CYA3B COMPANY LAW AND SECRETARIAL PRACTICE - II Unit : I - V 1
Unit I Methods of raising capital Rules and regulations relating to raising funds through debentures and deposits. Kinds of debentures Difference between debentures and shares Creation of charge Modification and satisfaction of charge Powers of board and shareholders Role of company secretary 2
Companies Act: The Companies Act 2013 is an Act of the Parliament of India which regulates incorporation of a company, responsibilities of a company, directors, dissolution of a company. The Companies Secretaries Act An act to make provision for the regulation and development of the profession of the company secretaries. 3
Methods of raising funds: After obtaining the certificate of incorporation steps should be take to raise the necessary capital by the company. Video Link: Methods of raising Capital METHODS OF RAISING FUND 4
Shares: The capital of a company is usually divided into certain indivisible units of a fixed amount. These units are called as Shares. A share is evidenced by a share certificate. A share certificate is issued by a company under its common seal. Debentures: Debenture is most important instrument and method of raising the loan capital by the company. It means a document which creates a debt or acknowledges it. It is commonly issued in a manner similar to the issue of shares through prospectus. 5
Deposits: The deposit placed by investors with companies for a fixed term carrying a prescribed rate of interest is called Company Fixed Deposit. Financial institutions and Non-Banking Finance Companies (NBFCs) also accept such deposits. Deposits thus mobilized are governed by the Companies Act under Section 58A. These deposits are unsecured, i.e., if the company defaults, the investor cannot sell the documents to recover his capital, thus making them a risky investment option. 6
Rules relating to issue of debentures: As per Section 73 of the Act, a company, whether public or private, may accept deposits from its members after passing of a resolution in general meeting of the company, subject to the fulfillment of the terms and conditions prescribed under the section and the Rules. A company may issue debentures with an option to convert such debentures into shares, either wholly or partly at the time of redemption. 7
Contd. Company can issue secured and unsecured debentures. Secured debentures may be issued by a company subject to such terms and conditions as may be prescribed. Company shall create a debenture redemption reserve account out of the profits of the company available for payment of dividend and the amount credited to such account shall not be utilized by the company except for the redemption of debentures. Company cannot issue a prospectus or make an offer or invitation to the public or to its members exceeding five hundred for the subscription of its debentures, unless it has, before such issue or offer, appointed one or more debenture trustees. 8
Types of Debentures: Bearer debentures Registered debentures Secured debentures Unsecured debentures Redeemable debentures Perpetual debentures Convertible debentures Video Link: Kinds of debentures TYPES OF DEBENTURES 9
Powers of the board and shareholders: The Board of Directors of a company shall be entitled to exercise all powers, and to do all acts and things, as the company is authorised to exercise and do. The Board shall be subject to restrictions imposed under this Act or in Memorandum or Articles or any regulation of the Company. The Board shall not exercise any power which is required to be exercised by the company in general meeting. 10
Powers to be exercise in Board Meeting: The Board shall exercise following powers only by means of resolution passed in its meeting: to make calls on shareholders in respect of money unpaid on their shares; to authorise buy-back of securities under section 68; to issue securities, including debentures, whether in or outside India; to borrow monies to invest the funds of the company; to grant loans or give guarantee or provide security in respect of loans; 11
Contd. to approve financial statement and the Board s report; to diversify the business of the company; to approve amalgamation, merger or reconstruction; to take over a company or acquire a controlling or substantial stake in another company; any other matter which may be prescribed. 12
Creation of charge: The company may borrow monies by providing security of its assets and may create a lien on the properties of the Company. The Companies Act, 2013 defines a Charge as an interest or lien created on the assets or property of a Company or any of its undertaking as security and includes a mortgage U/s 2(16). Modification of charge: In case the terms, conditions, extend or operation of a charge created on a company and filed with the Registrar is changed, then the company must file for modification of the charge. 13
