Vacation of office of Director as per Companies Act 2013

Vacation of office of Director

Which sections to read: Section 167, 164, 152, 154, 184 of Companies Act 2013

Meaning: Vacation of office of Director means expiry date of Director from the office of the company.

When he/she vacates the office: Section 167 of Companies Act 2013 says that the Director becomes vacant in the following cases;

a.       When he/ she incurs any of the disqualifications specified in Sec 164

                                i.            He is of unsound mind and stands as an insolvent and his application is pending;

                              ii.            He is an undischarged insolvent

                            iii.            He has applied to be adjudicated as an insolvent and his application is pending;

                            iv.            He has been convicted by a court of any offence, whether involving moral turpitude or otherwise and sentenced in respect thereof to imprisonment for not less than six months and a period of five years has not elapsed from the date of expiry of the sentence;

Provided that if a person has been convicted of any offence and sentenced in respect thereof to imprisonment for a period of seven years or more, he shall not be eligible to be appointed as a director in any company;

                              v.            An order disqualifying him for appointment as a Director has been passed by a court or Tribunal and the order is in force;

                            vi.            He has not paid any calls in respect of any shares of the company held by him, whether alone or jointly with others, and six months have elapsed from the last day fixed for the payment of the call;

                          vii.            He has been convicted of the offence dealing with related party transactions under Section 188 at any time during the last preceding five years; or

                        viii.            He has not complied with Sub section (3) of Sec 152 which says that’

-No person shall be appointed as a Director of a company unless he has been allotted the Director Identification Number (DIN)

                            ix.            No person who is or has been a director of a company which, has not filed Financial statements or annual returns for any continuous period of three financial years; or

                              x.            No person who is or has been a director of a company which, has failed to repay the deposits accepted by it or pay interest thereon or to redeem any debentures on the due date or pay interest due thereon or pay any dividend declared and such failure to pay or redeem continues for one year or more;

Shall be eligible to be re-appointed as a director of that company or appointed in other company for a period of five years from the date on which the said company fails to do so.

b.      He absents himself from all the meetings of the Board of Directors held during a period of twelve months with or without seeking leave of absence of the Board;

This means the director has to be there in atleast one Board meeting in a period of 12 months. For this calculation, it should be calculated from the date of last meeting attended by the Director. However, professionals have different point of view on this, some say;

The period of 12 months should be reckoned from the first board meeting held after the commencement of the Act and which the Director missed. That will be month one.Then count upto 12 months. If there is a board meeting in the 12th month and the director misses it then he will vacate office at the end of the meeting.

c.       He acts in contravention of the provisions of Sec 184 relating to entering into Contracts and arrangement in which he is directly or indirectly interested;

d.      He fails to disclose his interest in any contract or arrangement in which he is directly or indirectly interested, in contravention of the provisions of Sec 184

e.       He becomes disqualified by an order of a court or the Tribunal

f.       He is convicted by court of any offence, whether involving moral turpitude or otherwise and sentenced in respect thereof to imprisonment for not less than six months;

Provided that the office shall be vacated by the Director even if he has filed an appeal against the order of such court;

Please note that Proviso to Sec 167(1)(f) is proposed to be substituted by the below mentioned clause as introduced by Lok Sabha on 16^th March 2016;

Provided that the office shall not be vacated by the director in case of orders referred to in clauses (e) and (f)-

(i)                 For thirty days from the date of conviction or order of disqualification;

(ii)               Where an appeal or petition is preferred within thirty days as aforesaid against the conviction resulting in sentence or order, until expiry of seven days from the date on which such appeal or petition is disposed of; or

(iii)             Where any further appeal or petition is preferred against order or sentence within seven days, until such further appeal or petition is disposed of.

g.      He is removed in pursuance of the provisions of this act;

h.      He having been appointed a director by virtue of his holding any office or other employment in the holding, subsidiary or associate company, ceases to hold such office or employment in that company.

