Clarification of MCA on Manegerial Remuneration

LEGAL UPDATE

As per recent the recent clarification of MCA issued on 16th August, 2012:

Any employee of the Company or any other person holding more than 0.5% shares in the paid - up capital of the Company, shall be treated as a person having interest in the capital of the Company. The remuneration received by such a person in managerial capacity will require the central governement's approval.

http://www.mca.gov.in/Ministry/pdf/G.S.R%28E%29534_16_08_2012.pdf

ALL ABOUT CONDUCTING BOARD MEETINGS:

Q 1: How many board meeting are necessary to be called in one financial year?

Ans: For private companies and unlisted public companies at least four meetings in one financial year and at least one meeting in each quarter need to be conducted. For listed public companies the gap between two board meetings shall not be more than four months. (section 285 of the companies act read with clause 49)

Q 2: Who can call the board meeting or send notice for calling board meeting:

Ans: Any of the director or secretary of the company on behalf of the board can call the meeting of board.

Q 3: How many days prior notice need to be sent? Or what shall be the length of notice?

Ans: No specific period has been mentioned in companies Act, AOA needs to be checked or if there is any shareholders agreement, which has been incorporated or is pending to be incorporated shall be checked.

Q 4: What is the quorum for meeting of board of directors and where it has been mentioned?

Ans: 1/3^rd of directors of the company or two whichever is higher can form a quorum. In case of interested directors on any motion, the quorum shall be counted excluding the interested directors, if there be more than 2/3^rd of interested director on any motion the rest of the directors (if at least two)shall form a valid quorum for that particular motion.(Dealing section is section is 287 of the Companies Act, 1956.)

Q 5: What if a meeting is called in a quarter but being adjourned due to want of quorum, will that be counted as one meeting conducted in a quarter.

Ans: Yes. (Dealing section 288 of the Companies Act, 1956)

Q 6: Whom all shall be given the notice of a board meeting?

Ans: Notice of board meeting shall be given in writing to all the directors living in india, and directors living abroad to his usual address of india.

FOR ANY FURTHER QUERY RELATED WITH BOARD MEETING WRITE TO THE BLOGGER AT nikita.1.singh@gmail.com .

The information given in this blog is the personal understanding of the writer and shall not be used as a conclusive material the content stated/mentioned here is subject to changes by respective government/authorities in the applicable laws. Writer shall not be liable for any direct or indirect damages caused to any person acting solely on/based upon the information provided herein.

ANNUAL GENERAL MEETING

Annual general meeting (AGM) is the meeting which is hold once in a year, any general meeting hold between two AGMs is called "extra ordinary general meeting". The most commonly asked questions about AGM is the time limit for holding AGM, provisions for extension of AGM and the consequences of not holding an AGM within the specified time limit.

TIME LIMIT FOR HOLDING FIRST AGM:

Ø  UNDERS SECTION 166 of the Companies Act, 1956: Within 18 months of incorporation;

Ø  UNDERS SECTION 210 of the Companies Act, 1956: Within 9 months of the end of the first financial year;

Whichever is earlier.

Now suppose the date of incorporation of a company is 10^th July, 2012, and the first financial year ended on 31^st March, 2013; it will have to held its first AGM latest by:

UNDERS SECTION 166: 9^th January, 2014;

UNDERS SECTION 210: 31^st December, 2013;

Latest by 31^st December, 2013.

TIME LIMIT FOR HOLDING SUBSEQUENT AGMs:

Ø  UNDERS SECTION 166 of the Companies Act, 1956:

a)      There shall be at least one annual general meeting in one calendar  year, i.e. one meeting between January to December of every year;

b)      There shall not be more than fifteen months gap between two AGMs;

Ø  UNDERS SECTION 210 of the Companies Act, 1956:

The AGM must be held within 6 months of the end of the financial year.

Suppose the company hold its first AGM on 31^st December, 2013. And the financial year is 31^st March ending. The next AGM must be hold by:

UNDERS SECTION 166: a) one AGM in the year 2014 i.e. latest by 31^st December, 2014;

            b) Latest by 30^th March, 2015;

i.e. latest by 31^st December, 2014 as per section 166.

UNDERS SECTION 210: Latest by 30^th September, 2014.

Thus the Company will have to hold its second AGM latest by 30^th September, 2014.

PROCEDURE FOR EXTENSION OF AGM’S TIME LIMIT:

If the company not be able to hold the AGM within the specified time limit it must apply to the ROC before expiry of the specified time limit for extension of time limit for holding AGM (not being the first annual general meeting), as per the provisions of section 166 of the companies act, 1956, on being satisfied with the reason of not holding of AGM within the specified time limit, ROC may grant an extension of three months, but this is a discretionary power of ROC.

Consequences of not holding AGM within the specified time limit:

Under section 168 of the Companies Act, 1956 it has been mentioned that if a company defaults in compliance of provisions regarding holding of AGM, every officer of the Company who is in default, shall be punishable with fine which may extend to Rs. 50,000 and in case of continuing default for a further fine of Rs. 2500 for each day of default.