Frequently Asked Questions
On
The Companies Act, 2013
The Institute of Chartered Accountants of India
(Set up by an Act of Parliament)
New Delhi
© The Institute of Chartered Accountants of India
All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system or transmitted in any form or by any means electronic,
mechanical, photocopying, recording or otherwise without prior permission in
writing from the publisher.
First Edition : February 2017
Committee/Department : Corporate Laws & Corporate Governance
Committee
E-mail : clcgc@icai.in
Website : www.icai.org
ISBN No. : 978-81-8441-858-3
Published by : The Publication Department on behalf of the
Institute of Chartered Accountants of India.
ICAI Bhawan, Post Box No. 7100,
Indraprastha Marg, New Delhi 110 002,
India.
Foreword
The Companies Act, 2013 was enacted to consolidate and amend the law
relating to companies and making Indian law at par with the best
International Standards. It was one of the most significant legal reforms in
India in the recent past.
The law is aimed at easing the process of doing business in India and
improving corporate governance by making companies more accountable.
Since the Companies Act is being implemented and during the last three
years of its enactment, issues are being resolved with the issuance of
Circulars, Notifications, Amendment in Rules/ Act, Companies Removal of
Difficulty Orders etc by the Ministry of Corporate Affairs.
Still there are challenges for the stakeholders to keep themselves abreast of
the frequent developments and understanding the intricacies of various new
provisions of the law. Although, the major amendments have been proposed
in the Companies Act, 2013 through the Companies (Amendment) Bill, 2016
which is now before the Parliament.
I am happy to inform you that ICAI has been part of the consultation process
for drafting the Companies (Amendment) Bill, 2016.
I congratulate the Corporate Laws & Corporate Governance Committee of
the Institute of Chartered Accountants of India (ICAI) to take this initiative in
bringing out a comprehensive book on Frequently Asked Questions of
Companies Act, 2013 and to provide guidance to the members of the
profession for clear interpretation and understanding of the new law.
I appreciate the Corporate Laws & Corporate Governance Committee (CL &
CGC) in bringing this publication which is so useful for our members. I extend
my sincere appreciation to CA. Dhinal Shah and CA. K. Sripriya, the
Chairman and Vice Chairperson of the Corporate Laws & Corporate
Governance Committee respectively, my Council Colleagues, other members
of the Committee, Co-opted members and Special Invitees of the Committee
to bring out this important publication.
I am confident that this publication would be of great help to the members
and other stakeholders.
New Delhi CA. Deveraja Reddy M
2nd February, 2017 President, ICAI
Preface
The Companies Act, 2013 was enacted to improve Corporate Governance
and better transparency in the corporate sector which is imperative to infuse
confidence amongst investors in Indian market and abroad and to further
strengthen regulations for the companies, keeping in view the changing
economic environment as well as the growth of our economy. The Ministry of
Corporate Affairs has been taking proactive initiatives by making the existing
law simple and comprehensive fostering a positive environment for
investment and growth.
There are 470 sections in the Companies Act, 2013 but various provisions of
the Act were notified in the last two and a half year in a phased manner.
The Companies (Amendment) Bill, 2016 is also before the Parliament where
large amendments to the Act have been proposed that were necessary for
proper and effective implementation o the Companies Act, 2013. Institute has
contributed substantially for the proposals in the Bill. Also, wherever there
are amendments proposed in the Bill, the same have been incorporated in
the respective sections.
In view of the extent and scope of changes in the new Act, the stakeholders
took some time to come to terms with the new provisions, and faced some
difficulties in the implementation of the Act.
To facilitate the understanding and interpretation of the provisions of
Companies Act, 2013, the Corporate Laws & Corporate Governance
Committee decided to bring out a publication on the Frequently Asked
Questions in the Companies Act 2013.
The publication has been designed in a question and answer format to assist
our members and fellow professionals in mitigating various queries relating to
the Companies Act, 2013.
In this connection I take this opportunity in thanking the President of ICAI,
CA. M. Devaraja Reddy and Vice President CA. Nilesh S. Vikamsey for their
moral support and encouragement in bringing out the publication. I place on
record my appreciation to CA. K. Sripriya, Vice Chairperson of the Corporate
Laws & Corporate Governance Committee and the other committee members
for their help and guidance in framing and bringing out this publication
comprising of the Frequently Asked Questions on the provisions of
Companies Act, 2013.
I would like to thank Ms. Purna Devi, Mr. Bikash Prasad, Ms. Sangeetha HN,
Ms. Shubhra Gupta who were involved in putting together the FAQ
I sincerely believe that the members of the profession, industries and other
stakeholders will find the publication immensely useful.
New Delhi CA. Dhinal Ashvinbhai Shah
2nd February, 2017 Chairman
Corporate Laws & Corporate Governance Committee,
ICAI
Index
Sl. Topic Question Page
No. No. No
1. Incorporation and allied matters 1-24 1
2. Capital and allied matters 25-54 8
3. Directors 55-64 16
4. Board related matters 65-89 20
5. Management and Administration 90-108 28
6. Accounts 109-122 33
7. Audit and Auditors 123-141 37
8. Secretarial audit 142-151 43
9. Deposits 152-157 46
10. Dividend 158-165 48
11. Corporate Social Responsibility 166-168 51
12. Compromise and Arrangement 169-177 52
Annexure 54
Annexure A List of sections as notified and -
enforced as on 30th January, 2017
Glossary
AGM Annual General Meeting
AOA Articles of Association
CA, 1956 Companies Act, 1956
CA, 2013 Companies Act, 2013
CIN Corporate Identification Number
CSR Corporate Social Responsibility
DIN Director Identification Number
EGM Extra-ordinary General Meeting
ESOP Employees Stock Option Plan
FEMA Foreign Exchange Management Act, 1999
ROC Registrar of Companies
MCA Ministry of Corporate Affairs
MOA Memorandum of Association
OPC One Person Company
KMP Key Managerial Personnel
RD Regional Director
NCLT National Company Law Tribunal
Incorporation and Allied Matters
Q1. What is SPICE?
A1. SPICE refers to "Simplified Proforma for Incorporating Company
Electronically". It is a simplified integrated process for incorporating
a company in Form No. INC-32 along with e-MOA in Form No. INC-33
and e-AOA in Form No. INC-34. It has been recently introduced by
the MCA and is effective from 1 October 2016.
Q2: In case the subscriber to the MOA is a foreign national residing
outside India, his signatures and address etc. shall be witnessed
by a Notary Public/Embassy/Consulate offices of Embassies as
per the Rule 13 of the Companies (Incorporation) Rules, 2014. In
such cases, how can the DSC of such a witness be affixed?
A2: In such cases, SPICe (INC-32) shall be filed along with the manually
signed and duly attested MOA and AOA.
Q3: Whether every company is required to follow the SPICe process
for incorporation of a company?
A3: As per Companies (Incorporation) Fifth Amendment Rules, 2016, all
companies except Part I companies and a company having more than
7 subscribers/promoters are required to follow the SPICe process for
incorporation with effect from 1 January 2017.
Q4: Can a company apply for name availability certificate by filing
Form INC-1 prior to filing of SPICe form?
A4: Yes, an applicant can make an application in Form INC-1 for name
availability as per Rule 9 of the Companies (Incorporation) Rules,
2014, and file incorporation documents through SPICe mode on
approval of the name. However, such name shall be reserved for a
period of 60 days from the date of making an application.
However, as per the proposed Companies Amendment Bill, 2016
which is yet to be notified, name shall be reserved for a period of 20
days from the date of approval or such other period as may be
prescribed shall be substituted.
Q5: Can a company be incorporated without a registered office?
A5: Yes, a company may be incorporated without having a registered
office address by providing an address for correspondence in the
incorporation form. However, as per Section 12 of the CA, 2013 read
Frequently Asked Questions on The Companies Act, 2013
with Rule 25 of the Companies (Incorporation) Rules, 2014 on or from
the 15th day of its incorporation and at all time thereafter, a company
is required to have a registered office. The company which has not
intimated address of its registered office at the time of incorporation
is required to intimate to ROC of the same within 30 days of
incorporation.
However, as per the proposed Companies Amendment Bill, 2016
which is yet to be notified, a Company can have its registered office
within 30 days of its incorporation as against 15 days as per the
present requirement.
Q6: In case of an overseas subscriber and director, are the
documents required to be notarised and apostilled for
incorporation of a company?
A6: As per Rule, 13 of the Companies (Incorporation) Rules, 2014, where
the subscriber to the MOA or a director to be appointed is a foreign
national residing outside India, the MOA, AOA, proof of identity as
well as address proof shall be attested in the following manner which
is based on the country where the subscriber/ director reside or the
registered office is situated in case of a body corporate being the
subscriber:
1. Residing in a country which is part of the Commonwealth - by
a Notary (Public) in that part of the Commonwealth;
2. Residing in a country which is party to the Hague Apostille
Convention, 1961 - by a Notary (Public) and duly apostilled in
accordance with the said Hague Convention; and
3. Residing in a country which is not party to the Hague Apostille
Convention, 1961 - the documents shall be notarized before
the Notary (Public) of such country and the certificate of the
Notary (Public) shall be authenticated by a Diplomatic or
Consular Officer empowered in this behalf under Section 3 of
the Diplomatic and Consular Officers (Oaths and Fees) Act,
1948 (40 of 1948) i.e. attested by Public Notary and
authenticated by Indian Embassy in the country of residence.
Q7: What is the due date to intimate the ROC for change in the
situation of registered office of the company?
A7: As per Section 12(4) of the CA, 2013 read with Rule 27 of the
Companies (Incorporation) Rules, 2014, notice of every change in the
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Incorporation and Allied Matters
situation of registered office of the company is required to be given to
the ROC within 15 days of the change in Form INC-22.
However, as per the proposed Companies Amendment Bill, 2016
which is yet to be notified, 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.
Q8: What is OPC?
A8: As per Section 2(62) of the CA, 2013, OPC means a company which
has only one person as a member.
Q9: Can a non-resident become a member of an OPC?
A9: 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.
Q10: How many OPCs can be incorporated by a person or in how
many OPCs, he shall be eligible to be a nominee?
A10: As per Rule 3(2) of Companies (Incorporation) Rules, 2014 no person
is eligible to incorporate more than one OPC or become nominee in
more than one such company.
Rule 3(2) of the Companies (Incorporation) Rules, 2014 was
substituted vide Notification dated 27 July 2016, Companies
(Incorporation) Third Amendment Rules, 2016, as per which 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.
Q11: Can a company registered under Section 8 merge with another
company with dissimilar objects?
A11: As per Section 8(10) of CA, 2013, a company registered under
Section 8 can only be merged with another Section 8 company which
has similar objects.
Q12: Is a Section 8 company required to seek permission of Central
Government ("RD") for alteration of its AOA prior to getting the
3
Frequently Asked Questions on The Companies Act, 2013
same approved by the members by means of special resolution
in general meeting?
A12: Yes, as per Section 8 (4)(i) of CA, 2013, Section 8 Company is
required to obtain prior approval of Central Government (power
delegated to "RD") for alteration of its articles. However, members
may pass the resolution for alteration of articles prior to the approval,
but it shall be effective only post approval from the Central
Government ("RD").
Q13: How will the surplus be treated in case of winding up of Section
8 Company?
A13: As per Section 8(9) of CA, 2013 (applicable w.e.f. 15.12.2016), any
asset remaining after satisfaction of the debts will be transferred to
another company registered under Section 8 of the CA, 2013 having
similar objects, subject to such conditions as the NCLT may impose,
or the same may be sold and proceeds thereof will be credited to the
Insolvency and Bankruptcy Fund formed under Section 224 of the
Insolvency and Bankruptcy Code, 2016.
Q14: What is Small Company?
A14: As per Section 2(85) of the CA, 2013, a Small Company, other than
public company, means a company where the:
(a) paid-up share capital of the company does not exceed INR 50
Lakhs or such higher amount as may be prescribed which
shall not be more than five crore rupees; and
(b) turnover as per its last profit and loss account does not
exceed 2 Crores or such higher amount as may be prescribed
which shall not be more than twenty crore rupees:
Note: No higher amount has been prescribed as yet.
Further, holding company, subsidiary company, company registered
under Section 8 or a company or body corporate governed by any
special act will not be considered as a small company.
However, as per the proposed Companies Amendment Bill, 2016
which is yet to be notified, the limit of paid up capital and turnover is
proposed to be increased to INR 10 Crores and INR 100 Crores
respectively.
Q15: Is it mandatory for the name of the company to be indicative of
the nature of its business?
4
Incorporation and Allied Matters
A15: No, it is not mandatory for the name to be indicative of the nature of
its business.
Q16: Can a company have multiple and varied objects under its MOA?
A16: The Object Clause of the MOA of a company defines the objects or
business it can carry and there is no bar under Section 4 (1) (c) of
CA, 2013 on a company from having multiple objectives. As a matter
of practice, the authorities do not approve more than four to five
objects in the Object Clause of the MOA.
However, as per the proposed Companies Amendment Bill, 2016
which is yet to be notified, the Company may engage in any lawful act
or activity for the time being in force. In case, company proposes to
pursue any specific objective, MOA shall state the said object for
which company is incorporated.
Thus, as per the proposed Companies Amendment Bill, 2016, the
question on multiple object or varied object would not arise.
Q17: Is a company required to alter its AOA as per the new format
under the CA, 2013?
A17: As per the provisions of Section 5(6) of the CA, 2013, AOA of the
company shall be in respective forms specified in Table F, G, H, I and
J in Schedule I.
Also, as per the provisions of Section 5(9) of CA, 2013, provisions
pertaining to AOA shall not apply to the AOA of company registered
under any previous company law unless amended under the CA,
2013.
It is not necessary, but advisable that subsequent to any amendment
to the AOA, the AOA is aligned as per the format specified under the
CA, 2013.
Q18: Is a company required to pass a special resolution for altering
its MOA?
A18: As per the provisions of Section 13(1) of the CA, 2013, a company is
required to pass special resolution for altering its MOA except for the
alteration of capital clause of MOA which could be altered by passing
ordinary resolution as per the provisions of Section 61 of the CA,
2013.
Q19: Is an approval from Central Government ("RD") required for
alteration of MOA relating to change in place of registered office
from one state to another?
5
Frequently Asked Questions on The Companies Act, 2013
A19: As per Section 13(4) of the CA, 2013, the alteration of MOA relating
to change in place of registered office from one state to another shall
not have any effect unless it is approved by the Central Government.
As the powers of Central Government on this aspect are delegated to
RD, the company will have to make an application and obtain the
approval from the RD.
Q20: In case of shifting of registered office from one state to another
there is a requirement of filing the order with each of the ROC's.
Is it possible to file two forms with a single CIN?
A20: No, it is not possible to file order approving the change of registered
office with two different ROC's with the same CIN.
As per Section 13 (7) of CA, 2013 read with Rule 31 of the
Companies (Incorporation) Rules, 2014, the order of the RD
approving the change of registered office from one state to another
has to be filed in Form INC-28 with the ROC of each of the state
within 30 days from the receipt of the certified copy of the order.
Given the practical challenge, that the company cannot file Form INC-
28 twice with the same CIN, the form is required to be filed with the
ROC under whose jurisdiction the registered office was originally
situated. The company will then have to file the Form INC-28 again
with the new ROC where the registered office of Company is shifted.
Q21: What is the limit on the number of members for formation of
association or partnership of persons?
A21: 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 the CA, 2013.
Rule 10 of Companies (Miscellaneous) Rules, 2014 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).
Q22. Will the notifications, circulars, rules, orders issued for certain
type of companies under Companies Act 1956 still be applicable
for those companies under the Companies Act 2013?
A22: Section 465 (2) of the CA, 2013 provides that the notification, circular,
rules, orders issued under CA, 1956, insofar as it is not inconsistent
with the provisions of CA, 2013, be deemed to have been done or
taken under the corresponding provisions of the CA, 2013. It further
6
Incorporation and Allied Matters
provides that it shall continue to be in force, if it was in force at the
commencement of the CA, 2013 and shall have effect as if made,
directed, passed, given, taken, executed, issued or done under or in
pursuance of the CA, 2013.
Considering the aforesaid, notifications, circulars, rules, orders issued
for certain type of companies under the CA, 1956 will also be
applicable for those companies under the CA, 2013.
