Company secretaries 383A

Transcription

1 Major rules and regulations under the Companies Act, 1956 Study circle meeting Feb 18, 2010 Company secretaries 383A Where Rs. 2 cr < PUC < Rs 5 cr, with registered and corporate office in small towns, Inter-CS PG Commerce Degree in law CA/CWA PGDM IIMs PG Dip Indian Law Institute PG Dip Univ of Jaipur Member ASM, Calcutta also eligible for appointment February 21,

2 Deposits 58A Not applicable to banking and NBF companies. Excludes amount received from foreign citizen, authority or person Security deposit from employee Agency deposits Advance for supplies Security subscription, pending allotment Amount in trust/transit Receipt from director or relative of director/member of private company, if not borrowed elsewhere by lender Convertible bonds/debentures secured by, up to value of, immovable property Promoters / relatives loan against FI stipulation and not borrowed from friends/business associates February 21, Tenure of 6m to 36m 10% of PUC and FR can be 2m to 6m Rate of interest capped by RBI; not shorter than monthly rests Brokerage terms prescribed No distinction between loan from shareholder and others Application may be made for extension of time 58A PUC Paid up capital FR Free reserves, excluding revaluation reserve February 21,

3 Limits 58A Net owned fund not less than Rs. 1 cr Govt. companies not to exceed 35% of PUC and FR Other companies not to exceed 10% of PUC and FR: shareholder / director 25% of PUC and FR: others 15% of deposits maturing next May 31 to be liquid February 21, Buy-back 77A For unlisted companies Rules For listed companies - SEBI From existing shareholders on proportionate basis From employees on ESOP or Sweat equity On fully paid up securities only Not to exceed 25% of PUC and FR and For equity buy-back: 25% of total PUC capital, in a year by special resolution BoD empowered up to 10% Debt (un/secured) to equity ratio not more than 2:1 February 21,

4 Buy-back Offer to be open not less than 15 days, not exceeding 30 days from offer Verification in 15 days from closure or rejection within 21 days Money to be deposited in a separate bank account Payment in 7 days, in cash only Not out of borrowed money Destroy certificates bought back in the presence of Company Secretary in practice February 21, Share certificates Notwithstanding AoA clauses To be issued in pursuance of BoD resolution Committee of 3 directors where BoD strength > 6 Committee of 2 directors At least half to be independent, if possible Not without surrender of allotment letter Duplicate certificates to be approved by BoD Directors signatures may be by machine, not the Secretary s February 21,

5 Transfer of profits Transfer of specified percentage to reserves, before dividend is declared or paid Dividend % Transfer %, not less than 10<dividend< <dividend< <dividend< >20 10 Residual balance in PnL to equal average of last three years dividend, unless current profit lower by 20% or more of preceding two financial years Current profits net profit after tax February 21, Declaration out of reserves If current profit inadequate, opening reserves may be utilized, provided Dividend rate is lower of average rate of last 5 years and 10%; Amount drawn does not exceed 10% of PUC and FR; Balance of reserves not below 15% of PUC. Reserves excludes capital and revaluation reserves. Previous central government permission for declaration not within the rules. February 21,

6 Unpaid dividend 205A Dividend unpaid or unclaimed after 30 days of declaration to be transferred to Unpaid dividend. account with scheduled bank within 7 days thereafter; Amount unpaid or unclaimed in Unpaid dividend. account to be transferred to general revenue account of central government in PNB; Particulars of dividend transferred to general revenue account to accompany notice for next AGM; 274(1)(g) not attracted by unclaimed dividend and non transfer to separate account; Dividend to non resident shareholders on a par; Specific disclosure under current liabilities and provisions February 21, Report of the BoD Every report to contain: Energy conservation measures taken product-wise Electricity purchased and self-generated Coal, furnace oil, other Number of units consumed, unit cost, consumption per unit of production, comparison with standard Technology absorption Areas of R&D, benefits, plans, expenditure Efforts for absorption, benefits, technology imported in the last five years, reasons for non absorption Details of employees drawing remuneration not less than Rs. 24L Designation, remuneration, nature, terms, qualifications, commencement date, age, previous employment, shares held February 21,

7 Applicable to every company but: Banking company Insurance company Section 25 company Private company with CARO PUC + FR not exceeding Rs. 50L and Has not accepted deposits from public and Outstanding loan of Rs. 10L or more from bank / FI and Turnover not exceeding Rs. 5 cr February 21, i. Fixed assets Records Particulars Verification Substantial disposal ii. Inventory Verification Procedures records iii. Loans granted to/taken from sec 301 parties Number of parties, amounts Rate of interest Regularity Overdues exceeding Rs. 1L iv. Internal controls CARO. Purchase of inventory and fixed assets Sale of goods Continuing failure v. Transactions under sec 301 Updated Reasonableness Public deposits February 21, vi. Compliance with RBI directives Compliance under sec 58A/AA Nature of contraventions Compliance with CLB order vii. Internal audit system If PUC+FR exceeds Rs. 50L or Average turnover exceeds Rs. 5 cr 7