Satisfaction of charge: Within 30 days of payment or satisfaction in full of any charge registered, the company shall give intimation of the same in CHG-4 along with fee. Then the ROC shall issue a certificate of registration of satisfaction of charge in Form no. CHG-5 Kinds of charge: Fixed charge Floating charge 14
Company Secretary: As per Company Secretary Act, Company Secretary means a person who is a member of the Institute of Company Secretary of INDIA. Role and responsibilities: The roles and responsibilities of the company secretary have been specified in the company law: To report to the Board about the compliance with the provisions of this Act. To ensure that the company complies with the applicable secretarial standards. 15
Contd To provide to the directors of the company the guidance they require in discharging their duties, responsibilities and powers. To facilitate the convening of meetings and attend Board, committee and general meetings and maintain the minutes of these meetings. To obtain approvals from the Board, general meeting, the government and such other authorities as required under the provisions of the Act. To assist the Board in the conduct of the affairs of the company. To assist and advise the Board in ensuring good corporate governance and in complying with the corporate governance requirements and best practices. 16
Difference between shares and debentures Video Link: Shares Vs Debentures DIFFERENCE BETWEEN SHARES AND DEBENTURES 17
Unit 2 Board of Directors Kinds of Directors Requirements of Woman Director and importance of Independent Director Director Identification Number and its significance Qualification and Disqualification Retirement, Resignation, Removal and Vacation of office of Director Duties of Directors Code of Conduct Key Managerial Personnel Whole time key managerial personnel Appointment and Remuneration. 18
Board of Directors: A Board of Directors (B of D) is a group of individuals that are elected as, or elected to act as, representatives of the stockholders to establish corporate management related policies and to make decisions on major company issues. Every public company must have a board of directors. Every company shall have a Board of Directors consisting of individuals as directors and shall have a minimum number of three directors in the case of a public company, two directors in the case of a private company, and 19
Contd One director in the case of a One Person Company; and a maximum of fifteen directors, Provided that a company may appoint more than fifteen directors after passing a special resolution: Kinds of directors: The Companies Act refers to the following two specific categories of Directors: Managing Directors; and Whole-time Directors. Video Link: Kinds of directors KINDS OF DIRECTORS KINDS OF DIRECTORS 20
Women directors: A new provision is introduced under section 149, which requires certain categories of companies to have at least one woman director on the board. Such companies are any listed company, and any public company having- paid up capital of Rs. 100 cr. or more, or turnover of Rs. 300 cr. or more. 21
Requirements of Women Director: Every person including a woman director who has been appointed to hold the office of a director shall on or before the appointment furnish to the company consent in writing to act as such in Form No. 11.2 and comply with requirements for filing of consent on MCA portal. Woman director proposed to be appointed has to obtain DIN and shall give a declaration that she is not disqualified to be appointed as a director. 22
Independent Director: Independent Director is for the first time introduced in the New Act, and has been clearly defined as any director other than a managing director, a whole time director, and a nominee director- who is a person of integrity and possesses relevant expertise and experience; who is not a promoter of the company or its holding, subsidiary or associate company; who has no any pecuniary relationship with the company, its holding, subsidiary or associate company or their promoters or directors amounting to 2% or more of its gross turnover or total income or INR 50 lakh, whichever is lower during the 2 immediately preceding financial years or during the current financial year; 23
who neither himself nor any of his relatives- holds the position of a Key Managerial Personnel (KMP) or has been an employee of the company or its holding, subsidiary or associate company is an employee or proprietor or a partner holds together with his relatives 2% or more of the total voting power of the company or is a Chief Executive or Director of any non profit organization that receives 25% or more of its receipts from the company or holds 2% or more voting power of the company 24