Q23. Is a Small Company required to prepare Cash Flow Statement?
A23: As per Proviso to Section 2(40), exemptions have been granted to
Small Company, OPC and Dormant Company with effect from 1st
April, 2014. Therefore, it is not mandatory for a Small Company to
prepare Cash Flow Statement.
Q24: Is it mandatory for a company to have a common seal?
A24: 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 AOA to this effect.
7
Capital and Allied Matters
Q25: Is a private company required to follow the rules pertaining to
issue of shares with differential voting rights?
A25: As per notification No. GSR 464(E), dated 5th June, 2015 issued by
MCA, Section 43 pertaining to kinds of share capital is not applicable
to a private company, if same is provided in the MOA and AOA of that
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.
Q26: Is it mandatory to issue share certificate under the common seal
of the company?
A26: No, it is not mandatory to issue share certificates under the common
seal of the company. As per the Companies (Amendment) Act, 2015
read with Companies (Share Capital and Debentures) Second
Amendment Rules, 2015, every share certificate shall be issued
under the common seal, if the company has a common seal.
Q27: Who is required to sign the share certificate?
A27: As per Section 46 of the CA, 2013, read with Rule 5(3) of the
Companies (Share Capital and Debentures) Rule, 2014, a share
certificate can be signed in the following manner:
a. Company other than OPC:
(i) If a company has a common seal, the share certificate is
required to be signed by two Directors and Secretary or any
person authorized by the Board for the purpose.
(ii) If a company does not have a common seal, then the share
certificates shall be signed by two directors or a Director and
the Company Secretary, where the company has appointed a
Company Secretary.
b. OPC:
(i) If a company has a common seal, the share certificate is
required to be signed by one Directors or a person authorized
by the Board of Directors of the company and Secretary or
any other person authorized by the Board for the purpose.
Capital and Allied Matters
(ii) If a company does not have a common seal, then the share
certificates shall be signed by a person in whose presence the seal is
required to be affixed.
Q28: What are the modes available for issue of further shares?
A28: As per Section 23 of the CA, 2013, following modes are available for
issue of further shares:
1. Public Companies:
a) Public offer through issue of prospectus;
b) Private Placement/ Preferential allotment;
c) Issue of shares to employees under a scheme of employees'
stock option; and
d) Right issue/ bonus issue
2. Private Companies:
a) Right issue/ bonus issue;
b) Issue of shares to employees under a scheme of employees'
stock option; and
c) Issue of shares to any person through preferential allotment/
private placement.
Q29: Can subsidiary company hold shares in its holding company?
A29: As per Section 19 of the CA, 2013, subsidiary company cannot hold
shares in its holding company and any such holding shall be void
except in 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.
Q30: Can a company issue shares at a discount?
A30: As per Section 53 of CA, 2013, no company shall issue shares at a
discount other than issue of sweat equity shares. Any shares issued
by a company at a discounted price shall be void.
9
Frequently Asked Questions on The Companies Act, 2013
However, as per the proposed Companies Amendment Bill, 2016
which is yet to be notified, 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.
Q31: Is a company required to obtain shareholders' approval for
preferential issue of shares?
A31: Yes, as per Section 62(1)(c) read with Rule 13(1) of the Company
(Share Capital and Debenture) Rules, 2014, a company is required to
obtain shareholders' approval by way of special resolution in the
general meeting of the company.
Q32: What is the maximum number of persons to whom private
placement offer can be made?
A32: As per Section 42 of CA, 2013, a company can issue securities to
such persons not exceeding fifty or such higher number as may be
prescribed.
As per Rule 14 of Companies (Prospectus and Allotment of
Securities) Rules, 2014, the limit of number of persons to whom the
securities are to be issued cannot exceed two hundred person in
aggregate in a financial year.
Q33: Who are exempted from being included in the limit of 200
persons to whom private placement offer is issued?
A33: As per Section 42 of CA, 2013 read with Rule 14 of the Companies
(Prospectus and Allotment of Securities) Rules, 2014, any offer made
to the qualified institutional buyers or the employees of the company
under the employee stock option scheme are exempted from being
considered in determining the maximum limit.
Q34: Is a share valuation report required in case of Right Issue of
Shares?
A34: Share valuation report is not required in case of right issue of shares.
However, in case of issue of shares to non-resident, valuation is
required to be carried out as per the provisions of FEMA.
Q35: Can Board of Directors of a company take a decision to issue
Preference Shares?
10
Capital and Allied Matters
A35: No, as per Rule 9(1)(a) of Companies (Share Capital and
Debentures) Rules, 2014, preference shares can only be issued after
obtaining approval of shareholders through a special resolution in
general meeting. Hence, Board of Directors can only recommend to
the shareholders along with a detailed explanatory statement for
approval.
Q36: Can a private company issue debentures to public?
A36: No, a private company cannot issue debentures to public. The
definition of a `private company' as laid down in Section 2 (68) of the
CA, 2013 prohibits a company from inviting public to subscribe to any
securities issued by it. Given the prohibition to subscription by the
public, a private company can issue debentures only through private
placement.
Q37: Is a company required to intimate the ROC post redemption of
preference shares?
A37: Yes, as per Section 64 of the CA, 2013, a company is required to
intimate the particulars of redemption to the ROC in Form SH-7 within
30 days of redemption of preference shares.
Q38: What is the form for filing return of allotment with the ROC post
allotment of securities?
A38: As per the provisions of Section 39(4) of the CA, 2013 read with Rule
12 of the Companies (Prospectus and Allotment of Securities) Rules,
2014, a Company is required to file a return of allotment within 30
days from the date of allotment of shares in Form PAS-3 with the
ROC along with the list of allottees.
However, as per the proposed Companies Amendment Bill, 2016
which is yet to be notified, in case of allotment of shares issued
through private placement procedure, the return of allotment shall be
filed with the ROC within 15 days from the date of allotment.
Q39: Is it mandatory to get the securities listed in case of a public
offer?
A39: Yes, as per Section 40 of the CA, 2013, it is mandatory for
companies to make an application to one or more recognised stock
exchange or exchanges and obtain permission for the securities to be
dealt with in such stock exchange or exchange before making a
public offer.
11
Frequently Asked Questions on The Companies Act, 2013
Q40: Section 40(1) of the CA, 2013 requires a company to make an
application to the stock exchanges for listing of securities and
obtaining permission prior to making an offer. The requirement
under Section 73(1) of the CA, 1956 was only to make an
application. Hence, is it now required to obtain prior permission
from the stock exchanges or is making an application a
sufficient compliance?
A40: As per Section 40(1) of the CA, 2013, it is specifically provided that
every company which desires to make public offer should make an
application to one or more stock exchanges and take prior permission
for dealing in securities. Hence, company intending to make a public
offer is required to make an application and obtain approval of
shareholders prior to making an offer.
Q41: What is the offer period for rights issue?
A41: As per Section 62(1)(a)(i) of the CA, 2013, the rights issue offer shall
be kept open for a minimum period of 15 days and maximum period
of 30 days. However, in case of a private company, offer period may
be reduced by obtaining consent in writing or through electronic mode
of 90% of the members of private company. [This exemption is
available to private company vide notification No. GSR 464(E) dated
5th June 2015].
Q42: Can a company pass the resolution for issue of securities by
way of circulation?
A42: As per Section 179(3) of the CA, 2013, resolution with regard to issue of
securities should be discussed and passed at a duly convened Board
meeting and hence, resolution cannot be passed through circulation.
Q43: Can a company convert the existing shares into shares with
differential voting rights and vice versa?
A43: 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.
Q44: What is meant by sweat equity shares and to whom can a
company issue sweat equity shares?
A44: As per Section 2(88) of the CA, 2013, 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.
12
Capital and Allied Matters
As per Rule 8(1) of the Companies (Share Capital and Debentures)
Rules, 2014, sweat equity shares can be issued to employees of the
company as classified below:
permanent employee of the Company who has been working in India
or outside India, for at least one year;
a Director of the Company, whether a whole time Director or not;
an employee or a director as specified above of a subsidiary or of a
holding of the company
Q45: What is the lock-in period for sweat equity shares?
A45: As per Rule 8(5) of the Companies (Share Capital and Debentures)
Rules, 2014, 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 and the same shall be stamped or mentioned
in any other prominent manner on the share certificate.
Q46: What is the cap on issue of sweat equity shares?
A46: The cap on issue of sweat equity shares is as follows:
(i) In a year, issue shall not exceed 15% of the existing issued equity
share capital or issue value of INR 5 crores whichever is higher;
(ii) At any time, issue shall not exceed 25% of the total paid up equity
capital of the Company but a start-up company can issue sweat
equity shares not exceeding 50% of its paid up capital up to five
years from the date of its incorporation [The Companies (Share
Capital and Debentures) Third Amendment Rules, 2016].
Q47: Are all kinds of companies required to obtain approval of
shareholders by means of a special resolution for issuing shares
under ESOP?
A47: As per Section 62(1)(b) of the CA, 2013, all companies other than
private companies are required to obtain approval by means of a
special resolution in general meeting for issuing shares under ESOP.
As per notification No. GSR 464(E) dated 5 June 2015, in case of
private companies, an ordinary resolution by the shareholders would
suffice the requirement for issue of shares under ESOP.
Q48: Can an employee who is also a promoter of a company eligible
to obtain sweat equity shares and employee stock of option?
A48: As per Rule 12 of Companies (Share Capital and Debentures) Rules,
2014, employee who is also a promoter or person belonging to the
13
Frequently Asked Questions on The Companies Act, 2013
promoter group is specifically excluded from obtaining shares issued
under ESOP. In case of a start-up company as defined in notification
number GSR 180(E) dated 17th February, 2016 issued by the
Department of Industrial Policy and Promotion, Ministry of Commerce
and Industry Government of India, Government of India, this condition
shall not apply up to five years from the date of its incorporation or
registration. [The Companies (Share Capital and Debentures) Third
Amendment Rules, 2016].
However, in case of sweat equity shares, the said exclusion is not
specified in the provisions. Thus, an employee who is also a promoter
of a company is eligible to get sweat equity shares and not the
employee stock option.
Q49: Will all the employees of the company be eligible to participate
in the ESOP?
A49: No, only those employees as determined by the management of the
company shall be eligible to participate in the ESOP.
Q50: Has Section 66 pertaining to reduction of capital been enforced?
A50: Section 66 of the CA, 2013 for reduction of capital has been enforced
with effect from 15 December 2016 and accordingly, every company
is required to follow the provisions prescribed thereunder for
reduction of share capital.
Q51: What is meant by the term "Buy back of Shares" and funds
utilized for buy back?
A51: "Buy back" is a concept by which a company purchases its own
shares or other specified securities by following the procedures laid
down in Section 68 of the CA, 2013. The company can utilize free
reserves, securities premium account or proceeds of the issue of
fresh issue shares or other specified securities to purchase its own
shares.
Q52: What is the limit prescribed for buy back of shares?
A52: As per the provisions of Section 68(2) of the CA, 2013, in case a
special resolution has been passed by the members of the company
at the general meeting, the company can buy back shares not
exceeding 25% of the aggregate of paid-up capital and free reserves
of the company and in case of buy back of equity shares in any
financial year, it should not exceed 25% of its total paid-up equity
capital in that financial year.
14
Capital and Allied Matters
Provided that the company can buy back 10% of the total paid-up
equity capital and free reserves after obtaining approval of Board. In
such a case, approval of the shareholders' by means of a special
resolution will not be required.
Q53: Can a company buy back its shares if it is not authorized by its
AOA?
A53: As per the provisions of Section 68(2) of the CA, 2013, a company
cannot buy back its shares if it is not authorized by its AOA.
Q54: What is the time limit for completion of buy back?
A54: As per the provisions of Section 68(4) of the CA, 2013, every buy
back shall be completed within a period of one year from the date of
passing of the special resolution or resolution passed by the Board,
as the case may be.
15
Directors
Q55: What is DIN?
A55: DIN is a unique identification number issued to a prospective director
by the DIN cell of Ministry of Corporate Affairs ("MCA"). An individual
should hold a DIN before being appointed as a director in any
Company.
Q56: Is it mandatory for a director to hold digital signature?
A56: A director who is already holding a DIN can obtain a digital signature,
though it is not mandatory. If a person is not holding DIN and intends
to be appointed as a Director in a Company, he should obtain a
digital signature for making an application for obtaining DIN to the
DIN cell.
Q57: Who can be appointed as director?
A57: As per the provisions of Section 152 of the CA, 2013, an individual
holding a valid DIN and not disqualified from being appointed as
Director under Section 164 of the CA, 2013, is eligible to be
appointed as Director. He shall give his consent to act as a director in
writing along with the disclosure of his interest and a declaration that
he is not disqualified to become a director under CA, 2013.
Q58: What are the broad steps involved in appointment of a director?
A58: The broad steps involved in appointment of a director are:
Obtain DSC;
Obtain DIN by filing Form DIR-3;
Declaration that he is not disqualified from being appointed as
the Director in form DIR-8;
Written consent of director for his appointment in form DIR-2;
Interest of the Director if any, in any other entity in form MBP-
1;
Approval of Board of directors by Board Resolution;
Approval of Shareholders by shareholders Ordinary
Resolution;
Intimation of appointment of director to ROC in Form DIR-12
Directors
Q59: Can a director be appointed by the Board of a company?
A59: Although, as per the provisions of Section 152 of the CA, 2013, the
directors of the Company are required to be appointed by the
shareholders of the Company in general meeting, the Board of the
Company, if authorised by the AOA of the company can appoint
director under following circumstances:
Appointment of additional director;
Appointment of nominee director;
Appointment of alternate director;
Appointment of director for filling casual vacancy
Q60: What shall be the effective date of resignation of a director?
A60: As per the provisions of Section 168(2) of the CA, 2013, the
resignation of a director shall take effect from the date on which the
notice is received by the company or the date specified in the notice,
whichever is later.
Q61: What are the procedures to be carried out by a director at the
time of resignation from the company?
A61: As per the provisions of Section 168 of the CA, 2013 read with Rule
15 and Rule 16 of the Companies (Appointment and Qualification of
Directors) Rules, 2014, a director may resign from his office in the
following manner:
(i) by giving a written notice to the Board; and
(ii) shall forward a copy of his resignation along with detailed
reasons to the ROC in Form DIR-11 within 30 days of
resignation.
In case of resignation of a foreign director, such a foreign director can
authorize in writing a practising chartered accountant or cost
accountant in practice or company secretary in practice or any other
resident director of the company to sign Form DIR-11 and file the
same on his behalf with the ROC.
The Company on receipt of the notice of resignation from the Director
shall:
17
Frequently Asked Questions on The Companies Act, 2013
(i) take the same on record;
(ii) intimate the ROC in Form DIR-12 within 30 days; and
(iii) place the fact of such resignation in the Board's Report laid in
the immediately following general meeting of the company.
Q62: How long will the director be liable for the offences occurred
during his tenure?
A62: The director shall be liable for the acts / transactions occurred during
his tenure even after resignation and disassociation with the
company.
Q63: Who are KMPs and whether their appointment requires
additional compliance?
A63: KMP has been defined under Section 2(51) of the CA, 2013, to mean:
Chief Executive Officer or Managing Director or Manager;
Company Secretary;
Whole Time Director;
Chief Financial Officer
The following companies, are required to appoint KMP and
their appointment shall be intimated to the ROC in Form DIR
12 and the return of their appointment shall be filed in Form
MR 1:
Listed company;
Public company having paid up share capital of INR 10
crores or more
Provided that as per Rule 8A of the Companies(Appointment and
Remuneration Managerial Personnel), Rules, 2014, a company other
than those mentioned above needs to appoint a whole time Company
Secretary if its paid-up share capital is rupees five crore or above.
Also, after the Companies (Appointment and Remuneration of
Managerial Personnel) Amendment Rules, 2016, MR-1 is not required
to be filed for Chief Executive Officer, Company Secretary and Chief
Financial Officer w.e.f. 30.06.2016.
Q64: Can a director be removed from the Company?
18
Directors
A64: Yes, shareholders of the Company may by passing an ordinary
resolution in general meeting remove a director, but after giving a
reasonable opportunity of being heard pursuant to Section 169 of the
CA, 2013. A special notice would be required for passing such
resolution. Once shareholders remove a director from the Board, the
Board of Directors cannot reappoint him.