For more details, contact CS Neha Seth At csnehaseth.cp@gmail.com

Role of Scrutinizer in Annual General Meeting of Listed Company

Role of PCS as Scrutiniser in AGM of Listed Company

Ø  To act as scrutinizers for e-voting

1)      Postal ballots and General Meetings

2)      Conduct of poll during General Meetings

Legal Framework for Scrutinisers for E-Voting

Ø  Section 108 of Companies act, 2013---Voting through electronic means

Ø  Section 110 of Companies act, 2013---Postal Ballots

Ø  Ministry of corporate affairs  (MCA) Circular No.21/2011 dated May 2, 2011

Ø  Ministry of Corporate Affairs (MCA) Companies (Management and Administration)  Rules, 2014 dated March 27, 2014

SECTION 108 OF COMPANIES ACT, 2013 (E-VOTING)

Ø  Every listed company or company having not less than one thousand shareholders to provide facility of e-Voting.

Ø  e-Voting to remain open for not less than one day and not more than three days

Ø  e-Voting to be completed three days prior to the date of general meeting

Ø  Vote once cast by shareholder will not be allowed to be changed

Ø  The portal where votes are cast to be blocked at the end of the voting period

Ø  Scrutinizers to unblock the votes in presence of at least two witnesses within three working days from the date of conclusion of e-Voting

Ø  Scruitinizers to prepare the report

Entities accessing e-Voting system

- RTA/ Company

- Shareholder/ Custodian/ Mutual Fund (Voter)

- Scrutinizer

Company/RTA

Ø  Company to complete formalities for availing e-voting services of NSDL

Ø   Company may authorise RTA to upload data, create voting cycle etc. on its behalf

Ø   Company to intimate details of scrutinizers

Ø   Company/RTA and scrutinizers to obtain Digital certificates to log into e-voting system.

Ø  Create e-Voting Event Number (EVEN)

Ø   Register Investors (File Upload)

Ø   View/Modify EVEN Cycle.

Shareholder/Custodian/ Mutual Fund (Voter)

Ø  First Login - Update Email/Mobile Number

Ø   Cast the Vote

Scrutiniser

Ø  View e-Voting Cycle

Ø   Authorize the poll results.

Scrutinizer Registration

Ø  Scrutiniser  has  to provide Certificate details from

Ø  IE Browser along with e-Voting User Creation Form

Ø  Provide details (print screens) of respective

Ø  Certificate w.r.t General, details, certification path.  

Login to e-Voting website (Scrutinizer)

Detailed Information

Appointment of scrutinisers

The Chairman shall appoint such number of scrutinisers, as he deems necessary, who may include a Company Secretary in Practice, a Chartered Accountant in Practice, a Cost Accountant in Practice, an Advocate or any other person of repute who is not in the employment of the company, to ensure that the scrutiny of the votes cast on a poll is done in a fair and transparent manner. Scrutiny of votes cast on a poll envisages detailed examination of the relevant records and calls for comprehensive knowledge and competence to deal with the intricacies and technicalities involved. These matters require professional knowledge, efficiency, fairness and transparency.

There is no bar on appointing any number of scrutinisers if the volume of work involved warrants such appointments. The Chairman should use his discretion in this regard and appoint such number of scrutinisers, as he deems necessary. At least one of the scrutinisers shall be a Member who is present at the Meeting, provided such a Member is available and willing to be appointed.

The Board shall:

(a)     appoint one or more scrutinisers for e-voting or the ballot process;

The scrutiniser(s) may be a Company Secretary in Practice, a Chartered Accountant in Practice, a Cost Accountant in Practice, or an Advocate or any other person of repute who is not in the employment of the company and who can, in the opinion of the Board, scrutinise the e-voting process or the ballot process, as the case may be, in a fair and transparent manner.

The scrutiniser (s) so appointed may take assistance of a person who is not in employment of the company and who is well-versed with the e-voting system. Prior consent to act as a scrutiniser(s) shall be obtained from the scrutiniser(s) and placed before the Board for noting.

The scrutiniser should be willing to be appointed and be available for the purpose of ascertaining the requisite majority. [Rule 20(4)(x) of the Companies (Management and Administration) Amendment Rules, 2015]

(b)    appoint an Agency;

An Agency should be appointed for providing and supervising the electronic platform for evoting.