Duties of directors: A director must Act in accordance with the Articles of Association of the company Pursue the best interests of the stake holders of the company, in good faith and to promote the objects of the company. Use independent judgement to exercise his duties with due and reasonable care, skill and diligence. Be aware of conflict of interest situations and should try and avoid such conflicts for the interest of the company. To ensure vigil mechanism of the company and the users are not prejudicially affected on account of such use. A Director of a Company shall not assign his office and any assignment so made shall be void. If a director of the company contravenes the provisions of this section such director shall be punishable with fine which shall not be less than one Lakh Rupees but which may extend to five Lac Rupees. 25
Director Identification number: Director Identification Number (DIN) is a unique identification number given to an existing or potential director of any company which is incorporated. Why DIN is important? There are cases where a startup generates fund from investors and runs away with the money. To stop such frauds, DIN number is allotted to directors of existing as well as under-registration companies so that their activities can be monitored. 26
DIN number ensures the individual is always under the vigilance of corporate ministry and never indulge in fraudulent activities. If they get indulged in any wrongdoing, they can be traced. Just like a company needs registration, a director needs DIN number for his authentication. 27
Retirement of Directors: At every subsequent annual general meeting, one third of such directors who are liable to retire by rotation, shall retire form office. Directors who retire by rotation at every annual general meeting shall be those who have been serving in the company for a longer duration than others. Removal and vacation of directors: Power to remove director always bestowed on shareholders. Shareholders can remove any director before the expiry of this tenure except any director by tribunal for prevention of oppression and mismanagement. 28
Resignation of Directors: A Director in a company may need to resign or the Board may want to remove a Director for a number of reasons. The Director of a Company can resign from the Board by filing a resignation letter with the company and filing the intimation with the ROC. 29
Procedure for Resignation: a) The Director intending to resign shall send notice in writing to the Company. The resignation of a director shall take effect from: The date on which the Notice Is Received by the company or The Date, If any, specified by the director in the notice whichever is later b) The director who has resigned shall be liable even after his resignation for the offences which occurred during his tenure. c) The law has caste duty upon the Director Resigning, to File Form DIR- 11 and Mention therein the Reason for Resigning. Enclose the copy of Notice sent to the Company. Enclose Proof of Dispatch. File the said form within 30 days of resignation along with the prescribed filing fees. 30
Code of Conduct: Companies develop a Code of Conduct to promulgate principles and ethics that will make them attractive to customers, employees, and other stakeholders. Non-profits create a Code of Conduct for these reasons and to ensure that employees and clients understand and trust their mission of service. 31
Key Managerial Personnel: Key Managerial Personnel(KMP) are the employees of a company who hold key position in a company and greater responsibility of overall functioning of the company including the duty to protect the interest of all stakeholders. They are: Managing director or chief executive officer or manger and in their absence a whole time director; Company secretary Chief financial officer. Video link: Who is a key managerial personnel? KEY MANAGERIAL PERSONNEL 32
Whole time key managerial personnel: Whole time key managerial personnel shall not hold office in more than one company except in its subsidiary company at the same time. With the permission of the board of a company a key managerial personnel can acts as a director of any other company. 33
Unit 3 Board Meeting Committee Meeting Mandatory Committees and its importance Role and Composition Powers of the Board and Video Conference Notice, Agenda and Minutes Role of Company Secretary Shareholders Meeting Kinds of Meetings and the Compliance of Legal requirement Electronic Voting Postal Ballot- Role of Company Secretary Rules relating to general meetings Kinds of Resolutions 34
Meeting: A meeting held at intervals to discuss problems and policy. A chairperson is the boss of the meeting and is appointed. Minutes must be made of each meeting. All members of the board are to follow what is decided. 35
Committee Meeting: The Committee is a group of men and women elected by the members of the club to operate the club on a day to day and week to week basis throughout the year. The Committee meets every month throughout the year, and are called together by the Secretary who circulates an agenda ahead of the meeting. The Chairman chairs the meeting and the Secretary takes notes (also called minutes as they minute (or take down in detail ) of what s discussed and agreed. 36
