time after complying with the following conditions :
- Consent of at least 75 % of holders shall be there in writing.
- Such trust deed shall contain provisions for rollover otherwise new trust deed shall be executed.
- New security shall be mortgaged if the older one is not capable to make rollover successful.
- Payment to those holders who did not give their assent to roll over, at the time of maturity of such debt instrument.
We have a query as in case a Director A is appointed on 1st April, Director B is appointed on 18th April, and Director C ceases to be associated with the company w.e.f. 18th April. In such a case can we file one e form DIR 12 for all the three events or we are required to file different forms with the ROC. Please clarify.
As in your case, details of all the three changes can be filed through the same Form DIR-12 only if the Form is filed on or before 1st May, as all the events fall within 30 days. However, if the company files the e-Form DIR-12 on the 10th of May, then details in a separate e-Form would be required to be filed in respect of Director A and accordingly.
In case a company is having a paid-up share capital of ten crore rupees or more, whether such a company requires prior approval of members by special resolution to enter any contract with any related party.
In terms of the Companies (Meetings of Board and its Powers) Second Amendment Rules, 2014, the limit of paid-up capital of ten crore rupees for the purpose of requiring prior approval of members by special resolution for entering any contract with a related party has been removed. The company is required to comply with the provisions of section 188 read with rule 15 of the Companies (Meetings of Board) Rules, 2014 for entering into any contract or arrangement with a related party.
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