19
Board Related Matters
Q65: Are all companies required to hold Board Meetings every
quarter?
A65: As per Section 173 of the CA 2013 and Secretarial Standards 1, all
companies whether private limited companies or public companies
are required to hold at least four meetings of its Board of Directors in
each quarter every year where the gap between two consecutive
board meetings is not more than one hundred and twenty days.
As per the notification No. GSR 466 E dated 05 June 2015, in case of
a Section 8 company, the Board of Directors of the company shall
hold at least one meeting within six calendar months.
In case of an OPC, if there is only one director on the Board of
Director, the quarterly board meetings are not required to be held.
However, if the OPC has more than one director or in case of small or
dormant companies, it will suffice the requirement, if they hold at
least one meeting in each half of the calendar year and the gap
between two meetings should not be less than ninety days. Further,
any business which is required to be transacted at the meeting of the
Board of Directors of a company, it shall be sufficient if, in case of
such OPC, the resolution by such director is entered in the minutes
book.
Q66: Can a Company restrict a director from participating in a meeting
through video conferencing if he has not given an intimation of
participating in the video conference meetings at the beginning
of the year?
A66: No, a company cannot restrict a director from participating in a
meeting through video conference if he has not given intimation at the
beginning of the year. An intimation given to the company or
chairman on receipt of the notice calling the board meeting would
suffice the requirement for attending the meeting through video
conferencing.
Q67: What are the matters which cannot be considered at a meeting
held through video conferencing or other audio visual means?
Board Related Matters
A67: As per Rule 4 of the Companies (Meetings of the Board and its
Powers) Rules, 2014, following matters shall not be considered
through video conferencing or other audio visual means:
(i) Approval of annual financial statements;
(ii) Approval of board's report;
(iii) Approval of prospectus;
(iv) Audit Committee Meetings for consideration of financial
statement including consolidated financial statement, if any,
to be approved by the Board of Directors pursuant to Section
134(1) of the CA, 2013;
(v) Approval of the matter relating to amalgamation, merger,
demerger, acquisition and takeover.
However, as per The Companies (Amendment) Bill, 2016, which is
yet to be notified, has proposed participation of Directors on certain
items at Board Meetings through video conference or other audio
visual means if there is quorum through physical presence of
Directors.
Q68: Is the notice calling for the board meeting required to state that
the meeting is being convened at a short notice?
A68: Yes, as per Secretarial Standards-1 effective from 1 July 2015, a
company is required to state the fact that the board meeting is
convened at a short notice in the notice calling the meeting. However,
the CA, 2013 is silent in this regard.
Q69: Can a director interested in the contract participate in the board
meeting or be counted for quorum as per Section 174 of CA
2013?
A69: As per provisions of Section 188 of the CA 2013, if any director is
directly or indirectly, concerned or interested in a contract or
arrangement or proposed contract or arrangement then such director
shall disclose the nature of his concern or interest at the meeting of
the Board in which the contract or arrangement is discussed and shall
not participate in such meeting.
However, in case of a private limited company, as per notification No.
GSR 464E dated 5th June 2015, an interested director can participate
and vote in a board meeting after disclosing his interest in the
particular transaction. The interested director, will be included for the
purpose of determining the quorum of the meeting.
21
Frequently Asked Questions on The Companies Act, 2013
Q70: Can meetings of the Audit Committee be held through video
conference?
A70: Yes, the meetings of Audit Committee can be held through video
conference except the meeting where financial statements including
consolidated financial statements is considered for approval under
Section 134(1) of CA, 2013.
Q71: Is a company required to obtain approval of the Audit Committee
for all the transaction entered into with related parties?
A71: Yes, as per Section 177 of CA, 2013 read with Rule 6 and 6A of the
Companies (Meetings of Board and its Power) Rules, 2014, a
company is required to obtain approval of the Audit Committee for all
the transactions entered into with related parties. Also, the Audit
Committee has an option to grant omnibus approval which shall be
valid for a period of one financial year.
However, as per the Companies (Amendment) Bill, 2016 which is yet
to be notified, proposes to insert following amendments:
Ratification by Audit Committee of transactions involving
amount not exceeding INR 1 Crores within 3 months of
transaction;
Consequences of non-ratification of the transactions;
Exemption from approval of audit committee to transaction
between a holding company and its wholly owned subsidiary.
Q72: Which powers of the board are required to be exercised at a duly
convened board meeting?
A72: As per Section 179 of CA, 2013 read with Rule 8 the Companies
(Meeting of Board and its Powers) Rules 2014, following powers of
the Board can be exercised by means of a resolution passed at a duly
convened Board meeting:
(a) To make calls on shareholders in respect of money unpaid;
(b) To authorise buy back of securities;
(c) To issue securities, including debentures, whether in or
outside India;
(d) To borrow monies;
(e) To invest the funds of the company;
22
Board Related Matters
(f) To grant loans or give guarantee or provide security in respect
of loans;
(g) To approve financial statements and the Board's report;
(h) To diversify the business of the company;
(i) To approve amalgamation, merger or reconstruction;
(j) To take over a company or acquire a controlling or substantial
stake in another company;
(k) To make political contributions;
(l) To appoint internal auditors and secretarial auditor;
(m) To appoint or remove KMP;
As per the notification dated 5 June 2015, in case of a Section 8
Company, matters referred to in point no. (d), (e) and (f) may be
decided by the Board by circulation instead of at a meeting.
Q73: Can a private company grant loan to its directors?
A73: Sec 185 of the CA 2013 restricts loans to directors including private
limited companies. However as per the notification dated 6th Jun
2015, a private company may grant loan to its directors subject to
fulfilment of all of the following conditions:
No body corporate has invested in the share capital of the
company;
Borrowings from banks/financial institutions/any other body
corporate is less than twice the paid up share capital of the
company and fifty crores whichever is lower; and
There is no subsisting default in repayment of existing
borrowings at the time of the transaction.
Q74. Can loan be given by a holding company to its wholly owned
subsidiary company or a guarantee given or security provided
by a holding company to any loan made to its wholly owned
subsidiary?
A74: Yes, as per the proviso to Section 185(1) loan given by a holding
company to its wholly owned subsidiary company or a guarantee
given or security provided by a holding company in respect of any
loan made to its wholly owned subsidiary company is exempt from
the purview of Section 185 of CA, 2013 provided the same is utilised
for the principal business activities by the subsidiary.
23
Frequently Asked Questions on The Companies Act, 2013
Q75: Is a private company exempt from Section 186 of CA, 2013?
A75: A private company is not exempt from the applicability of Section 186
of CA, 2013.
Q76: Is loan to an employee covered within the ambit of Section 186
of the CA, 2013?
A76: As per General Clarification No.04/2015 issued by the Ministry of
Corporate Affairs dated 10 March 2015, loans and/or advances made
by the companies to their employees, other than the managing or
who-time director are not governed by the requirement of Section 186
of the CA,2013. This clarification will however, be applicable if such
loans/advances to employees are in accordance with the conditions
of service applicable to employees and are also in accordance with
the remuneration policy, in cases where such policy is required to be
formulated.
Further, as per the Companies (Amendment) Bill, 2016 which is yet to
be notified, proposes to exclude `employees' from the definition of
`any person'.
Q77: Will salary advances made by the Company for only one or two
months (without interest) come within the preview of "Loan"?
A77: There is a difference between advance and loan. Loan is lending of
money with absolute promise to repay whereas advance is to be
adjusted against supply of goods and services. Advance given to
employees against current month's salary will not be in the nature of
loan and the same will not fall within the purview of Section 186.
Q78: Is unanimous consent of the board required for entering into a
transaction under Section 186?
A78: Yes, as per Section 186(5) of the CA, 2013, consent of all the
directors present at the meeting is required for entering into a
transaction.
Q79: When is the approval from the public financial institutions not
required for entering into transactions under Section 186?
A79: As per the proviso to Section 186(5) of the CA, 2013, approval of
public financial institutions is not required under the below
circumstances:
The amount involved in the transaction does not exceed 60%
of the paid up share capital, free reserves and securities
24
Board Related Matters
premium account and 100% of its free reserves and securities
premium account, whichever is higher; and
There is no default in repayment of loan installments and
interest to public financial institutions.
Q80: What is the due date for making entries in the new format of
Register of Loans, Guarantees, Security and Acquisition? Also,
is a company required to update the transactions covered under
Section 372A of the CA 1956?
A80: Since, 1 April 2014 it is mandatory for a company to maintain the
Register of Loans, Guarantee, Security and Acquisition made by the
company in Form MBP-2. Also, as per the clarification issued by MCA
vide Circular No. 15/2014, registers maintained by companies
pursuant to Section 372A (5) of the CA, 1956 may continue as per the
requirement under these provisions and the new format prescribed
(MBP-2) shall be used for transactions entered on and from 1 April
2014.
Q81: Which are the transactions covered under Section 188 of the CA,
2013?
A81: The following transactions are covered under Section 188 of the CA,
2013:
Sale, purchase or supply of goods or materials;
Sale or disposal of or buying of property of any kind;
Leasing of property of any kind;
Availing of or rendering any services;
Appointment of an agent for purchase or sale of goods,
materials, services or property;
Related party's appointment to any office or place of profit in
the company or its subsidiary or associate company;
Underwriting of subscription of any securities or derivatives;
Q82: Can Company provide interest free loans?
A82: No, the Company shall not provide any loan without interest. As per
Section 186(7) of the CA, 2013, no loan shall be given at a rate lower
than the prevailing yield of one year, three year, five year or ten year
Government Security closest to the tenor of the loan.
25
Frequently Asked Questions on The Companies Act, 2013
Q83: Which are the transactions that would not require approval of
the shareholders under Section 188?
A83: As per Section 188(1) of the CA, 2013, following transactions do not
require approval of the shareholders under Section 188 of the CA,
2013:
Transactions in ordinary course of business and on arm's
length basis;
Transactions between holding company and wholly owned
subsidiary company whose accounts are consolidated and
laid before shareholders at AGM.
Q84: Can a member of a private company interested in a particular
transaction participate and vote at a general meeting?
A84: Yes, an interested member of a private company can participate and
vote at general meeting on matters requiring approval for related
party transaction pursuant to exemption Notification No. GSR 464(E),
dated 05th June, 2015.
Q85: Can a Director who is also a member of a private company
participate and vote at a meeting for the transaction related to
payment of remuneration to such directors?
A85: Yes, an interested Director who is also a member of a private
company can participate and vote at meeting to approve the
transactions related to payment of remuneration to such Director.
Q86: In what circumstances is the prior approval of Board required for
entering into specified contracts or arrangements with related
parties under Section 188?
A86: As per Section 188 of the CA 2013, Board's approval is required for
the contracts or arrangements with related parties specified in
Section 188(1) (a) to (g) which are either not in ordinary course of
business or not at arm's length basis. Further, in the case the
transactions exceed the prescribed threshold, prior approval by
ordinary resolution of the company shall be required for entering into
such contract or arrangement with related party.
Q87: As per the second proviso to Section 188 (1) of the CA, 2013, no
member of the company shall vote on such ordinary resolution,
to approve any contract or arrangement which may be entered
into by the company, if such member is a related party.
What is the meaning of related party in such cases?
26
Board Related Matters
A87: The MCA vide General Circular No. 30/2014 dated 17 July 2014 has
clarified that `related party' referred to in the second proviso has to be
construed with reference to the contract or arrangement for which the
said ordinary resolution is being passed. Thus, the term `related
party' in the above context refers only to such related party with
whom the contract or arrangement is being proposed and for which
the said ordinary resolution is being passed.
However, as per the Companies (Amendment) Bill, 2016 which is yet
to be notified, proposes to remove non-participation of related party
shareholder of a public Company, in passing of the resolution of such
public Company in which 90% or more members, in number, are
relatives or promoters of related parties.
Q88: Which are the transactions exempted from being entered in
Register of Contracts and Arrangements in which the directors
are interested?
A88: The following transactions are exempted from being entered in the
Register of Contracts and Arrangements in which the directors are
interested:
Sale/purchase/supply of any goods/services, if the value does not
exceed five lakh rupees in the aggregate in any year
Transaction by a banking company for the collection of bills in
the ordinary course of its business
Q89: Which are the different type of companies required to adopt vigil
mechanism?
A89: Pursuant to Section 177(9) of the CA, 2013 read with Rule 7 of
the Companies (meetings of Board and its Power) Rules, 2014, Vigil
Mechanism is required to be adopted by the following companies:
Every listed company;
Companies which accept deposits from the public;
Companies which have borrowed money from banks and
public financial institutions in excess of fifty crore rupees.
27
Management and Administration
Q90: When should a company convene its first AGM?
A90: As per Section 96 of the CA, 2013, the first AGM of a company
should be held within a period 9 months from the date of close of first
financial year.
Example If a company's financial year ends on 31 March, the first
AGM of the company shall be held latest by 31 December of that
year.
Q91: Can AGM be held at a place situated outside the limit of city,
town or village in which the Registered Office is situated?
A91: As per the provisions of Section 96(2) of the CA, 2013, AGM cannot
be held at a place situated outside the limit of city, town or village in
which the Registered Office is situated. Provided in case of
Government companies, AGM can be held at a place which the
Central Government may approve i.e. a Government Company can
convene its AGM at a place other than limit of city, town or village in
which the Registered Office is situated if the Central Government
may approve.
However, as per the proposed Companies Amendment Bill, 2016
which is yet to be notified, AGM of an unlisted company may be held
at any place in India if consent is given in writing or by electronic
mode by all the members in advance.
Q92: Can AGM be convened at shorter notice?
A92: Yes, as per Section 101(1) of the CA, 2013, AGM can be convened
after giving a shorter notice subject to consent in writing or in
electronic mode is received from 95% of the members entitled to vote
thereat.
Q93: What shall be the Quorum of an AGM?
A93: As per Section 103 of the CA, 2013, quorum for the AGM of a private
limited company is 2 members personally present, but in case of
public limited company, quorum for AGM is based on the number of
members in the Company, as stated below:
Management and Administration
Quorum required Total number of member in the
Company
(members to be personally
present)
5 Less than 1000
15 1000 to 5000
30 More than 5000
Q94: Can EGM be held at a place situated outside India?
A94: No, EGM of a company cannot be held outside India.
However, as per the proposed Companies Amendment Bill, 2016
which is yet to be notified, EGM of a company, other than a wholly
owned subsidiary of a company incorporated outside India, shall be
held at a place within India.
Q95: Who can be appointed as proxy?
A95: As per Section 105 of the CA, 2013, proxy need not be a member of
the company and any person can be appointed as a proxy.
Q96: What are the restrictions on a proxy during the shareholders
meeting?
A96: As per Section 105 of the CA, 2013, at a shareholders meeting, a
proxy can vote only through poll and not by show of hands. Also a
proxy is not entitled to speak at the meeting.
Q97: Can a member of Section 8 Company appoint any other person
as its proxy?
A97: No, as per Rule 19 of Companies (Management and Administration)
Rules, 2014, a member of Section 8 Company can appoint only
another member of the same company as its proxy.
Q98: For how many members can a person be appointed as a proxy?
A98: As per Section 105 of the CA, 2013, read with Rule 19 of the
Companies (Management and Administration) Rules, 2014, a person
can act as proxy on behalf of maximum 50 members and holding
voting rights on shares not more than 10% of total share capital.
29
Frequently Asked Questions on The Companies Act, 2013
In case of a person holding proxy for a member, holding voting rights
on shares for more than 10% of total share capital, he/she cannot
hold a proxy for another member in the same company.
Q99: Can one member appoint more than one proxy?
A99: Yes, a person can appoint more than one proxy.
Q100: When can a proxy be appointed? Can a person be appointed as a
permanent proxy for a member?
A100: As per the provisions of Section 105 of the CA, 2013, proxy
can be appointed by a member any time after the notice is issued, but
the same should reach the company 48 hours before the scheduled
meeting. A person cannot be appointed as a permanent proxy for a
member.
Q101: Can a director appointed as a Chairman at the meeting of the
Board for the purpose of convening such meeting be considered
as a person holding the positon of Chairman of the Company?
A101: A director appointed as a Chairman at the meeting of the Board for
the purpose of convening such meeting cannot be considered as a
person holding the positon of Chairman of the company. In case a
company is willing to designate a director as Chairman of the
company, a separate resolution with this affect is required and the
necessary intimations shall be given to the ROC.