Types of Committee: Audit Committee: Committee shall consist of least three directors with majority of independent directors. Nomination and Remuneration Committee: Every Listed Company and some other companies shall constitute Nomination and Remuneration Committee consisting of three or more non executive Directors with majority of independent directors. Chairperson of the company may be a member of this committee irrespective of whether he is a executive director or non executive director. 37
Contd Stakeholders Relationship Committee: The chairperson of the committee shall be a non executive director or may have any number of members. The chairperson or any other authorized member of committee shall attend General Meeting. Corporate Social Responsibility: The Committee shall consist of three or more Directors including one independent Director. Composition of this Committee shall be disclosed in Board Report. 38
Video Conferencing: As per companies act 2013, every company can hold meeting through video conferencing or other audio visual means. Video conferencing or other video means audio-video electronic communication faculty employed which enables all the persons participating at a meeting to communicate concurrently with each other without an intermediary and to participate effectively in the meeting. 39
Notice: The second requirement of a valid meeting is that a proper notice of the meeting should be given to members. A general meeting can be attended by all the members and hence they are all entitled to a notice of every such meeting. Purpose of notice: The primary purpose of the Notice of sufficient length is to enable a member of the company to read, understand the financial statements, performance and to raise any questions on the state of affairs. Contents of notice: Every notice of a meeting must specify the place, and the day and hour of the meeting. 40
Agenda: An agenda is a list of meeting activities in the order in which they are to be taken up, beginning with the call to order and ending with adjournment. It usually includes one or more specific items of business to be acted upon. Minutes:Meeting minutes keep an official account of what was done or talked about at formal meetings, including any decisions made or actions taken. They are taken during a formal meeting of the board of directors or shareholders of a corporation, such as initial and annual meetings. Typically, meeting minutes are recorded by the corporation s secretary. 41
Types of Meeting: Statutory Meeting Annual General Meeting Extraordinary General Meeting Meeting of the Board of Directors Class Meeting Meeting of Creditors Meeting of Debenture Holders Meeting of Creditors and Contributories. 42
Compliance of legal requirements: A company which has been set or incorporated in India must comply with the Companies Act,2013. The Companies Act, 2013 regulates appointment, qualification, remuneration and retirement of directors of the company. And other aspects such as how to conduct board meetings and shareholders meetings. It also lays down details about the preparation and presentation of annual accounts and the regular maintenance of books of accounts. 43
Resolution: A resolution is a legally binding decision made by limited company directors or shareholders. If a majority vote is achieved in favour of the decision, a resolution is 'passed'. Shareholders can pass ordinary resolutions or special resolutions at general meetings, or they can pass written resolutions. Kinds of resolution: Ordinary resolution Special resolution Resolution requiring special notice Video Link: What is resolution? KINDS OF RESOLUTION 44
E-Voting: Electronic Voting (e-voting) is a term encircling several different types of voting, implementing both electronic means of casting a vote and electronic means of counting votes. Postal Ballot: A Postal Ballot is a system of voting in which person send their votes by post when they cannot be present. It enables as many voters as possible to participate. It can assist people who may not be able to attend the General Meeting. 45
Unit 4 Declaration and Payment of dividend and the legal procedure and compliance requirement Appointment of auditors Internal and Branch audit Statutory audit Secretarial Audit Importance Eligibility, Qualification and Disqualifications Remuneration Powers and Duties prohibited Services Auditors report 46
Declaration of dividend: o o The Board of Directors may declare interim dividend during any financial year out of the surplus in the profit and loss account and out of profits of the financial year in which such interim dividend is sought to be declared. In case the company has incurred loss during the current financial year upto the end of the quarter immediately preceding the date of declaration of interim dividend, such interim dividend shall not be declared at a rate higher than the average dividends declared by the company during the immediately preceding three financial years. 47
