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Monday, 22 October 2012

OFFICER IN DEFAULT



If a Company made default in compliance of the applicable legal provisions, who will be held responsible for it? Officers in default. Who are the officers in default? As per section 5 of the Companies Act, 1956 following persons are defined as officers in default:
(i)                 the managing director or managing directors;

(ii)               the whole-time director or whole-time directors;

(iii)             the manager;

(iv)               the secretary means the Company Secretary;

(v)                any person in accordance with whose directions or instructions the Board of directors of the company is accustomed to act;

(vi)              any person charged by the Board with the responsibility of complying with that provision:

(vii)            Provided that the person so charged has given his consent in this behalf to the Board;

(viii)          where any company does not have any of the officers specified in clauses (a) to (c), any director or directors who may be specified by the Board in this behalf or where no director is so specified, all the directors:

If a person has been charged with the responsibility of complying provisions the ROC/MCA shall be informed about this by filing Form 1AB.
To give more clarity about the position of nominee directors, independent director, director appointed by the government and in case no director has been named as managing director or so, MCA issued a master circular dated 29th July, 2011.

As clarified by the MCA the nominee director if appointed by the investors and/or banks, financial institutions etc. can be saved from the liability as officer in default if mentioned so in the agreement for his appointment.

No director appointment by the government shall be an officer in default. It further clarified that a non-executive director will be an officer in default shall be determined on the basis of diligence exercised by him at the time of doing such act as per which officer in default is to be decided.


FOR ANY FURTHER QUERY RELATED CONTACT 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.

MCA CIRCULAR ON XBRL FILING DEFAULTS



Ministry of Corporate Affairs has issued circular dated 16th October, 2012 to point out the mistakes and defaults made in XBRL filings for the year 2010-11. It has requested the respective institutes to give training or issue guidelines for it members to let them learn the proper use of XBRL to make disclosures which must not be diluted or misrepresent the facts about the company’s financials.

It has also pointed out few major mistakes made in the XBRL Filings for the year 2011-12. Please follow the link to read the circular http://www.mca.gov.in/Ministry/pdf/General_Circular_33_2012.pdf

Sunday, 23 September 2012

Appointment of Statutory Auditor(s)



·         Appointment of First Auditors:
As per section 224(5) of the Companies Act, 1956 First Auditors of the Company shall be appointed within 30 days of registration of the Company by the Board of Directors of the Company, and if the Directors fail to appoint the auditor as such, the auditor may be appointed by the members of the Company in general meeting.
The First auditors appointed by the Board shall hold the office till the conclusion of the first annual general meeting unless removed by the shareholders in general meeting by giving at least 14 days prior notice and nominating the new auditors.

·         Appointment of Subsequent Auditors:

As per section 224(1) of the Companies Act, 1956 every company shall appoint the auditor in its annual general meeting who will hold the meeting till the conclusion of the next annual general meeting.



·         Casual Vacancy of the Auditors and Appointment in Casual Vacancy:

Casual vacancy may be of two types:

1.      Caused by death: By death of the auditor in his office, such a vacancy may be filled by the Board by passing a Board Resolution.
2.      Caused by Resignation: Such a vacancy can be filled by the members of the Company in extra-ordinary general meeting.

·         Procedure for appointment of Statutory Auditor:

1.      Before proposing appointment of the auditor, take the letter from the auditor to the effect that if the appointment/re-appointment will be made, it will be within the limit specified u/s 224(1B) of the Companies Act, 1956.
2.      Within 7 days of the appointment/re-appointment of the auditor the Company shall inform the Auditor about the appointment/re-appointment.
3.      Within 30 days of receiving the letter of appointment from the Company the auditor must communicate to the respective ROC about the appointment by filing e-form 23B.
·       
          Remuneration of the Statutory Auditor:

The remuneration of the auditor shall be decided in the general meeting or by the Board if they authorised to do so in the general meeting. If in the general meeting the resolution mention as “such remuneration as may be agreed by the Board and the auditors” then after general meeting a Board meeting need to be conducted for determination of remuneration of the auditor.


Friday, 7 September 2012

ISSUE OF BONUS SHARES



·         MEANING AND DEFINITION OF BONUS SHARES:

Bonus share is a share issued to the existing shareholders of the company in ratio to the respective shareholding in the Company at free of cost. The board may decide to utilise the free reserves and/or securities premium of the Company by issuing bonus shares to the shareholders of the Company to let them get benefited by the growth and reserves of the Company. 