Q102: What is the period prescribed for preserving the annual returns
prepared under the CA, 2013?
A102: Pursuant to Rule 15(3) of the Companies (Management and
Administration) Rules, 2014, the Copies of annual returns prepared
under Section 92 and copies of all certificates and documents
required to be annexed thereto shall be preserved for a period of
eight years from the date of filing with the ROC.
Q103: What are the requirements of signing of Annual Return?
A103: Pursuant to the provisions of Section 92 of the CA, 2013 read with
Rule 11 of the Companies (Management and Administration) Rules,
2014, annual return shall be signed in the following manner:
(i) In case of a Small Company and OPC, the annual return shall
be signed by Company Secretary or where there is no
Company Secretary, by the Director of the Company.
30
Management and Administration
(ii) In case of other companies, the annual return shall be signed
by a Director and the Company Secretary, or where there is
no Company Secretary, by a Practising Company Secretary.
Q104: What are the certification requirements of Annual Return?
A104: Pursuant to Section 92(2) of the CA, 2013 read with Rule 11(2) of the
Companies (Management and Administration Rules, 2014, the
Annual Return of the following companies shall be certified by a
Company Secretary in whole time practice in Form No. MGT-8:
Every listed company;
Every company having paid up share capital of INR 10 crore
or more;
Every company having turnover of INR 50 crore or more
Q105: Is the extract of the Annual Return required to be attached to
Board's Report in terms of Section 134 (3)(a) of the CA, 2013?
A105: An extract of the annual return in form MGT-9 relating to the financial
year to which the Board's Report relates shall be attached therewith
in terms of Section 134 (3)(a) of the CA, 2013.
Q106: In case the AGM is not held, what is the time limit for filing the
Annual Return?
A106: As per Section 92(4) of the CA, 2013, in case the AGM of a company
is not held, the Annual Return has to be filed within 60 days from the
last date on which AGM should have been held together with the
statement specifying the reasons for not holding the AGM.
Q107: Which registers should include the index of names?
A107: As per Section 88(2) of the CA, 2013, the following registers should
include an index of names:
Register of members;
Register of debenture holders;
Register of any other security holders.
Provided that an index is not mandatory if the number of members
are less than 50
Q108: What is the duration for preservation of Statutory Registers?
31
Frequently Asked Questions on The Companies Act, 2013
A108: As per Rule 15 of the Companies (Management and Administration)
Rules, 2014, the Statutory Registers are to be preserved in the
following manner:
Register of members : Permanently
Register of debenture : To be preserved for 8 years
holders & register of from the date of redemption of
any other security debenture or securities as the
holders case may be
Foreign Register of : Permanently, unless it is
members discontinued and all the
entries are transferred to any
other foreign register or to the
principal register
Foreign Register of : To be preserved for 8 years
debenture holders from the date of redemption of
debenture or securities as the
case may be
32
Accounts
Q109: What shall be the first financial year of the newly incorporated
company or body corporate?
A109: As per Section 2(41) of the CA, 2013, the first financial year of a
company means a period beginning from the date of incorporation
and ending on 31 March of the following year.
Q110: In case any existing auditor incurs disqualifications as per the
CA 2013, what is the procedure to be followed for appointment of
new auditor? Is the company also required to follow the
procedures relating to removal of auditor as prescribed in the
CA, 2013?
A110: As per Section 141(4) the CA, 2013, an auditor once disqualified shall
vacate office and which in turn results in casual vacancy. The casual
vacancy can be filled by the board of directors within 30 days of such
disqualification and the process relating to removal of Auditors is not
required to be followed.
It may be noted that the auditor so appointed holds office only till the
conclusion of the next AGM.
Q111: How does the requirement of rotation of auditor apply to a
company having a calendar year end or June Year-end?
A111: Appointment/re-appointment of auditor takes place at the AGM and is
valid until the conclusion of the next AGM irrespective of the year
end. The period of five years will be counted from AGM to AGM.
Q112: Who shall sign the Financial Statements of a Company?
A112: The Financial Statements of a company is required to be signed as
per the provisions of Section 134 of the CA, 2013 by:
The chairperson of the company (if he is authorised by the
Board) or by two directors (out of which 1 shall be Managing
Director/ Chief Executive Officer if any); and
Chief Financial Officer and Company Secretary wherever they
are appointed
However, the Companies (Amendment) Bill, 2016 which is yet to be
notified, enables Chairperson if he is authorized or two directors out
of which one shall be MD, if any and the CEO, the CFO and the
Frequently Asked Questions on The Companies Act, 2013
Company Secretary, wherever they are appointed, to sign the
financial statements of the company.
Q113: Can a company maintain books of account in any place other
than Registered Office?
A113: As per the provisions of Section 128 of the CA, 2013 read with Rule
2A of the Companies (Accounts) Rules, 2014, a company may
maintain books of account and other relevant papers may be kept at
such other place in India as the Board of Directors may decide and
where such a decision is taken, the company shall, within seven days
thereof, file with the ROC a notice in Form AOC-5 giving the full
address of that other place.
Q114: If the Notice of the AGM is circulated at a short notice, can the
financial statements also be sent along with the notice?
A114: Yes, a company holding a general meeting after giving a short notice
as provided under Section 101 of the CA, 2013 may also circulate
financial statements at such short notice.
However, the Companies (Amendment) Bill, 2016 which is yet to be
notified, proposes to enable the Company to send copy of the
financial statements at a period lesser than 21 days if 95% of the
members entitled to vote at the meeting agrees for the same.
Q115: What is the duration for preserving the Books of Account?
A115: As per Section 128(5) of the CA 2013, the books of account shall be
preserved by the company for 8 financial years preceding the
financial year.
Q116: Is it required to attach Board's Report to the consolidated
financial statements?
A116: Yes, as per Section 134 (3) of the CA, 2013, the Board's Report shall
be attached to the consolidated financial statements.
Q117: Are the standalone financial statements of the associates/joint
ventures required to be placed on the website too?
A117: 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. Therefore, there is no requirement of placing standalone
financial statements of associates/joint ventures on the website of the
company.
34
Accounts
However, the Companies (Amendment) Bill, 2016, inserts the
following provisions w.r.t foreign subsidiary.
If a Listed Company which 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.
Q118: Can a branch office of the company maintain its books of
account in the location of branch office?
A118: Yes, as per Section 128(2) the CA, 2013, the Company may maintain
books of account relating to the transactions effected at the branch
office at branch provided summarised returns are periodically sent to
the registered office.
Q 119: Whether the subsidiary of a company under liquidation is
required to consolidate its accounts as per Section 129 of the
CA, 2013?
A119: Since the holding company under liquidation is not required to have
the accounts prepared as per Section 129 the CA, 2013, its
subsidiary company's accounts shall not be consolidated with the
aforesaid holding company. However, the reasons for not
consolidating must be explained in the notes as required by Schedule
III.
Q120: Is it required to comply with Accounting Standards while
preparing the financial statements?
A120: Yes, as per Section 129(1) of the CA, 2013, the financial statements
should be prepared in accordance with the accounting standards.
Further, as per Section 129 (5) of the CA, 2013, in case of deviation
from accounting standards, the financial statements must disclose the
fact of such deviation and reasons for the same along with its
financial effects.
Q121: What are the modes available for the company to maintain the
books of account?
A121: The Company may maintain books of account either physically or
electronically. In case the books of account is maintained
35
Frequently Asked Questions on The Companies Act, 2013
electronically, the back-up of the books of account and other books
and papers of the company shall be kept in servers physically located
in India on a periodic basis.
Q122: Can a company keep the books and registers at a place other
than registered office of the company?
A122: Yes, as per Proviso to Section 128 (1), the books may be kept at
such other place in India as the Board of Directors may decide after
passing resolution in the duly held Board Meeting of the company.
36
Audit and Auditors
Q123: Which companies are required to appoint Internal Auditor?
A123: As per Section 138 of the CA, 2013 and Rule 13 of Companies
(Accounts) Rules, 2014, the following companies are required to
appoint an internal auditor:
listed company;
every unlisted public company having at any point of time during the
preceding financial year -
o paid up share capital of INR 50 crores or more; or
o turnover of INR 200 crores or more; or
o outstanding loans or borrowings from banks or public financial
institutions for more than INR 100 crores; or
o outstanding deposits of INR 25 crore rupees or more
every private company having at any point of time during the
preceding financial year -
o turnover of INR 200 crores or more; or
o outstanding loans or borrowings from banks or PFI for more than INR
100 crores
Q124: Who can be appointed as Internal Auditor of the Company?
A124: As per the provisions of Section 138 of the CA, 2013 read with Rule
13 of the Companies (accounts) Rules, 2014, a "Chartered
Accountant" or "Cost Accountant" whether engaged in practice or not,
or such other professional as may be decided by the Board of
Directors of the company can be appointed as internal auditor of the
Company. The internal auditor may or may or may not be an
employee of the company.
Q125: Can internal Auditor be appointed by way of a circular
resolution?
A125: No, as per Section 179 the CA, 2013 read with applicable rules,
Internal Auditor shall be appointed at the duly convened board
meeting of the Company.
Q126: Can the Statutory Auditor and Cost Auditor be the same person
or firm?
Frequently Asked Questions on The Companies Act, 2013
A126: As per the proviso to the Section 148(3) the CA, 2013, the person
appointed under Section 139 the CA, 2013 as an auditor of the
company shall not be appointed for conducting the audit of cost
records.
Q127: When should the first auditors be appointed?
A127: As per Section 139 of the CA, 2013, the first auditors should be
appointed by the Board within 30 days of the registration of the
company and in case of failure of the Board to appoint such auditors,
the auditors shall be appointed by the members in general meeting.
Further, such auditor shall hold office till the date of the conclusion of
the first AGM.
Q128: What is the term of appointment of an individual and a firm as a
statutory auditor?
A128: As per Section 139(2) the CA, 2013 read with Rule 5 of Companies
(Audit and Auditors) Rules, 2014, the following companies shall not
appoint an individual as statutory auditor for more than one term of 5
years and a firm as statutory auditor for more than two terms of 5
year each:
Listed company;
All unlisted public companies having paid up share capital of INR 10
Crores or more;
All private limited companies having paid up share capital of INR 20
Crores or more;
All companies having paid up share capital below the threshold limit
mentioned in the aforesaid two points, but having public borrowings
from financial institutions, banks or public deposits of INR 50 Crores
or more
Q129: Is there any transition period provided for complying with the
provisions of Section 139 (2) of the CA, 2013 relating to rotation
of auditors?
A129: As per Companies (Removal of Difficulties) Third Order, 2016 dated
30th June, 2016 issued by the MCA, the classes of companies stated
under Q128 are required to comply with the provisions of Section
139(2) the CA, 2013 relating to rotation of auditors not later than the
AGM to be held in the year 2017.
Q130: Which are the classes of companies required to comply with the
provisions relating to rotation of auditors?
38
Audit and Auditors
A130: As per Section 139(2) of the CA, 2013 read with Rule 5 and Rule 6 of
Companies (Audit and Auditors) Rules, 2014, the following
companies are required to rotate their auditors on expiry of the term:
Listed company;
All unlisted public companies having paid up share capital of INR 10
Crores or more;
All private limited companies having paid up share capital of INR 20
Crores or more;
All companies having paid up share capital below the threshold limit
mentioned in the aforesaid two points, but having public borrowings
from financial institutions, banks or public deposits of INR 50 Crores
or more
Q131: In case of Companies which have already appointed auditors in
CA, 1956, how should the period of 5 years and 10 years for
rotation of auditors be computed?
A131: As per Rule 6(3) of the 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 CA, 2013 shall be taken
into consideration for the purpose of rotation of auditors.
For example, in case of listed and prescribed companies, if an
individual has completed four years as an auditor on April 01, 2014,
he can continue for 3 years in the same company.
Further, if the auditor is required to appointed again, he may do so
after the cooling period of five years from the completion of term of
five years.
Q132: Can a company remove its auditor?
A132: As per Section 140(1) of the CA, 2013 read with Rule 7 of Companies
(Audit and Auditors) Rules, 2014, a company may remove its auditor
before the expiry of the term by obtaining prior approval of the
Central Government and passing a special resolution in general
meeting.
Q133: Is there limit on the number of audits an auditor may undertake?
A133: As per Section 141(3)(g) of the CA, 2013, an auditor cannot
undertake audit of more than twenty companies.
In case of private companies, while calculating the limit of 20, one
person companies, dormant companies, small companies and private
39
Frequently Asked Questions on The Companies Act, 2013
companies having paid up share capital less than one hundred crore
rupees shall be excluded. [Notification No. GSR 464(E), dated 5th
June, 2015]
Q134: Who shall fix the remuneration of Auditors?
A134: As per Section 142(1) of the CA, 2013, the remuneration of the
auditor of a company shall be fixed in its general meeting or in such
manner as may be determined by the Board of Directors, which shall
include any out of pocket expenses incurred for the purpose and in
connection with the audit. Provided further, that the Board may fix the
remuneration of the first auditor appointed by it.
Q135: Is it the duty of the auditor to confirm on internal financial
controls?
A135: As per Section 143(3)(i) of the CA, 2013 the auditor is required to
state the adequacy of internal financial control systems and its
operating effectives.
However, as per the Companies (Amendment) Bill, 2016 which is yet
to be notified, it is proposed that the auditors are required to report on
Internal Financial Control with reference to financial statements.
Q136: Who shall appoint an auditor of a Government Company?
A136: As per Section 143(5) of the CA, 2013, the auditor of a Government
Company shall be appointed by the Comptroller and Auditor General
of India ("CAG"). Further, w.e.f. 4th September 2014, auditor of any
other company owned or controlled directly or indirectly by Central
Government or State Government and partly by Central Government
and partly by one or more State Governments shall also be appointed
by CAG.
Q137: Which services are not to be rendered by auditor of a company?
A137: As per Section 144 of the CA, 2013, an auditor shall not provide any
of the following services:
(a) Accounting and Book keeping services
(b) Internal Audit
(c) Design and implementation of any financial information
system
(d) Actuarial services
(e) Investment advisory services
40
Audit and Auditors
(f) Investment Banking services
(g) Rendering of outsourced financial services
(h) Management services
Q138: What are the provisions for Reporting Fraud under CA, 2013?
A138: The provisions on reporting fraud have been laid down under Section
143(12) of the CA, 2013 and provides that if the auditor of a
company, in the course of the performance of his duties as auditor,
has reason to believe that an offence of fraud is being or has been
committed against the company by officers or employees of the
company, he shall report the matter to the Central Government.
However, as per the Companies (Amendment) Act, 2015 as notified
by MCA vide notification dated 14 December 2015, the auditor shall
report only those matters to the Central Government which involves
or is expected to involve individually an amount of INR One Crore or
above.
Q139: What is the procedure for reporting of frauds of less than rupees
one crore?
A139: As per Rule 13(3) of Companies (Audit and Auditors) Rules, 2014, in
case of fraud involving less than one crore rupees, auditor shall
report the matter to the Audit Committee under Section 177 of the
CA, 2013 or to the Board immediately within 2 days of his knowledge
of the fraud and also the same is required to be disclosed in the
Board's Report.
Q140: What is the procedure for reporting of fraud under CA, 2013?
A140: As per Section 143 (12) of the CA, 2013read with Rule 13 of
Companies (Audit and Auditors) Rules, 2014, the procedure for
reporting of fraud if the amount of the fraud is equal or more than 1
crore, is as follows:
(i) auditor shall forward his report to the Board or the Audit
Committee, as the case may be, immediately after he comes
to knowledge of the fraud, seeking their reply or observations
within 45 days;
(ii) on receipt of such reply or observations, the auditor shall
forward his report and the reply or observations of the Board
or the Audit Committee along with his comments (on such
reply or observations of the Board or the Audit Committee) to
41
Frequently Asked Questions on The Companies Act, 2013
the Central Government within 15 days of receipt of such
reply or observations;
(iii) in case the auditor fails to get any reply or observations from
the Board or the Audit Committee within the stipulated period
of 45 days, he shall forward his report to the Central
Government along with a note containing the details of his
report that was earlier forwarded to the Board or the Audit
Committee for which he failed to receive any reply or
observations within the stipulated time;
(iv) The report shall be in the form of a statement as specified in
Form ADT-4 on the letter-head of the auditor containing postal
address, e-mail address, contact number, Membership
Number and be signed & sealed by the auditor and same
shall be sent through Registered Post with AD/speed post
followed by an e-mail in confirmation to the Secretary, MCA of
the same.