8 viii.cost records Requirement Status ix. Statutory dues PF, Investor fund, ESI, IT, Sales tax, WT, CD, ED, Cess, any other Regularity Arrears Outstanding since Sept 30 Details of disputed dues x. Losses 50% or more of networth Cash loss of two years xi. FI repayment defaults xii. Loans/advances made against pledge of securities xiii. Chit funds CARO. Compliance of special statute Deposit liability exceeds 20 times net owned funds Prudential norms compliance xiv. Traders in securities Records Title xv. Guarantee for loans terms xvi. Application of terms loans xvii. Short-term funds xviii. Preferential allotment xix. Security for debentures xx. End-use of public issue funds xxi. Fraud February 21, Branch audit Branch office exempt from sec 228 if the higher of: Average value of production, manufacture or processing or Average value of goods sold and services rendered or Expenditure during the year does not exceed higher of Rs. 2L or 2% of average turnover, excluding that office Company s auditor or another qualified person can audit Central government may exempt, on application Above order to be read in next AGM Auditor to state exemption in report February 21,

9 Cost audit 233B 224(1B) limits to be satisfied by auditor Required only for companies engaged in production, processing, manufacturing and mining 209(1)(d) Carried out only by cost accountant under CWAA Report within 180 days from close of financial year Copy of report to be furnished to central government Report on Quantitative details: capacity, actual production, sales Input raw materials (2% or more of total) consumed, standard vs. actual per unit Cost break up for above raw materials Power, fuel and utilities : quantity, rate, value, standard vs. actual per unit Salaries and wages: direct, indirect, days available vs. actual February 21, Cost audit Repairs, maintenance: asset category wise, deferred cost Fixed assets register and depreciation: cost-center wise, reconciliation with financial records Overheads: factory, administration, selling, distribution R&D: existing product/process development, new product development, payment to related parties Royalty: reconciliation with financial records Quality control expenses Pollution control expenses: effluent treatment, air pollution, other Abnormal non-recurring costs Non-moving closing stock: material cost, percentage to total Stock value written off: in/direct materials, WIP, FG Inventory valuation: basis, quantity, rate, value, reconciliation with financial records February 21,

10 Cost audit Verification: periodicity, shortage, excess Sales: quantity, rate, value, purchased goods, licensed, indigenous sales, export sales Margin per unit: cost of sales, realization, margin, indigenous sales, export sales Competitive margin against imports: estimated demand, total production, quantity imported, production by company, imputed value of imports vs. unit cost of production, countrywise Value addition and distribution: value added, employee benefits, dividend, non-cash expenditure, taxes Ratio analysis: product wise, factory wise, company as a whole Revenue expenditure capitalized: materials, labor, overheads Related party transactions Quantity reconciliation: ED chapter heading wise Profit reconciliation: with financial records February 21, Small shareholders director Applicable to public companies With PUC of Rs. 5 cr or more With 1000 or more shareholders Shareholders with holding of Rs. 20k or less are small 10% or more of small shareholders may propose Company may suo motu elect Such director must be a small shareholder also At most 3 years tenure Does not retire by rotation Maybe re-elected for 3 more years February 21,

11 Disqualified if Small Ceases to be small shareholder Fails to pay calls within 6m from last date Absents from three consecutive Board meetings or for three continuous months, with obtaining leave of absence Contravention of sec 295, 299 Removed under sec 284 Not more than two such directorships February 21, Applicable to listed companies Notice through Postal ballot Registered post, acknowledgement due or Certificate of posting and Advertisement in state newspaper, about dispatch of ballot papers Notice for AGM to carry reference Independent scrutinizer to be appointed Retired judge or Person of repute Available at registered office February 21,

12 Scrutinizer to record Postal Consent or otherwise received, mutilated/defaced Name, address, folio Number of shares, nominal value, voting rights Custody of scrutinizer till minutes signed Thereafter, register and ballots to be preserved by company Consent received after thirty days from date of notice not valid February 21, Postal Business, resolution shall be through postal ballot: Object clause alteration in MoA Insertion of definition of private company in AoA Buy-back, 77A Issue of shares with differential voting rights, 86(ii)(a) Change in registered office outside local limits, 146(2) Sale of substantially the /whole of undertaking, 293(1)(a) Exceeding limits for lending / guarantee, 372A Election of small shareholders director, 252(1) Variation in rights attached to securities, 106 February 21,

13 Investor fund Guidelines for obtaining financial assistance: Organization to be empanelled by the Committee Society, Trust or Incorporated companies; profit-making organization not eligible Project on investors education and protection Disbursed as grant Limits: 5% of IEPF budget for the year, 50% of expenditure on project 2 years prior existence By-laws of organization to be in harmony with conditions for registration Utilization of grant subjected to audit February 21, Thank you 13