Payment of dividend: Unpaid dividend or unclaimed dividend i.e. after thirty days from the date of the declaration, the company has to transfer the total amount of unpaid/ unclaimed dividend to a special account to be opened by the company in that behalf in any scheduled bank to be called the Unpaid Dividend Account within seven days from the date of expiry of the said period of thirty days. 48
Subsequent Compliances and Legal requirements: Within 90 days of transfer of amount to the Unpaid Dividend Account, Company has to prepare a statement (containing details of names, their last known addresses, and unpaid dividend), which should be placed on its website if any, and also on any website approved by the Central Government for this purpose as per prescribed form and manner. 49
Audit: As per Companies Act, Every company shall prepare and keep at its registered office books of account and other relevant books and papers and financial statement for every financial year which gives a true and fair view of the state of the affairs of the company, including that of its branch office or office. Video Link: Audit AUDIT 50
Statutory Audit: Statutory Audit is an audit by a practicing Chartered Accountant which has its operations exterior to the organization which it is auditing. Statutory Auditors are a part of the external audit process are focused on the various financial accounts or risks associated with the domain of finance and are appointed by the shareholders of the company. The chief responsibility of statutory auditors is to perform the process of annual statutory audit of the company s financial accounts, providing opinions if they are an impartial and fair reflection of the company s financial position. 51
Internal Audit: Internal Audit is a function that, even though operating independently from other departments and involves reporting directly to the audit committee, the function remains within an organization i.e. the company employees. It is essential for performing audits of both financial and non-financial nature within a wide of areas of operation in a business, as that are directed by the annual audit plan. Video Link: Internal Vs External audit INTERNAL AUDIT Vs EXTERNAL AUDIT 52
Auditor: An Auditor is a person or a firm appointed by a company to execute an audit. To act as an auditor, a person should be certified by the regulator authority of accounting and auditing or possess certain specified qualifications. Generally, to act as an external auditor of the company, a person should have a certificate of practice from the regulatory authority. Video Link: Auditor Vs Accountant AUDITOR VS ACCOUNTANT 53
Audit committee: Every Listed Company shall form Audit Committee consisting of minimum 3 directors. Whereas, Majority of directors should be independent and ability to read & understand financial statement. Role of Audit committee: Appointment, remuneration and term of appointment of auditor shall be made after considering the recommendations of the Audit Committee. 54
Appointment of Auditors: The first auditor of the company needs to be appointed within 30 days of registration of the company in a general meeting or within 90 days, in an Emergency General Body Meeting. The first auditor (or the auditing firm) appointed will hold office from the conclusion of the meeting (in which the appointment has been made) to the time when sixth annual general meeting is held (five years). Therein, the auditor appointments are reviewed every sixth year. A written consent from the auditor, with a sufficient proof to suggest that the person (or firm) qualifies the criteria provided in Section 141 of the Act, needs to be submitted before an appointment. The company should issue an appointment notice to the auditor, and a Form, ADT- 1 is required to be submitted with the registrar within 15 days of the meeting in which the auditor is appointed. 55
Power of Auditor: Auditor of holding company has the right of access to the records of all subsidiaries in so far as it relates to the consolidation of its financial statements with that of its subsidiaries. Duties of Auditor: Every auditor need to comply with auditing standard. Auditor shall report the fraud to the CG within prescribed time and manner and the same shall not be construed as breach of duty. If auditor fails to comply with above mentioned provisions then he shall be punishable with fee of Rs. 100,000 Rs. 500,000. Auditor has to attend general meeting unless exempted by the company. 56
Remuneration of Auditor: Remuneration shall be decided by members at a general meeting except for the remuneration of first auditor which shall be decided by board. Qualification of Auditor: A person shall appointed as an auditor, if he is chartered accountant within the meaning of Chartered Accountants Act, 1949 and holding valid certificate of practice and acting in capacity as Individual Partnership Firm Limited Liability partnership 57