Q141: Is an auditor required to attend General Meeting?
A141: Yes, as per Section 146 of the CA, 2013, an auditor either by himself
or through his representative, who is qualified to be an auditor should
attend the general meeting, unless exempted by the company.
42
Secretarial Audit
Q.142. Who can conduct Secretarial Audit and provide the Report?
A142: Only a member of the Institute of Company Secretaries of India
holding a certificate of practice (company secretary in practice) can
conduct Secretarial Audit and furnish the Secretarial Audit Report to
the company. [Section 204(1) of CA, 2013].
The Secretarial Audit Report should be signed by the Secretarial
Auditor who has been engaged by the company to conduct the
Secretarial Audit and in case of a firm of Company Secretaries, by
the partner under whose supervision the Secretarial Audit was
conducted.
Q143: Which companies are required to undergo Secretarial Audit?
A143: As per Section 204(1) of the CA, 2013 read with rule 9 of the
Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the following companies are required to
obtain Secretarial Audit Report:
- Every listed company;
- Every public company having a paid-up share capital of fifty crore
rupees or more; or
- Every public company having a turnover of two hundred fifty crore
rupees or more.
"Turnover" means the aggregate value of the realisation of amount
made from the sale, supply or distribution of goods or on account of
services rendered, or both, by the company during a financial year.
[Section 2(91)]
Q144: Whether the Secretarial Audit is voluntary or mandatory as per
the provisions of CA, 2013?
A144: Pursuant to the provisions of Section 204 of the CA 2013, it is
mandatory for every listed company and company belonging to class
of companies as prescribed under Question No. 143 to annex with its
Board's Report, a Secretarial Audit Report given by a Company
Secretary in Practice.
In case of companies which are not covered under Section 204 of the
CA, 2013, it may obtain Secretarial Audit Report voluntarily.
Frequently Asked Questions on The Companies Act, 2013
Q145: What is the format of Secretarial Audit Report?
A145: As per Section 204(1) of the CA, 2013 read with Rule 9 of the
Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, Secretarial Audit Report is required to be
provided in the format prescribed in Form MR-3.
Q146: Is Secretarial Auditor entitled to receive notice of AGM in which
his report is to be laid before the members?
A146: As per Secretarial Standard 2, the notice in writing of every general
meeting shall be given to every member of the company as well as to
the Directors, Auditors and to the Secretarial Auditor and Debenture
Trustees, if any.
Q147: Is Secretarial Audit applicable to a private company which is a
subsidiary of a public company?
A147: Yes, as per proviso to Section 2(71) of the CA, 2013, the company
which is a subsidiary of a company, not being a private company,
shall be deemed to be a public company for the purposes of this Act,
even where such subsidiary company continues to be a private
company in its articles.
Given the above, Secretarial Audit would be applicable to a private
company which is a subsidiary of a public company if the prescribed
criteria of the paid up share capital or turnover is met.
Q148. What are events and actions required to be reported by the
Secretarial Auditor in the audit report?
A148: Secretarial Auditor is required to report and provide details of
specific events and actions occurred during the reporting period
having major bearing on the affairs of the Company in pursuant to
above referred laws/ rules and regulations. Few events are also
given as example in the format of audit report.
Q149: Can a Practicing Company Secretary certify the Annual Return
with qualification?
A149: A Practicing Company Secretary can certify the Annual Return
subject to certain reservations/qualifications by way of an annexure to
his certificate.
Q150: How is the Secretarial Auditor appointed?
44
Secretarial Audit
A150: As per Rule 8 of the Companies (Meetings of Board and its powers)
Rules, 2014, Secretarial Auditor is required to be appointed by means
of resolution passed at a duly convened Board meeting.
Q151: Whether communication to earlier incumbent is required?
A151: Yes, whenever a practicing company secretary is appointed as
Secretarial Auditor in place of the existing Secretarial Auditor, he/she
should communicate the appointment to the earlier incumbent in
writing, in view of the provisions of clause (8) of Part I of the First
Schedule to the Company Secretaries Act, 1980.
45
Deposits
Q152: Can a Private Company accept deposit from its members without
complying with the provisions applicable to deposits?
A152: Yes, as per the exemption Notification No. GSR 464(E) of the MCA
dated 5th June 2015, a Private Company can accept deposits from its
members not exceeding 100% of aggregate of its paid up share
capital and free reserve without complying with the provisions of
Section 73(2) (a), (b), (c), (d) and (e) of the CA, 2013 and such
company shall file details of monies so accepted in the manner as
may be specified.
Q153: What is an "eligible company" for the purpose of deposit?
A153: "Eligible company" refers to every public company having net worth of
not less than INR 100 crore rupees or a turnover of not less than INR
500 crore rupees and which has obtained prior consent of
shareholders in general meeting by means of a special resolution and
made respective filings with the ROC before making any invitation to
public.
In case, deposit is with respect to the specified limits under Section
180(1)(c) of the CA, 2013, an ordinary resolution may suffice the
requirement.
Q154. Does Deposit provisions cover debenture?
A154:
Deposits
Debentures
Secured Unsecured
Compulsorily Issued to Company Not a
Compulsorily deposit
Convertible Convertible
Debenture Issued to resident Not a
Debenture
deposit if convertible within 10
years
Optionally
Optionally Not a Convertible
Convertible Debenture Issued to Company Not a
Deposit
Debenture deposit
Issued to resident Deposit
unless listed on stock exchange
Non - Convertible Issued to foreign body Not a
Non - Convertible Debenture
Debenture deposit
47
Dividend
Q155: Will advance towards annual maintenance service for more than
365 days be treated as a deposit?
A155: Yes, as per the Companies (Acceptance of Deposits) Rules, 2014,
advance towards annual maintenance service for more than 365 days
will be treated as a deposit
Q156: Is share application money pending allotment for more than 60
days treated as a deposit?
A156: Yes, as per the Companies (Acceptance of Deposits) Rules, 2014,
share application money pending allotment for more than 60 days is
treated as a deposit.
Q157: In case deposit is taken from a person who is both a director and
a member of the Company, will such receipt of money be treated
as deposit or not?
A157: Any amount received from a person who, at the time of the receipt of
the amount, was a director of the company furnishes to the company
at the time of giving the money, a declaration in writing to the effect
that the amount is not being given out of funds acquired by him by
borrowing or accepting loans or deposits from others, is not
considered as deposit.
In case of private company, if the amount is borrowed from its
member not exceeding 100% of the paid-up share capital and free
reserves of the company, then it will not be treated as deposits.
[Notification No. GSR 464E, dated 5th June, 2015]
Q158: Is it mandatory for a company to declare dividend?
A158: No, it is not mandatory for a company to declare dividend.
Q159: In case a company declares dividend, what shall be the last date
of payment of dividend?
A159: The dividend warrants shall be dispatched by the company-
(i) in case of Interim Dividend- within 30 days of declaration of
dividend in the Board Meeting; and
(ii) in case of final dividend- within 30 days of its approval in the
AGM.
Dividend
In case of ECS transfers for distribution of dividend, the transfer shall
be made within 30 days of declaration of dividend.
Q160: Can a company which has inadequate profits or has incurred
loss in the immediately preceding financial year declare final
dividend out of the accumulated profits of the previous financial
years? Also, is there any restriction on the rate of dividend?
A160: As per the second proviso to Section 123(1) of the CA, 2013, a
company which has inadequate profit or has incurred loss in the
immediately preceding financial year may declare dividend out of the
accumulated profits of the company. However, as per Rule 3 of
Companies (Declaration and Payment of Dividend) Rules, 2014, the
rate of dividend shall not exceed the average of the rates at which
dividend was declared by the company in the immediately preceding
three financial years.
If a company has not declared dividend in any of the preceding three
financial years, the restriction on the rate of dividend would not be
applicable.
Q161: Can Board of Directors declare final dividend for the financial
year?
A161: The Board can only recommend the final dividend to the shareholders
of the Company for declaration at the AGM.
Q162: Can dividend be declared to certain class of shareholders only?
A162: Dividend can be paid to any class of shareholders, but separate
resolution for declaration of dividend to each class of shares is
required to be passed at the meeting of the Board or shareholders, as
the case may be.
Q163: Can dividend be paid to certain shareholders of the same class?
A163: Dividend once declared has to be paid to all the shareholders in a
particular class.
Q164: Can a shareholder whose shares have been transferred to IEPF
claim back his shares?
A164: As per proviso to Section 124(6) of the CA, 2013 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.
Q165: When is unpaid/ unclaimed dividend transferred to Unpaid
Dividend Account?
49
Frequently Asked Questions on The Companies Act, 2013
A165: As per Section 124(1) of the CA, 2013, dividend declared by the
company which remains unpaid/ unclaimed for a period of 30 days
from the date of declaration shall be transferred to Unpaid Dividend
Account within 7 days from the date of expiry of the said period of 30
days.
50
Corporate Social Responsibility
Q166: Whether provisions governing CSR are applicable to private
Companies?
A166: Yes, every company irrespective of Private or Public Limited or a
foreign company having its branch office or project office in India
having:
· net worth of INR 500 crores or more
· turnover of INR 1000 crores or more
· net profit of INR 5 crores or more
shall formulate a CSR Committee, who shall determine the CSR
policy of the company and every such company is required to spend
of 2% of average net profits of the company for last 3 years towards
CSR.
Q167: In which activities can a company contribute towards CSR?
A167: The amount allocated for CSR can be spent for activities specified
under Schedule VII of the CA, 2013.
Q168: Are there any implications of not spending the 2% of average net
profits as CSR expenditure?
168: In case of any shortfall of not spending the 2% of average net profits,
the Board is required to be disclosed the same in the Board report
along with reasons thereof.
Compromise and Arrangements
Q169: What are the applicable provisions for carrying out Compromise
and arrangements?
A169: Compromise and Arrangement between company and its creditors or
company and its members shall be done in accordance with the
provisions of the CA, 2013.
(MCA vide notification dated 7 December 2016 notified the Section
230 to 240 of the CA, 2013 which deal with Compromise and
Arrangements)
Q170: Who are eligible to raise objections to the scheme of
compromise and arrangement?
A170: As per the proviso to Section 230(4) of the CA, 2013, objection can
be raised only by persons holding 10% or more of shareholding or
having debt amounting 5% of the total outstanding debt as per the
latest audited financial statement.
Q171: How do we calculate the `shareholding' and `outstanding debt'
while ascertaining the eligibility to object to the scheme?
A171: As per Explanation to Rule 9 of the Companies (Compromise,
Arrangements and Amalgamations) Rules, 2016:
`Shareholding' means the shareholding of the members of the class
who are entitled to vote on the proposal and
`Outstanding debt' shall mean all debt owed by the company to the
respective class or classes of creditors that remains outstanding as
per the latest audited financial statement, or if such statement is more
than six months old, as per provisional financial statement not
preceding the date of application by more than six months.
Q172: What is Corporate Debt Restructuring?
A172: As per explanation to the rule 4 of the Companies (Compromises,
Arrangements and Amalgamations) Rules, 2016, corporate debt
restructuring means a scheme that restructures or varies the debt
obligations of a company towards its creditors.
Q173: Under what circumstances the meeting of the creditors may be
dispensed by the NCLT?
Compromise and Arrangements
A173: As per Section 230(9) of the CA, 2013, if 90% of the creditors in
value agree and confirm to the scheme by way of affidavit, NCLT may
dispense the holding of meeting of creditors or class of creditors.
Q174: Do we have to comply with Section 230 and Section 232 while
carrying out the merger and amalgamation of two or more small
companies or between holding and wholly owned subsidiary
companies?
A174: No, Section 233 of the CA, 2013 prescribes to regulate the merger
and amalgamation between two or more small companies or between
holding and wholly owned subsidiary companies. The powers with
regard to the same have been delegated to the Regional Director.
Q175: For how many years the books and papers of amalgamated
companies shall be preserved?
A175: The CA, 2013 does not prescribe any period for preservation of books
and papers. However, books and papers of amalgamated companies
shall not be destroyed without the approval of the Central
Government.
Q176: What happens in case of merger of listed transferor company
into unlisted transferee company?
A176: As per Section 232(3)(h) of CA, 2013, where the transferor company
is a listed company and the transferee company is an unlisted
company, then:
(i) the transferee company shall remain an unlisted company until it
becomes a listed company.
(ii) If shareholders of the transferor company decide to opt out of the
transferee company, provision shall be made for payment of the value
of shares held by them and other benefits n accordance with a pre-
determined price formula or after valuation is made and the
arrangements may be made by the NCLT.
Q177: Can Company buy back its shares under a scheme of
arrangement without following the conditions prescribed under
Section 68 of the CA, 2013?
A177: No, as per Section 230(10) of the CA, 2013, NCLT shall not approve
any scheme of compromise or arrangement in respect of buy-back of
securities which is not in compliance with the provisions of Section 68
of the CA, 2013.