·         PROVISIONS OF COMPANIES ACT APPLICABLE ON BONUS ISSUE:

There are no specific provisions of Companies Act, 1956 dealing with issue of bonus shares, though reference has been given to bonus issue/bonus shares in section 205 and Table A. Articles of association of the Company must be checked for any articles dealing with issue of bonus shares in the Company.

·         SEBI GUIDELINES GOVERNING BONUS ISSUE OF SHARES:

      SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009
 
·         ASCERTAIN AVAILABILITY OF RESOURCES FOR ISSUE OF BONUS SHARES:

Securities premium u/s 78(2) and capital redemption reserve account u/s 80(5) may be utilised for issue of bonus shares. Also assure that the unissued authorised capital is sufficient for issue of bonus shares.

·         BOARD RESOLUTION FOR PROPOSING ISSUE OF BONUS SHARES:

RESOLVED THAT pursuant to provisions of Companies Act, 1956 and Article __________ of the Articles of Association of the company, and subject to the consent of the members in the general meeting the Board do hereby recommend that a sum of Rs. __________ be capitalised out of the following namely,
1.
2.
3.
[State the reserves along with the amounts proposed to be capitalized from each reserve]
and be distributed amongst the equity shareholders of the company, by issue of __________ equity shares of Rs. __________ each credited as fully paid up to the equity shareholders in the proportion of __________ equity shares for every __________ equity shares held by them on the date the transfer books are proposed to be closed as may be declared by the board and that such new shares as and when issued and fully paid, shall rank pari passu with the existing equity shares.

RESOLVED FURTHER THAT an extra ordinary general meeting of the members of the Company be and is hereby called on ….day of ……, 20.. at .. a.m. at the registered office of the Company situated at….to take approval of the Company on issue of bonus shares and that Mr. …., director of the Company be and is hereby authorised to issue notice as per draft placed before the board and initialed by the chairman for the purpose of identification and to do all such other deed and things as may be necessary and expedient to give effect to this resolution.”

·         SHAREHOLDERS RESOLUTION(ORDINARY RESOLUTION:

“RESOLVED THAT a sum of Rs. ---------/-(Rupees --) being a part of the undistributed profits of the Company standing to the credit of its General Reserve/securities premium be capitalized and that the said amount be applied in paying up in full at par ----- (----) equity shares of Rs. 10/- each in the capital of the company to be allotted and distributed as fully paid bonus shares to and amongst the Members who are on the company’s Register of Members of the equity shares on such date as may be determined by the Board of Directors of the company (hereinafter called “the Board”) to the holders of the existing ---- (----) issued and paid up equity shares of  the company in the proportion of (mention the ratio of issue) and paid up equity share held by them, respectively on the said date on the footing that they become entitled to their new equity shares as capital and not as income.

RESOLVED FURTHER THAT the new equity shares shall in all respects rank pari passu with the existing equity shares including for the payment of dividend, if any, declared by the company any time after the allotment of the aforesaid Bonus Shares.

RESOLVED FURTHER THAT the Board be and is hereby authorized to allot and issue new equity shares credited as fully paid provided that if any fractions of shares are involved in making the aforesaid allotment, no fractional certificates will be issued, but that such fractions shall be consolidated and that the Board be and is hereby authorized to allot the shares resulting from such consolidation to such person or persons (including any Director or employee of the company) upon trust for sale on such terms and conditions as the Board may think fit and that the net proceeds of sale (after payment of costs and charges of such sale) be distributed proportionately amongst those said members entitled to such fractions in proportion to their respective entitlements.

RESOLVED FURTHER THAT board of directors be and hereby authorised to do all such acts, deeds and things as may be necessary and expedient to give effect to this resolution”

·   BOARD RESOLUTION FOR ALLOTMENT OF BONUS SHARES:


“RESOLVED THAT ----- equity shares of Rs. --/- each, bearing distinctive nos. ----- (both inclusive) be and is hereby allotted to the following Applicants as per details given herein below:
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

RESOLVED FURTHER THAT Mr. ---, Director be and is hereby authorized to file the relevant Form No. 2 [Return of Allotments u/s 75 (1)] with the office of Registrar of Companies, Maharashtra in accordance with provisions of the Companies Act, 1956 and Rules and Regulations there under.

RESOLVED FURTHER THAT the aforesaid share certificates be signed by Mr. ------ and Mr. ---, Directors and countersigned by Mr. --- as an authorized person and the common seal be affixed thereto.

RESOLVED FURTHER THAT Mr. ------, Practicing Company Secretary be and is hereby appointed to sign and certify by using digital signature Form No. 2 (Return of allotment) and to be filed with Registrar of companies, Maharashtra”.

·   E-FORMS TO BE FILED WITH MCA/ROC:

E-form 2 within 30 days of allotment of shares.