Disqualification of Auditor: Following persons shall not be eligible as auditor of the company: A body corporate other than LLP (Limited Liability partnership) registered under the LLP Act, 2008 An officer or employee of the company. A person who is partner or who in the employment, of an officer or employee of the company. A person who or his relative or partner a) is holding any security/interest in the company or its subsidiary or of its holding or associate company or subsidiary of such holding company b) is indebted to the company or its subsidiary, or its holding or associate company or subsidiary of such holding company, in excess of Rs. 5 lacs rupees. 58
Prohibited services of Auditor: book keeping or other services related to the accounting records or financial statements of the audit client financial information systems design and implementation appraisal or valuation services, fairness opinions, or contribution-inkind report actuarial services internal audit outsourcing services management functions or human resources broker or dealer, investment adviser, or investment banking services legal services and expert services unrelated to the audit and any other service that the Board determines, by regulation, is impermissible. 59
Auditor s report: The auditor shall make a report to the members of the company on the accounts examined by him and on every financial statements which are required by or under this Act to be laid before the company in general meeting. 60
Auditor s report: The report shall after taking into account the provisions of this Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of this Act or any rules made thereunder or under any order made under sub-section (11) and to the best of his information and knowledge, the said accounts, financial statements give a true and fair view of the state of the company s affairs as at the end of its financial year and profit or loss and cash flow for the year and such other matters as may be prescribed. 61
Auditor report content: The auditor s report shall also state (a) whether he has sought and obtained all the information and explanations which to the best of his knowledge and belief were necessary for the purpose of his audit and if not, the details thereof and the effect of such information on the financial statements; (b) whether, in his opinion, proper books of account as required by law have been kept by the company so far as appears from his examination of those books and proper returns adequate for the purposes of his audit have been received from branches not visited by him; (c) whether the report on the accounts of any branch office of the company audited under sub-section (8) by a person other than the company s auditor has been sent to him under the proviso to that sub-section and the manner in which he has dealt with it in preparing his report; 62
Contd. (d) whether the company s balance sheet and profit and loss account dealt with in the report are in agreement with the books of account and returns; (e) whether, in his opinion, the financial statements comply with the accounting standards; (f) the observations or comments of the auditors on financial transactions or matters which have any adverse effect on the functioning of the company; (g) whether any director is disqualified from being appointed as a director under sub-section (2) of section 164; (h) any qualification, reservation or adverse remark relating to the maintenance of accounts and other matters connected therewith; 63
Unit 5 Corporate restructuring Special Courts Mediation and conciliation Panel Modes of Winding up National Company Law Tribunal(NCLT) Corporate Governance. 64
Corporate Restructuring: The Corporate Restructuring is the process of making changes in the composition of a firm s one or more business portfolios in order to have a more profitable enterprise. Simply, reorganizing the structure of the organization to fetch more profits from its operations or is best suited to the present situation. Corporate restructuring takes place in two forms: Financial restructuring Organizational restructuring 65
Financial Restructuring: The Financial Restructuring may take place due to a drastic fall in the sales because of the adverse economic conditions. Here, the firm may change the equity pattern, cross-holding pattern, debt-servicing schedule and the equity holdings. All this is done to sustain the profitability of the firm and sustain in the market. Generally, the financial or legal advisors are hired to assist the firms in the negotiations. 66
Organizational Restructuring: The Organizational Restructuring means changing the structure of an organization, such as reducing the hierarchical levels, downsizing the employees, redesigning the job positions and changing the reporting relationships. This is done to cut the cost and pay off the outstanding debt to continue with the business operations in some manner. 67