53
Annexure "A"
List of Sections of Companies Act 2013 that has been notified and
enforced by the Ministry of Corporate Affairs as on 30th January, 2017
Chapters Sections Notified
Chapter 1 Section 1- Short title, extent, commencement
Preliminary and application
(Notified on 12th September, 2013)
Definitions
Section 2 (1)- Abridged prospectus
(Notified on 12th September, 2013)
Section 2 (2)- Accounting Standards
(Notified on 1st April, 2014)
Section 2 (3)- Alter" or "Alteration
(Notified on 12th September, 2013)
Section 2 (4)- Appellate Tribunal
(Notified on 12th September, 2013)
Section 2 (5)- Articles
(Notified on 12th September, 2013)
Section 2 (6)- Associate company
(Notified on 12th September, 2013)
Section 2 (7)- Auditing Standards
(Notified on 1st April,2014)
Section 2 (8)- Authorised capital
(Notified on 12th September, 2013)
Section 2 (9)- Banking company
(Notified on 12th September, 2013)
Section 2 (10)- Board of Directors "Board"
(Notified on 12th September, 2013)
Section 2 (11)- Body Corporate or Corporation
(Notified on 12th September, 2013)
Section 2 (12)- Book and Paper and Book or Paper
Annexure-1
(Notified on 12th September, 2013)
Section 2 (13)- Books of Account
(Notified on 1st April, 2014)
Section 2 (14)- Branch Office
(Notified on 12th September, 2013)
Section 2 (15)- Called up Capital
(Notified on 12th September, 2013)
Section 2 (16)- Charge
(Notified on 12th September, 2013)
Section 2 (17)- Chartered Accountant
(Notified on 12th September, 2013)
Section 2 (18)- Chief Executive Officer
(Notified on 12th September, 2013)
Section 2 (19)- Chief Financial Officer
(Notified on 12th September, 2013)
Section 2 (20)- Company
(Notified on 12th September, 2013)
Section 2 (21)- Company limited by Guarantee
(Notified on 12th September, 2013)
Section 2 (22)- Company limited by shares
(Notified on 12th September, 2013)
Section 2 (23)- Company Liquidator
(Notified on 15th December, 2016)
Section 2 (24)- "Company Secretary" or "Secretary"
(Notified on 12th September, 2013)
Section 2 (25)- Company Secretary in Practice
(Notified on 12th September, 2013)
Section 2 (26)- Contributory
(Notified on 12th September, 2013)
Section 2 (27)- Control
(Notified on 12th September, 2013)
Section 2 (28)- Cost Accountant
(Notified on 12th September, 2013)
Section 2 (29)- Court
(Notified on 12th September, 2013)
55
Frequently Asked Questions on The Companies Act, 2013
Section 2 (30)- Debenture
(Notified on 12th September, 2013)
Section 2 (31)- Deposit
(Notified on 1st April, 2014)
Section 2 (32)- Depository
(Notified on 12th September, 2013)
Section 2 (33)- Derivative
(Notified on 12th September, 2013)
Section 2 (34)- Director
(Notified on 12th September, 2013)
Section 2 (35)- Dividend
(Notified on 12th September, 2013)
Section 2 (36)- Document
(Notified on 12th September, 2013)
Section 2 (37)- Employees' Stock Option
(Notified on 12th September, 2013)
Section 2 (38)- Expert
(Notified on 12th September, 2013)
Section 2 (39)- Financial Institution
(Notified on 12th September, 2013)
Section 2 (40)- Financial Statement
(Notified on 12th September, 2013)
Section 2 (41)- Financial Year (Except 1st proviso)
(Notified on 1st April, 2014)
Section 2 (42)- Foreign Company
(Notified on 1st April, 2014)
Section 2 (43)- Free Reserves
(Notified on 12th September, 2013)
Section 2 (44)- Global Depository Receipt
(Notified on 12th September, 2013)
Section 2 (45)- Government company
(Notified on 12th September, 2013)
Section 2 (46)- Holding Company
(Notified on 12th September, 2013)
Section 2 (47)- Independent Director
56
Annexure-1
(Notified on 1st April, 2014)
Section 2 (48)- Indian Depository Receipt
(Notified on 1st April, 2014)
Section 2 (49)- Interested Director
(Notified on 12th September, 2013)
Section 2 (50)- Issued Capital
(Notified on 12th September, 2013)
Section 2 (51)- Key Managerial Personnel
(Notified on 12th September, 2013)
Section 2 (52)- Listed Company
(Notified on 12th September, 2013)
Section 2 (53)- Manager
(Notified on 12th September, 2013)
Section 2 (54)- Managing Director
(Notified on 12th September, 2013)
Section 2 (55)- Member
(Notified on 12th September, 2013)
Section 2 (56)- Memorandum
(Notified on 12th September, 2013)
Section 2 (57)- Net Worth (modified)-
(Notified on 12th September, 2013)
Section 2 (58)- Notification
(Notified on 12th September, 2013)
Section 2 (59)- Officer
(Notified on 12th September, 2013)
Section 2 (60)- Officer who is in default
(Notified on 12th September, 2013)
Section 2 (61)- Official Liquidator
(Notified on 12th September, 2013)
Section 2 (62)- One Person Company
(Notified on 1st April, 2014)
Section 2 (63)- Ordinary or Special Resolution
(Notified on 12th September, 2013)
Section 2 (64)- Paid- up Share Capital
(Notified on 12th September, 2013)
57
Frequently Asked Questions on The Companies Act, 2013
Section 2 (65)- Postal Ballot
(Notified on 12th September, 2013)
Section 2 (66)- Prescribed
(Notified on 12th September, 2013)
Section 2 (67)- Previous Company Law (Except Sub
clause (ix))
(Notified on 12th September, 2013)
Section 2 (68)- Private Company
(Notified on 12th September, 2013)
Section 2 (69)- Promoter
(Notified on 12th September, 2013)
Section 2 (70)- Prospectus
(Notified on 12th September, 2013)
Section 2 (71)- Public Company
(Notified on 12th September, 2013)
Section 2 (72)- Public Financial Institution
(Notified on 12th September, 2013)
Section 2 (73)- Recognised Stock Exchange
(Notified on 12th September, 2013)
Section 2 (74)- Register of Companies
(Notified on 12th September, 2013)
Section 2 (75)- Registrar
(Notified on 12th September, 2013)
Section 2 (76)- Related Party
(Notified on 12th September, 2013)
Section 2 (77)- Relative
(Notified on 12th September, 2013)
Section 2 (78)- Remuneration
(Notified on 12th September, 2013)
Section 2 (79)- Schedule
(Notified on 12th September, 2013)
Section 2 (80)- Scheduled Bank
(Notified on 12th September, 2013)
Section 2 (81)- Securities
(Notified on 12th September, 2013)
Section 2 (82)- Securities and Exchange Board
58
Annexure-1
(Notified on 12th September, 2013)
Section 2 (83)- Serious Fraud Investigation Office
(Notified on 1st April, 2014)
Section 2 (84)- Share
(Notified on 12th September, 2013)
Section 2 (85)- Small company
(Notified on 1st April, 2014)
Section 2 (86)- Subscribed Capital
(Notified on 12th September, 2013)
Section 2 (87)- Subsidiary Company (Except the
proviso)
(Notified on 12th September, 2013)
(Proviso Notified on 1st April, 2014)
Section 2 (88)- Sweat Equity Shares
(Notified on 12th September, 2013)
Section 2 (89)- Total Voting Power
(Notified on 12th September, 2013)
Section 2 (90)- Tribunal
(Notified on 12th September, 2013)
Section 2 (91)- Turnover
(Notified on 12th September, 2013)
Section 2 (92)- Unlimited Company
(Notified on 12th September, 2013)
Section 2 (93)- Voting right
(Notified on 12th September, 2013)
Section 2 (94)- Whole Time Director
(Notified on 12th September, 2013)
Section 2 (95)- words and expressions used and
not defined in this Act but defined in
the Securities Contracts (Regulation)
Act, 1956 or the Securities and
Exchange Board of India Act, 1992 or
the Depositories Act, 1996 shall have
the meanings respectively assigned to
them in those Acts.
(Notified on 12th September, 2013)
59
Frequently Asked Questions on The Companies Act, 2013
Chapter II Section 3- Formation of company
Incorporation of (Notified on 1st April, 2014)
Company and Matters Section 4- Memorandum
Incidental Thereto (Notified on 1st April, 2014)
(3-22) Section 5- Articles
(Notified on 1st April, 2014)
Section 6- Act to override memorandum, articles,
etc.
(Notified on 1st April, 2014)
Section 7- Incorporation of company
(sub-section (7) notified on 1st June,
2016)
Section 8- Formation of companies with charitable
objects, etc.
Sub-section (9) notified on 15th December, 2016
Section 9- Effect of registration
(Notified on 1st April, 2014)
Section 10- Effect of memorandum and articles
(Notified on 1st April, 2014)
Section 11- Commencement of business, etc
Section 12- Registered office of company
(Notified on 1st April, 2014)
Section 13- Alteration of memorandum
(Notified on 1st April, 2014)
Section 14- Alteration of articles
(second proviso to sub-section (1) and
sub-section (2) notified on 1st June, 2016)
Section 15- Alteration of memorandum or articles to
be noted in every copy
(Notified on 1st April, 2014)
Section 16- Rectification of name of company
(Notified on 1st April, 2014)
Section 17- Copies of memorandum, articles, etc.,
to be given to members
(Notified on 1st April, 2014)
Section 18- Conversion of companies already
60
Annexure-1
registered
(Notified on 1st April, 2014)
Section 19- Subsidiary company not to hold shares
in its holding company
(Notified on 12th September, 2013)
Section 20- Service of documents
(Notified on 1st April, 2014)
Section 21- Authentication of documents,
proceedings and contracts
(Notified on 12th September, 2013)
Section 22- Execution of Acts of exchange, etc.
(Notified on 12th September, 2013)
Chapter III Section 23- Public offer and private placement
Prospectus and (Notified on 1st April,2014)
Allotment of Securities [Except clause (b) of sub-section (1) and
(23-42) subsection (2)]
(Notified on 12th September, 2013)
[23(1)(6) & (2]
Section 24- Power of Securities and Exchange
Board to regulate issue and transfer of
securities, etc.
(Notified on 12th September, 2013)
Section 25- Document containing offer of securities
for sale to be deemed prospectus [Except
clause 3]
(Notified on 12th September, 2013)
Section 26- Matters to be stated in prospectus
(Notified on 1st April,2014)
Section 27- Variation in terms of contract or objects
in prospectus
(Notified on 1st April,2014)
Section 28- Offer of sale of shares by certain
members of company
(Notified on 1st April,2014)
Section 29- Public offer of securities to be in
dematerialised form.
(Notified on 12th September, 2013)
61
Frequently Asked Questions on The Companies Act, 2013
Section 30- Advertisement of prospectus.
(Notified on 12th September, 2013)
Section 31- Shelf prospectus
(Notified on 12th September, 2013)
Section 32- Red herring prospectus.
(Notified on 12th September, 2013)
Section 33- Issue of application forms for securities
[Except sub section 3] (Notified on 12th
September, 2013)
[sub section 3] (Notified on 1st April, 2014)
Section 34- Criminal liability for mis-statements in
prospectus.
(Notified on 12th September, 2013)
Section 35- Civil liability for mis-statements in
prospectus
(Notified on 12th September, 2013)
[Clause (e) of sub-section 1](Notified on
1st April, 2014)
Section 36- Punishment for fraudulently inducing
persons to invest money
(Notified on 12th September, 2013)
Section 37- Action by affected persons
(Notified on 12th September, 2013)
Section 38- Punishment for personation for
acquisition, etc., of securities
(Notified on 12th September, 2013)
Section 39- Allotment of securities by company
(Notified on 12th September, 2013)
[Clause 4] (Notified on 1st April, 2014)
Section 40- Securities to be dealt with in stock
exchanges
(Notified on 12th September, 2013)
[clause 6 (Notified on 1st April, 2014)]
Section 41- Global depository receipt
(Notified on 1st April, 2014)
PART II.--Private placement
Section 42- Offer or invitation for subscription of
62
Annexure-1
securities on private placement
(Notified on 1st April, 2014)
Chapter IV Section 43- Kinds of share capital
Share Capital and (Notified on 1st April, 2014)
Debentures Section 44- Nature of shares or debentures
(43 - 72) (Notified on 12th September, 2013)
Section 45- Numbering of shares
(Notified on 12th September, 2013)
Section 46- Certificate of shares
(Notified on 1st April, 2014)
Section 47- Voting rights
(Notified on 1st April, 2014)
Section 48- Variation of shareholders' rights.
(Notified on 15th December, 2016)
Section 49- Calls on shares of same class to be
made on uniform basis.
(Notified on 12th September, 2013)
Section 50- Company to accept unpaid share
capital, although not called up.
(Notified on 12th September, 2013)
Section 51- Payment of dividend in proportion to
amount paid-up.
(Notified on 12th September, 2013)
Section 52- Application of premiums received on
issue of shares.
(Notified on 1st April, 2014)
Section 53- Prohibition on issue of shares at
discount.
(Notified on 1st April, 2014)
Section 54- Issue of sweat equity shares.
(Notified on 1st April, 2014)
Section 55- Issue and redemption of preference
shares
(Sub-section (3) notified on 1st June,
2016)
Section 56- Transfer and transmission of securities
63
Frequently Asked Questions on The Companies Act, 2013
(Notified on 1st April, 2014)
Section 57- Punishment for personation of
shareholder
(Notified on 12th September, 2013)
Section 58- Refusal of registration and appeal
against refusal
(Notified on 12th September, 2013)
Section 59- Rectification of register of members
(Notified on 12th September, 2013)
Section 60- Publication of authorised, subscribed
and paid-up capital
(Notified on 12th September, 2013)
Section 61- Power of limited company to alter its
share capital
(Proviso to clause (b) of sub-section (1)
notified on 1st June, 2016)
Section 62- Further issue of share capital
(Sub-sections (4) to (6) notified on 1st
June, 2016)
Section 63- Issue of bonus shares
(Notified on 1st April, 2014)
Section 64- Notice to be given to Registrar for
alteration of share capital
(Notified on 1st April, 2014)
Section 65- Unlimited company to provide for
reserve share capital on re-registration.
(Notified on 12th September, 2013)
Section 66- Reduction of Share Capital
(Notified on 15th December, 2016)
Section 67- Restrictions on purchase by company
or giving of loans by it for purchase of its
shares.
(Notified on 1st April, 2014)
Section 68- Power of company to purchase its own
securities
(Notified on 1st April, 2014)
Section 69- Transfer of certain sums to capital
64
Annexure-1
redemption reserve account
(Notified on 12th September, 2013)
Section 70- Prohibition for buy-back in certain
circumstances
(Notified on 12th September, 2013)
[Sub section 2 Notified on 1st April, 2014]
Section 71- Debentures
(Notified on 1st April, 2014)
(Sub-sections (9) to (11) notified on 1st
June, 2016)
Section 72- Power to nominate
(Notified on 1st April, 2014)
CHAPTER V Section 73- Prohibition on acceptance of deposits
Acceptance of from public.
Deposits by (Notified on 1st April, 2014)
Companies Section 74- Repayment of deposits, etc., accepted
(73 - 76) before commencement of this Act.
(Notified on 1st April, 2014)
Section 75- Damages for fraud
(Notified on 1st June, 2016)
Section 76- Acceptance of deposits from public by
certain companies
(Notified on 1st April, 2014)
Section 76A- Punishment for contravention of
section 73 or 76
(Notified on 29th May, 2015)
Chapter VI Section 77- Duty to register charges, etc.
Registration of (Notified on 1st April, 2014)
Charges Section 78- Application for registration of charge.
(77 - 87) (Notified on 1st April, 2014)
Section 79- Section 77 to apply in certain matters.
(Notified on 1st April, 2014)
Section 80- Date of notice of charge.
(Notified on 1st April, 2014)
Section 81- Register of charges to be kept by
Registrar.
65
Frequently Asked Questions on The Companies Act, 2013
(Notified on 1st April, 2014)
Section 82- Company to report satisfaction of
charge.
(Notified on 1st April, 2014)
Section 83- Power of Registrar to make entries of
satisfaction and release in absence of
intimation from company.
(Notified on 1st April, 2014)
Section 84- Intimation of appointment of receiver or
manager.
(Notified on 1st April, 2014)
Section 85- Company's register of charges.
(Notified on 1st April, 2014)
Section 86- Punishment for contravention.
(Notified on 12th September, 2013)
Section 87- Rectification by Central Government in
register of charges.
(Notified on 1st April, 2014)
Chapter VII Section 88- Register of members, etc.
Management and (Notified on 1st April, 2014)
Administration Section 89- Declaration in respect of beneficial
(88 - 122) interest in any share.
(Notified on 1st April, 2014)
Section 90- Investigation of beneficial ownership of
shares in certain cases.
(Notified on 1st April, 2014)
Section 91- Power to close register of members or
debenture holders or other security
holders.
(Notified on 12th September, 2013)
Section 92- Annual return.
(Notified on 1st April, 2014)
Section 93- Return to be filed with Registrar in case
promoters' stake changes.
(Notified on 1st April, 2014)
Section 94- Place of keeping and inspection of
registers, returns, etc.
66
Annexure-1
(Notified on 1st April, 2014)
Section 95- Registers, etc., to be evidence.
(Notified on 1st April, 2014)
Section 96- Annual general meeting.
(Notified on 1st April, 2014)
Section 97- Power of Tribunal to call annual general
meeting.
(Notified on 1st June, 2016)
Section 98- Power of Tribunal to call meetings of
members, etc.
(Notified on 1st June, 2016)
Section 99- Punishment for default in complying
with provisions of sections 96 to 98.
(Notified on 1st June, 2016)
Section 100- Calling of extraordinary general
meeting.
(Notified on 12th September, 2013)
[Clause 100(6) Notified on 1st April, 2014]
Section 101- Notice of meeting
(Notified on 1st April, 2014)
Section 102- Statement to be annexed to notice
(Notified on 12th September, 2013)
Section 103- Quorum for meetings
(Notified on 12th September, 2013)
Section 104- Chairman of meetings
(Notified on 12th September, 2013)
Section 105- Proxies
(Notified on 12th September, 2013)
[105(1), Third and fourth proviso and 105(7)
Notified on 1st April, 2014]
Section 106- Restriction on voting rights.
(Notified on 12th September, 2013)
Section 107- Voting by show of hands.
(Notified on 12th September, 2013)
Section 108- Voting through electronic means.
(Notified on 1st April, 2014)
67
Frequently Asked Questions on The Companies Act, 2013
Section 109- Demand for poll.
(Notified on 1st April, 2014)
Section 110- Postal ballot.
(Notified on 1st April, 2014)
Section 111- Circulation of members' resolution.
(Notified on 12th September, 2013)
Section 112- Representation of President and
Governors in meetings.
(Notified on 12th September, 2013)
Section 113- Representation of corporations at
meeting of
companies and of creditors.
(Notified on 12th September, 2013)
[Except 113(1)(6) Notified on 1st April, 2014]
Section 114- Ordinary and special resolutions.
(Notified on 12th September, 2013)
Section 115- Resolutions requiring special notice.
(Notified on 1st April, 2014)
Section 116- Resolutions passed at adjourned
meeting (Notified on 12th September,
2013)
Section 117- Resolutions and agreements to be
filed
(Notified on 1st April, 2014)
Section 118- Minutes of proceedings of general
meeting, meeting of Board of Directors
and other meeting and resolutions passed
by postal ballot.
(Notified on 1st April, 2014)
Section 119- Inspection of minute-books of general
meeting (Notified on 1st April, 2014)
(Sub-section (4) notified on 1st June, 2016)
Section 120- Maintenance and inspection of
documents in electronic form.
(Notified on 1st April, 2014)
Section 121- Report on annual general meeting.
(Notified on 1st April, 2014)
68
Annexure-1
Section 122- Applicability of this Chapter to One
Person Company
(Notified on 1st April, 2014)
Chapter VIII Section 123- Declaration of dividend.
Declaration and (Notified on 1st April, 2014)
Payment of Dividend Section 124- Unpaid Dividend Account
(123 - 127) (Notified on 5th September, 2016)
Section 125- Commencement of sub- section 1, 2,
3, 4 and 6 (with respect to the manner of
administration of the Investor Education
and Protection Fund] and 8, 9, 10 and 11
of Investor Education and Protection Fund
from 5th September, 2016.
Commencement of sub- section 5, 6 and 7 of
Investor Education and Protection Fund
from 13th January, 2016. (Sub-section (5),
sub-section (6) [except with respect to the
manner of administration of the Investor
Education and Protection Fund]
Section 126- Right to dividend, rights shares and
bonus shares to be held in abeyance
pending registration of transfer of shares.
(Notified on 1st April, 2014)
Section 127- Punishment for failure to distribute
dividends
(Notified on 12th September,2013)
Chapter IX Section 128- Books of account, etc., to be kept by
Accounts of company.
Companies (Notified on 1st April, 2014)
(128 - 138) Section 129- Financial statement.
(Notified on 1st April, 2014)
Section 130- Re-opening of accounts on court's or
Tribunal's orders.
(Notified on 1st June, 2016)
Section 131- Voluntary revision of financial
statements or Board's report.
(Notified on 1st June, 2016)
Section 133- Central Government to prescribe
69
Frequently Asked Questions on The Companies Act, 2013
accounting standards.
(Notified on 12th September, 2013)
Section 134- Financial Statement, Board Report,
etc
(Notified on 1st April, 2014)
Section 135- Corporate Social Responsibility.
(Notified on 1st April, 2014)
Section 136- Right of member to copies of audited
financial statement
(Notified on 1st April, 2014)
Section 137- Copy of financial statement to be filed
with Registrar
(Notified on 1st April, 2014)
Section 138- Internal Audit
(Notified on 1st April, 2014)
Chapter X Section 139- Appointment of auditors.
Audit and Auditors (Notified on 1st April, 2014)
(139 - 148) Section 140- Removal, resignation of auditor and
giving of special notice
(Notified on 1st April, 2014)
(Second proviso to sub-section (4)) and (Sub-
section (5) notified on 1st June, 2016)
Section 141- Eligibility, qualifications and
disqualifications of auditors.
(Notified on 1st April, 2014)
Section 142- Remuneration of auditors.
(Notified on 1st April, 2014)
Section 143- Powers and duties of auditors and
auditing standards.
(Notified on 1st April, 2014)
Section 144- Auditor not to render certain services.
(Notified on 1st April, 2014)
Section 145- Auditors to sign audit reports, etc.
(Notified on 1st April, 2014)
Section 146- Auditors to attend general meeting.
(Notified on 1st April, 2014)
70
Annexure-1
Section 147- Punishment for contravention.
(Notified on 1st April, 2014)
Section 148- Central Government to specify audit of
items of cost in respect of certain
companies
(Notified on 1st April, 2014)
Chapter XI Section 149- Company to have Board of Directors.
Appointment and (Notified on 1st April, 2014)
Qualifications of Section 150- Manner of selection of independent
Directors directors and maintenance of data bank of
(149 - 172) independent directors.
(Notified on 1st April, 2014)
Section 151- Appointment of director elected by
small shareholders.
(Notified on 1st April, 2014)
Section 152- Appointment of directors.
(Notified on 1st April, 2014)
Section 153- Application for allotment of Director
Identification Number.
(Notified on 1st April, 2014)
Section 154- Allotment of Director Identification
Number.
(Notified on 1st April, 2014)
Section 155- Prohibition to obtain more than one
Director Identification Number.
(Notified on 1st April, 2014)
Section 156- Director to intimate Director
Identification Number. (Notified on 1st
April, 2014)
Section 157- Company to inform Director
Identification Number to Registrar.
(Notified on 1st April, 2014)
Section 158- Obligation to indicate Director
Identification Number.
(Notified on 1st April, 2014)
Section 159- Punishment for contravention.
(Notified on 1st April, 2014)
71
Frequently Asked Questions on The Companies Act, 2013
Section 160- Right of persons other than retiring
directors to stand for directorship.
(Notified on 1st April, 2014)
Section 161- Appointment of additional director,
alternate director and nominee director.
(Notified on 12th September, 2013)
[Except 161(2) (Notified on 1st April, 2014)]
Section 162- Appointment of directors to be voted
individually. (Notified on 12th September,
2013)
Section 163- Option to adopt principle of
proportional representation for
appointment of directors. (Notified on 12th
September, 2013)
Section 164- Disqualifications for appointment of
director.
(Notified on 1st April, 2014)
Section 165- Number of directorships.
(Notified on 1st April, 2014)
Section 166- Duties of directors.
(Notified on 1st April, 2014)
Section 167- Vacation of office of director.
(Notified on 1st April, 2014)
Section 168- Resignation of director
(Notified on 1st April, 2014)
Section 169- Removal of directors
(Notified on 1st April, 2014)
(Sub-section (4) notified on 1st June, 2016)
Section 170- Register of directors and key
managerial personnel and their
shareholding.
(Notified on 1st April, 2014)
Section 171- Members' right to inspect.
(Notified on 1st April, 2014)
Section 172- Punishment
(Notified on 1st April, 2014)
Chapter XII Section 173- Meetings of Board.
72
Annexure-1
Meetings of Board (Notified on 1st April, 2014)
and its Powers Section 174- Quorum for meetings of Board.
(173 - 195) (Notified on 1st April, 2014)
Section 175- Passing of resolution by circulation.
(Notified on 1st April, 2014)
Section 176- Defects in appointment of directors not
to invalidate actions taken.
(Notified on 12th September, 2013)
Section 177- Audit committee.
(Notified on 1st April, 2014)
Section 178- Nomination and remuneration
committee and stakeholders relationship
committee.
(Notified on 1st April, 2014)
Section 179- Powers of Board.
(Notified on 1st April, 2014)
Section 180- Restrictions on powers of Board.
(Notified on 12th September, 2013)
Section 181- Company to contribute to bona fide
and charitable funds, etc.
(Notified on 12th September, 2013)
Section 182- Prohibitions and restrictions regarding
political contributions.
(Notified on 12th September, 2013)
Section 183- Power of Board and other persons to
make contributions to national defence
fund, etc. (Notified on 12th September,
2013)
Section 184- Disclosure of interest by director.
(Notified on 1st April, 2014)
Section 185- Loan to directors, etc.
(Notified on 12th September, 2013)
Section 186- Loan and investment by company.
(Notified on 1st April, 2014)
Section 187- Investments of company to be held in
its own name.
(Notified on 1st April, 2014)
73
Frequently Asked Questions on The Companies Act, 2013
Section 188- Related party transactions.
(Notified on 1st April, 2014)
Section 189- Register of contracts or arrangements
in which directors are interested.
(Notified on 1st April, 2014)
Section 190- Contract of employment with
managing or whole-time directors.
(Notified on 1st April, 2014)
Section 191- Payment to director for loss of office,
etc., in connection with transfer of
undertaking, property or shares.
(Notified on 1st April, 2014)
Section 192- Restriction on non-cash transactions
involving directors.
(Notified on 12th September, 2013)
Section 193- Contract by One Person Company.
(Notified on 1st April, 2014)
Section 194- Prohibition on forward dealings in
securities of company by key managerial
personnel.
(Notified on 12th September, 2013)
Section 195- Prohibition on insider trading of
securities. (Notified on 12th September,
2013)
Chapter XIII Section 196- Appointment of managing director,
Appointment and whole-time director or manager.
Remuneration of (Notified on 1st April, 2014)
Managerial Personnel Section 197- Overall maximum managerial
(196 - 205) remuneration and managerial
remuneration in case of absence or
inadequacy of profits.
(Notified on 1st April, 2014)
Section 198- Calculation of profits.
(Notified on 1st April, 2014)
Section 199- Recovery of remuneration in certain
cases. (Notified on 1st April, 2014)
74
Annexure-1
Section 200- Central Government or company to fix
limit with regard to remuneration.
(Notified on 1st April, 2014)
Section 201- Forms of, and procedure in relation to,
certain applications.
(Notified on 1st April, 2014)
Section 202- Compensation for loss of office of
managing or whole-time director or
manager.
(Notified on 12th September, 2013)
Section 203- Appointment of key managerial
personnel.
(Notified on 1st April, 2014)
Section 204- Secretarial audit for bigger companies.
(Notified on 1st April, 2014)
Section 205- Functions of company secretary.
(Notified on 1st April, 2014)
CHAPTER XIV Section 206- Power to call for information, inspect
Inspection, Inquiry books and conduct inquiries.
and Investigation (Notified on 1st April, 2014)
(206 - 229) Section 207- Conduct of inspection and inquiry.
(Notified on 1st April, 2014)
Section 208- Report on inspection made.
(Notified on 1st April, 2014)
Section 209- Search and seizure.
(Notified on 1st April, 2014)
Section 210- Investigation into affairs of company.
(Notified on 1st April, 2014)
Section 211- Establishment of Serious Fraud
Investigation Office.
(Notified on 1st April, 2014)
Section 212- Investigation into affairs of company
by Serious Fraud Investigation Office.
(except references of sub-section (10) of
section 66, sub-section (5) of section 140,
section 213, sub-section (1) of section 251
and sub-section (3) of section 339 made in
75
Frequently Asked Questions on The Companies Act, 2013
sub-section (6) and also sub-sections (8)
to (10))
(Notified on 1st April, 2014)
Section 213- Investigation into company's affairs in
other cases.
(Notified on 1st June, 2016)
Section 214- Security for payment of costs and
expenses of investigation.
(Notified on 1st April, 2014)
Section 215- Firm, body corporate or association
not to be appointed as inspector.
(Notified on 1st April, 2014)
Section 216- Investigation of ownership of company
(Notified on 1st April, 2014)
(Sub-section (2) notified on 1st June, 2016)
Section 217- Procedure, powers, etc., of inspectors.
(Notified on 1st April, 2014)
Section 218- Protection of employees during
investigation.
(Notified on 1st June, 2016)
Section 219- Power of inspector to conduct
investigation into affairs of related
companies, etc.
(Notified on 1st April, 2014)
Section 220- Seizure of documents by inspector.
(Notified on 1st April, 2014)
Section 221- Freezing of assets of company on
inquiry and investigation.
(Notified on 1st June, 2016)
Section 222- Imposition of restrictions upon
securities.
(Notified on 1st June, 2016)
Section 223- Inspector's report.
(Notified on 1st April, 2014)
Section 224- Actions to be taken in pursuance of
inspector's report
(Notified on 1st April, 2014)
76
Annexure-1
(Sub-section (2) and (5) notified on 1st June,
2016)
Section 225- Expenses of investigation.
(Notified on 1st April, 2014)
Section 226- Voluntary winding up of company, etc.,
not to stop investigation proceedings.
(Notified on 15th December, 2016)
Section 227- Legal advisers and bankers not to
disclose certain information.
(Notified on 9th September, 2016)
Section 228- Investigation, etc., of foreign
companies.
(Notified on 1st April, 2014)
Section 229- Penalty for furnishing false statement,
mutilation, destruction of documents.
(Notified on 1st April, 2014)
CHAPTER XV Section 230- Power to compromise or make
Compromises, arrangements with creditors and members.
Arrangements and (Except Sub- Section (11) and (12))
Amalgamations (Notified on 15th December, 2016)
(230 - 240) Section 231-Power of Tribunal to enforce
compromise or arrangement.
(Notified on 15th December, 2016)
Section 232- Merger and amalgamation of
companies.
(Notified on 15th December, 2016)
Section 233- Merger or amalgamation of certain
companies.
(Notified on 15th December, 2016)
Section 235- Power to acquire shares of
shareholders dissenting from scheme or
contract approved by majority.
(Notified on 15th December, 2016)
Section 236- Purchase of minority shareholding.
(Notified on 15th December, 2016)
Section 237- Power of Central Government to
77
Frequently Asked Questions on The Companies Act, 2013
provide for amalgamation of companies in
public interest.
(Notified on 15th December, 2016)
Section 238- Registration of offer of schemes
involving transfer of shares.
(Notified on 15th December, 2016)
Section 239- Preservation of books and papers of
amalgamated companies.
(Notified on 15th December, 2016)
Section 240-Liability of officers in respect of
offences committed prior to merger,
amalgamation, etc.
(Notified on 15th December, 2016)
CHAPTER XVI Section 241- Application to Tribunal for relief in
Prevention of cases of oppression, etc.
Oppression and (Notified on 1st June, 2016)
Mismanagement Section 242- Powers of Tribunal.
(241 - 246) (Notified on 1st June, 2016 except clause (b) of
sub-section (1), clause (c) & (g) of sub-
section (2)
Clause (b) of sub-section (1) of section 242,
clauses (c) and (g) of sub-section (2) of
section 242 (Notified on 9th September,
2016)
Section 243- Consequence of termination or
modification of certain agreements.
(Notified on 1st June, 2016)
Section 244- Right to apply under section 241.
(Notified on 1st June, 2016)
Section 245- Class action.
(Notified on 1st June, 2016)
Section 246- Application of certain provisions to
proceedings under section 241 or section
245.
(Notified on 9th September, 2016)
CHAPTER XX Section 270- Modes of winding up.
Winding up (Notified on 15th December, 2016)
78
Annexure-1
(270-365) Section 271- Circumstances in which company may
be wound up by Tribunal.
PART I.- Winding up (Notified on 15th December, 2016)
by Section 272- Petition for winding up.
the Tribunal (Notified on 15th December, 2016)
(271- 303) Section 273- Powers of Tribunal.
(Notified on 15th December, 2016)
PART II.- Voluntary Section 274- Directions for filing statement of
winding up affairs.
(304- 323) (Notified on 15th December, 2016)
Section 275- Company Liquidators and their
PART III.- Provisions appointments.
applicable to every (Notified on 15th December, 2016)
mode of winding up Section 276- Removal and replacement of
(324- 358) liquidator.
(Notified on 15th December, 2016)
PART IV.- Official Section 277- Intimation to Company Liquidator,
liquidators provisional liquidator and Registrar.
(359- 365) (Notified on 15th December, 2016)
Section 278- Effect of winding up order.
(Notified on 15th December, 2016)
Section 279- Stay of suits, etc., on winding up
order.
(Notified on 15th December, 2016)
Section 280- Jurisdiction of Tribunal.
(Notified on 15th December, 2016)
Section 281- Submission of report by Company
Liquidator.
(Notified on 15th December, 2016)
Section 282- Directions of Tribunal on report of
Company Liquidator.
(Notified on 15th December, 2016)
Section 283- Custody of company's properties.
(Notified on 15th December, 2016)
Section 284- Promoters, directors, etc., to co-
operate with Company Liquidator.
(Notified on 15th December, 2016)
79
Frequently Asked Questions on The Companies Act, 2013
Section 285- Settlement of list of contributories and
application of assets.
(Notified on 15th December, 2016)
Section 286- Obligations of directors and managers.
(Notified on 15th December, 2016)
Section 287- Advisory Committee.
(Notified on 15th December, 2016)
Section 288- Submission of periodical reports to
Tribunal.
(Notified on 15th December, 2016)
Section 290- Powers and duties of Company
Liquidator.
(Notified on 15th December, 2016)
Section 291- Provision for professional assistance
to Company Liquidator.
(Notified on 15th December, 2016)
Section 292- Exercise and control of Company
Liquidator's powers.
(Notified on 15th December, 2016)
Section 293- Books to be kept by Company
Liquidator.
(notified on 15th December, 2016)
Section 294- Audit of Company Liquidator's
accounts.
(Notified on 15th December, 2016)
Section 295- Payment of debts by contributory and
extent of set-off.