Special Courts - Mediation and Control Panel: The Central Government shall maintain a panel of experts to be called as the Mediation and Conciliation Panel consisting of such number of experts having such qualifications as may be prescribed for mediation. Any of the parties to the proceedings may, at any time during the proceedings before the Central Government or the Tribunal or the Appellate Tribunal, apply to the Central Government or the Tribunal or the Appellate Tribunal, as the case may be, in such form along with such fees as may be prescribed. The fee and other terms and conditions of experts of the Mediation and Conciliation Panel shall be such as may be prescribed. Any party aggrieved by the recommendation of the Mediation and Conciliation Panel may file objections to the Central Government or the Tribunal or the Appellate Tribunal, as the case may be. 68
Winding up: Winding up of a company mean the end of the life of a company. It is the permanent closure of the business. A company is the creature of law. It is therefore cannot die natural death. The termination of its existence is affected by the law. Thus winding up of a company is a legal procedure in which all the affairs of the company are wound up. Its assets and liabilities are determined. Assets are sold out and claims of the creditors met out before winding up the company. The balance if any is disturbed among the shareholders in proportion of their shares. This work is done by the liquidator. 69
Modes of Winding up Winding up by Court. Voluntary Winding Up. Winding up subject to supervision of the court. Video Link: Modes of Winding up MODES OF WINDING UP 70
National Company Law Tribunal (NCLT) The National Company Law Tribunal was setup by the Central Government in 2016 under Section 408 of the Companies Act, 2013. The National Company Law Tribunal has been setup as a quasi-judicial body to govern the companies registered in India and is a successor to the Company Law Board. 71
Advantages for National Company Law Tribunal NCLT is a specialized court only for Corporates, i.e., companies registered in India. This will be no more than a Tribunal for the Corporate Members. NCLT will reduce the multiplicity of litigation before different forums and courts. NCLT has multiple branches and is able to provide justice at a close range. NCLT consists of both judicial and technical members while deciding on matters. The time taken to windup a company is reduced. Speedy disposal of cases will help reduce the number of cases. 72
Powers of National Company Law Tribunal (NCLT) Power to seek assistance of Chief Metropolitan Magistrate. De-registration of Companies. Declare the liability of members unlimited. De-registration of companies in certain circumstances when there is registration of companies is obtained in an illegal or wrongful manner. Remedy of oppression and mismanagement. Power to hear grievance of refusal of companies to transfer securities and rectification of register of members. Protection of the interest of various stakeholders, especially nonpromoter shareholders and depositors. Power to provide relief to the investors against a large set of wrongful actions committed by the company management or other consultants and advisors who are associated with the company. 73
National Company Law Appellate Tribunal (NCLAT) Appeal from order of Tribunal can be raised to the National Company Law Appellate Tribunal (NCLAT). Appeals can be made by any person aggrieved by an order or decision of the NCLT, within a period of 45 days from the date on which a copy of the order or decision of the Tribunal. On the receipt of an appeal from an aggrieved person, the Appellate Tribunal would pass such orders, after giving an opportunity of being heard, as it considers fit, confirming, changing or setting aside the order that is appealed against. The Appellate Tribunal is required to dispose the appeal within a period of six months from the date of the receipt of the appeal. 74
Corporate Governance: Corporate Governance is the technique by which companies are directed and managed. It means carrying the business as per the stakeholders desires. It is actually conducted by the board of Directors and the concerned committees for the company s stakeholder s benefit. It is all about balancing individual and societal goals, as well as, economic and social goals. Corporate Governance is the interaction between various participants The relationship between the owners and the managers in an organization must be healthy and there should be no conflict between the two. The owners must see that individual s actual performance is according to the standard performance. These dimensions of corporate governance should not be overlooked. 75
Benefits of Corporate Governance Good corporate governance ensures corporate success and economic growth. Strong corporate governance maintains investors confidence, as a result of which, company can raise capital efficiently and effectively. It lowers the capital cost. There is a positive impact on the share price. It helps in brand formation and development. Good corporate governance also minimizes wastages, corruption, risks and mismanagement. It ensures organization in managed in a manner that fits the best interests 76
Video Link: Corporate Governance CORPORATE GOVERNANCE 77