(Notified on 15th December, 2016)
Section 296- Power of Tribunal to make calls.
(Notified on 15th December, 2016)
Section 297- Adjustment of rights of contributories.
(Notified on 15th December, 2016)
Section 298- Power to order costs.
(Notified on 15th December, 2016)
Section 299- Power to summon persons suspected
of having property of company, etc.
(Notified on 15th December, 2016)
80
Annexure-1
Section 300- Power to order examination of
promoters, directors, etc.
(Notified on 15th December, 2016)
Section 301- Arrest of person trying to leave India
or abscond.
(Notified on 15th December, 2016)
Section 302- Dissolution of company by Tribunal.
(Notified on 15th December, 2016)
Section 303- Appeals from orders made before
commencement of Act.
(Notified on 15th December, 2016)
Section 324- Debts of all descriptions to be
admitted to proof.
(Notified on 15th December, 2016)
Section 326- Overriding preferential payments.
(Notified on 15th December, 2016)
Section 327- Preferential payments.
(Notified on 15th December, 2016)
Section 328- Fraudulent preference.
(Notified on 15th December, 2016)
Section 329- Transfers not in good faith to be void.
(Notified on 15th December, 2016)
Section 330- Certain transfers to be void.
(Notified on 15th December, 2016)
Section 331- Liabilities and rights of certain persons
fraudulently preferred.
(Notified on 15th December, 2016)
Section 332- Effect of floating charge.
(Notified on 15th December, 2016)
Section 333- Disclaimer of onerous property.
(Notified on 15th December, 2016)
Section 334- Transfers, etc., after commencement
of winding up to be void.
(Notified on 15th December, 2016)
Section 335- Certain attachments, executions, etc.,
in winding up by Tribunal to be void.
81
Frequently Asked Questions on The Companies Act, 2013
(Notified on 15th December, 2016)
Section 336- Offences by officers of companies in
liquidation.
(Notified on 15th December, 2016)
Section 337- Penalty for frauds by officers.
(Notified on 15th December, 2016)
Section 338- Liability where proper accounts not
kept.
(Notified on 15th December, 2016)
Section 339- Liability for fraudulent conduct of
business.
(Notified on 15th December, 2016)
Section 340- Power of Tribunal to assess damages
against delinquent directors, etc.
(Notified on 15th December, 2016)
Section 341- Liability under sections 339 and 340 to
extend to partners or directors in firms or
companies.
(Notified on 15th December, 2016)
Section 342- Prosecution of delinquent officers and
members of company.
(Notified on 15th December, 2016)
Section 343- Company Liquidator to exercise
certain powers subject to sanction.
(Notified on 15th December, 2016)
Section 344- Statement that company is in
liquidation.
(Notified on 15th December, 2016)
Section 345- Books and papers of company to be
evidence.
(Notified on 15th December, 2016)
Section 346- Inspection of books and papers by
creditors and contributories.
(Notified on 15th December, 2016)
Section 347- Disposal of books and papers of
company.
(Notified on 15th December, 2016)
82
Annexure-1
Section 348- Information as to pending liquidations.
(Notified on 15th December, 2016)
Section 349- Official Liquidator to make payments
into public account of India.
(Notified on 15th December, 2016)
Section 350- Company Liquidator to deposit monies
into scheduled bank.
(Notified on 15th December, 2016)
Section 351- Liquidator not to deposit monies into
private banking account.
(Notified on 15th December, 2016)
Section 352- Company Liquidation Dividend and
Undistributed Assets Account.
(Notified on 15th December, 2016)
Section 353- Liquidator to make returns, etc.
(Notified on 15th December, 2016)
Section 354- Meetings to ascertain wishes of
creditors or contributories.
(Notified on 15th December, 2016)
Section 355- Court, Tribunal or person, etc., before
whom affidavit may be sworn.
(Notified on 15th December, 2016)
Section 356- Powers of Tribunal to declare
dissolution of company void.
(Notified on 15th December, 2016)
Section 357- Commencement of winding up by
Tribunal.
(Notified on 15th December, 2016)
Section 358- Exclusion of certain time in computing
period of limitation.
(Notified on 15th December, 2016)
Section 359- Appointment of Official Liquidator.
(Notified on 15th December, 2016)
Section 360- Powers and functions of Official
Liquidator.
(Notified on 15th December, 2016)
Section 361- Summary procedure for liquidation.
83
Frequently Asked Questions on The Companies Act, 2013
(Notified on 15th December, 2016)
Section 362- Sale of assets and recovery of debts
due to company.
(Notified on 15th December, 2016)
Section 363- Settlement of claims of creditors by
Official Liquidator.
(Notified on 15th December, 2016)
Section 364- Appeal by creditor.
(Notified on 15th December, 2016)
Section 365- Order of dissolution of company.
(Notified on 15th December, 2016)
CHAPTER XXI Section 366- Companies capable of being
PART I.--Companies registered.
authorised to register (Notified on 1st April, 2014)
under this Act Section 367- Certificate of registration of existing
(366- 374) companies. (Notified on 1st April, 2014)
Section 368- Vesting of property on registration.
PART II.--Winding up (Notified on 1st April, 2014)
of unregistered Section 369- Saving of existing liabilities.
companies (Notified on 1st April, 2014)
(375- 378) Section 370- Continuation of pending legal
proceedings
(Notified on 1st April, 2014)
- Proviso notified on 15th December, 2016
Section 371- Effect of registration under this Part.
(Notified on 1st April, 2014)
Section 372- Power of Court to stay or restrain
proceedings.
(Notified on 15th December, 2016)
Section 373- Suits stayed on winding up order.
(Notified on 15th December, 2016)
Section 374- Obligation of Companies registering
under this Part.
(Notified on 1st April, 2014)
Section 375- Winding up of unregistered
companies.
84
Annexure-1
(Notified on 15th December, 2016)
Section 376- Power to wind up foreign companies
although dissolved.
(Notified on 15th December, 2016)
Section 377- Provisions of Chapter cumulative.
(Notified on 15th December, 2016)
Section 378- Saving and construction of
enactments conferring power to wind up
partnership firm, association or company,
etc., in certain cases.
(Notified on 15th December, 2016)
Chapter XXII- Section 379- Application of Act to foreign
Companies companies.
Incorporated Outside (Notified on 12th September,2013)
India Section 380- Documents, etc., to be delivered to
(379- 393) Registrar by foreign companies.
(Notified on 1st April, 2014)
Section 381- Accounts of foreign company.
(Notified on 1st April, 2014)
Section 382- Display of name, etc., of foreign
company.
(Notified on 12th September,2013)
Section 383- Service on foreign company.
(Notified on 12th September,2013)
Section 384- Debentures, annual return, registration
of charges, books of account and their
inspection.
(Notified on 1st April, 2014)
Section 385- Fee for registration of documents.
(Notified on 1st April, 2014)
Section 386- Interpretation.
(Notified on 12th September, 2013)
[Except clause (a) notified on 1st April, 2014]
Section 387- Dating of prospectus and particulars to
be contained therein.
(Notified on 1st April, 2014)
Section 388- Provisions as to expert's consent and
85
Frequently Asked Questions on The Companies Act, 2013
allotment.
(Notified on 1st April, 2014)
Section 389- Registration of prospectus.
(Notified on 1st April, 2014)
Section 390- Offer of Indian Depository Receipts.
(Notified on 1st April, 2014)
Section 391- sub-section 1- Application of sections
34 to 36 and Chapter XX.
(Notified on 1st April, 2014)
[Sub-section 1 notified on 15th December, 2016]
Section 392- Punishment for contravention.
(Notified on 1st April, 2014)
Section 393- Company's failure to comply with
provisions of this Chapter not to affect
validity of contracts, etc. (Notified on 1st
April, 2014)
Chapter XXIII- Section 394- Annual reports on Government
Government companies.
Companies (Notified on 12th September, 2013)
(394 - 395) Section 395- Annual reports where one or more
State Governments are members of
companies. (Notified on 1st April, 2014)
CHAPTER XXIV Section 396- Registration offices.
Registration offices (Notified on 1st April, 2014)
and fees Section 397- Admissibility of certain documents as
(396 - 404) evidence.
(Notified on 1st April, 2014)
Section 398- Provisions relating to filing of
applications, documents, inspection, etc.,
in electronic form. (Notified on 1st April,
2014)
Section 399- Inspection, production and evidence of
documents kept by Registrar.
(Notified on 1st April, 2014)
(reference of word Tribunal in sub-section (2)
notified on 1st June, 2016)
86
Annexure-1
Section 400- Electronic form to be exclusive,
alternative or in addition to physical form.
(Notified on 1st April, 2014)
Section 401- Provision of value added services
through electronic form.
(Notified on 1st April, 2014)
Section 402- Application of provisions of
Information Technology Act, 2000.
(Notified on 1st April, 2014)
Section 403- Fee for filing, etc.
(Notified on 1st April, 2014)
Section 404- Fees, etc., to be credited into public
account. (Notified on 1st April, 2014)
Chapter XXV- Section 405- Power of Central Government to direct
Companies to Furnish companies to furnish information or
Information or statistics.
Statistics (Notified on 12th September, 2013)
(405)
CHAPTER XXVI Section 406- Power to modify Act in its application
Nidhis to Nidhis.
(406) (Notified on 1st April, 2014)
Chapter XXVII- Section 407- Definitions.
National Company (Notified on 12th September, 2013)
Law Tribunal and Section 408- Constitution of National Company Law
Appellate Tribunal Tribunal.
(407 - 434) (Notified on 12th September, 2013)
Section 409- Qualification of President and
Members of Tribunal.
(Notified on 12th September, 2013)
Section 410- Constitution of Appellate Tribunal
(Notified on 12th September, 2013)
Section 411- Qualification of Chairperson and
Members of Appellate Tribunal.
(Notified on 12th September, 2013)
Section 412- Selection of Members of Tribunal and
87
Frequently Asked Questions on The Companies Act, 2013
Appellate Tribunal.
(Notified on 12th September, 2013)
Section 413- Term of office of President,
Chairperson and other Members.
(Notified on 12th September, 2013)
Section 414- Salary, allowances and other terms
and conditions of service of Members.
(Notified on 12th September, 2013)
Section 415- Acting President and Chairperson of
Tribunal or Appellate Tribunal.
(Notified on 1st June, 2016)
Section 416- Resignation of Members.
(Notified on 1st June, 2016)
Section 417- Removal of Members.
(Notified on 1st June, 2016)
Section 418- Staff of Tribunal and Appellate
Tribunal.
(Notified on 1st June, 2016)
Section 419- Benches of Tribunal.
(Notified on 1st June, 2016)
Section 420- Orders of Tribunal.
(Notified on 1st June, 2016)
Section 421- Appeal from Orders of Tribunal.
(Notified on 1st June, 2016)
Section 422- Expeditious disposal by Tribunal and
Appellate Tribunal.
(Notified on 1st June, 2016)
Section 423- Appeal to Supreme Court.
(Notified on 1st June, 2016)
Section 424- Procedure before Tribunal and
Appellate Tribunal.
(Notified on 1st June, 2016)
Section 425- Power to punish for contempt.
(Notified on 1st June, 2016)
Section 426- Delegation of powers.
(Notified on 1st June, 2016)
88
Annexure-1
Section 427- President, Members, officers, etc., to
be public servants.
(Notified on 1st June, 2016)
Section 428- Protection of action taken in good
faith.
(Notified on 1st June, 2016)
Section 429- Power to seek assistance of Chief
Metropolitan
Magistrate, etc.
(Notified on 1st June, 2016)
Section 430- Civil court not to have jurisdiction.
(Notified on 1st June, 2016)
Section 431- Vacancy in Tribunal or Appellate
Tribunal not to invalidate acts or
proceedings.
(Notified on 1st June, 2016)
Section 432- Right to legal representation.
(Notified on 1st June, 2016)
Section 433- Limitation.
(Notified on 1st June, 2016)
Section 434- Sub- Section 1 (a) and (b) of Transfer
of certain pending proceedings.
(Notified on 1st June, 2016)
Sub- Section 1 (c) of Transfer of certain pending
proceedings.
(Notified on 15th December, 2016)
Chapter XXVIII- Section 435- Establishment of Special Courts.
Special Courts (Notified on 18th May, 2016)
(435 - 446) Section 436- Offences triable by Special Courts.
(Notified on 18th May, 2016)
Section 437- Appeal and revision.
(Notified on 18th May, 2016)
Section 438- Application of Code to proceedings
before Special Court.
(Notified on 18th May, 2016)
Section 439- Offences to be non-cognizable.
89
Frequently Asked Questions on The Companies Act, 2013
(Notified on 12th September,2013)
Section 440- Transitional provisions.
(Notified on 18th May, 2016)
Section 441- Compounding of certain offences.
(Notified on 1st June, 2016)
Section 442- Mediation and conciliation penal.
(Notified on 1st April, 2014)
Section 443- Power of Central Government to
appoint company prosecutors.
(Notified on 12th September, 2013)
Section 444- Appeal against acquittal.
(Notified on 12th September, 2013)
Section 445- Compensation for accusation without
reasonable cause.
(Notified on 12th September, 2013)
Section 446- Application of fines.
(Notified on 12th September, 2013)
Chapter XXIX Section 447- Punishment for fraud.
Miscellaneous (Notified on 12th September, 2013)
(447 - 470) Section 448- Punishment for false statements.
(Notified on 12th September, 2013)
Section 449- Punishment for false evidence.
(Notified on 12th September, 2013)
Section 450- Punishment where no specific penalty
or punishment is provided.
(Notified on 12th September, 2013)
Section 451- Punishment in case of repeated
default.
(Notified on 12th September, 2013)
Section 452- Punishment for wrongful withholding of
property.
(Notified on 12th September, 2013)
Section 453- Punishment for improper use of
"Limited" or "Private Limited".
(Notified on 12th September, 2013)
Section 454- Adjudication of penalties.
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Annexure-1
(Notified on 1st April, 2014)
Section 455- Dormant company
(Notified on 1st April, 2014)
Section 456- Protection of action taken in good
faith.
(Notified on 12th September, 2013)
Section 457- Non-disclosure of information in
certain cases. (Notified on 12th September,
2013)
Section 458- Delegation by Central Government of
its powers and functions.
(Notified on 12th September, 2013)
Section 459- Powers of Central Government or
Tribunal to accord approval, etc., subject
to conditions and to prescribe fees on
applications.
(Notified on 12th September, 2013)
Section 460- Condonation of delay in certain cases.
(Notified on 12th September, 2013)
Section 461- Annual report by Central Government.
(Notified on 12th September, 2013)
Section 462- Power to exempt a class or classes of
companies from provisions of this Act.
(Notified on 12th September, 2013)
Section 463- Power of Court to grant relief in
certain cases
(Notified on 12th September, 2013)
Section 464- Prohibition of association or
partnership of persons exceeding certain
number.
(Notified on 1st April, 2014)
Section 465- Repeal of certain enactments and
savings.
(Notified on 1st June, 2016)
Section 466- Dissolution of Company Law Board
and consequential provisions.
(Notified on 1st June, 2016)
91
Frequently Asked Questions on The Companies Act, 2013
Section 467- Power of Central Government to
amend Schedules. (Notified on 12th
September, 2013)
Section 468- Power of Central Government to make
rules relating to winding up.
(Notified on 12th September, 2013)
Section 469- Power of Central Government to make
rules.
(Notified on 12th September, 2013)
Section 470- Power to remove difficulties.
(Notified on 12th September, 2013)
Schedules SCHEDULE I- Section 4 and 5
(Notified on 1st April, 2014)
SCHEDULE II- Useful Lives to Compute
Depreciation
(Notified on 1st April, 2014)
SCHEDULE III- General Instructions For
Preparation Of Balance Sheet And
Statement Of Profit And Loss of A
Company
(Notified on 1st April, 2014)
SCHEDULE IV- Code For Independent Directors
(Notified on 1st April, 2014)
SCHEDULE V - Conditions to be Fulfilled for the
Appointment of a Managing or Whole Time
Director or a Manager Without the
Approval of the Central Government
(Notified on 1st April, 2014)
SCHEDULE VI- Section 55 And 186 Related To
Infrastructure Projects
(Notified on 1st April, 2014)
SCHEDULE VII-Corporate Social Responsibility
(Notified on 1st April, 2014)
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