(c)     decide the cut-off date for the purpose of reckoning the names of Members who are entitled to Voting Rights;

The cut-off date for determining the Members who are entitled to vote through Remote e-voting or voting at the Meeting shall be a date not earlier than seven days prior to the date fixed for the Meeting.

Only Members as on the cut-off date, who have not exercised their Voting Rights through Remote e-voting, shall be entitled to vote at the Meeting.

(d)    authorise the Chairman or in his absence, any other Director to receive the scrutiniser’s register, report on e-voting and other related papers with requisite details.

The scrutiniser(s) is required to submit his report within a period of three days from

the date of the Meeting.

The Chairman or any other director so authorized shall countersign the scrutiniser‘sreport so received. Since the scrutiniser‘s report and related papers are important documents, uthority to receive and countersign the same has been given to the Chairman or any other Director authorised by the Board. The idea is also to bring in uniformity between the provisions of evoting, poll and postal ballot in the Act as far as receiving and countersigning of the scrutiniser‘s report are concerned.

      (e)    Notice

Notice of the Meeting, wherein the facility of e-voting is provided, shall be sent either by registered post or speed post or by courier or by e-mail or by any other electronic means.

The Notice in case of e-voting should not be served though hand delivery or ordinary post.

The provisions of sending Notice covered in paragraph 1.2.2 of SS-2 shall be mutatismutandis applicable for the purpose of sending Notice, wherein the facility of e-voting is provided.

1.2.2  Notice shall be sent by hand or by ordinary post or by speed post or by registered post or by courier or by facsimile or by e-mail or by any other electronic means. ‘Electronic means’ means any communication sent by a company through its authorised and secured computer programme which is capable of producing confirmation and keeping record of such communication addressed to the person entitled to receive such communication at the last electronic mail address provided by the Member.

An advertisement containing prescribed details shall be published, immediately on completion of dispatch of notices for Meeting but atleast twenty one days before the date of the General Meeting, at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated and having a wide circulation in that district and at least once in English language in an English newspaper, having country-wide circulation, and specifying therein, inter-alia the following matters, namely:-

a) A statement to the effect that the business may be transacted by e-voting;

b) The date and time of commencement of remote e-voting;

c) The date and time of end of Remote e-voting; The cut-off date as on which the right of voting of the Members shall be reckoned;

e) The manner in which persons who have acquired shares and become Members after the dispatch of Notice may obtain the login ID and password;

f) The manner in which company shall provide for voting by Members present at the Meeting;

g) The statement that

i) Remote e-voting shall not be allowed beyond the said date and time;

ii) a Member may participate in the General Meeting even after exercising his right to vote through Remote e-voting but shall not be entitled to vote again; and

iii) a Member as on the cut-off date shall only be entitled for availing the Remote e-voting facility or vote, as the case may be, in the General Meeting;

h) website address of the company, in case of companies having a website and Agency where Notice is displayed; and

i) Name, designation, address, e-mail ID and phone number of the person responsible to address the grievances connected with the e-voting. Advertisement shall also be placed on the website of the company, in case of companies having a website and of the Agency.

The advertisement on Remote e-voting should remain on the website of the company and of the Agency, till the date of the General Meeting.

J)  Notice shall inform the Members about procedure of Remote e-voting, availability of such facility and provide necessary information thereof to enable them to access such facility.

k) Notice shall clearly state that the company is providing e-voting facility and that the business may be transacted through such voting.

l) The Notice of the Meeting should clearly state that the facility for voting, either through electronic voting system or ballot or polling paper, is being made available at the Meeting and that Members attending the Meeting, who have not already cast their vote by Remote evoting, shall only be able to exercise their voting right at the Meeting.

Notice shall also clearly specify the date and time of commencement and end of Remote e-voting and contain a statement that at the end of Remote e-voting period,the facility shall forthwith be blocked.

Notice shall also contain contact details of the official responsible to address the grievances connected with voting by electronic means.

(f)           Declaration of results

Based on the scrutiniser’s report received on Remote e-voting and voting at the Meeting, the Chairman or any other Director so authorised shall countersign the scrutiniser’s report and declare the result of the voting forthwith with details of the number of votes cast for and against the Resolution, invalid votes and whether the Resolution has been carried or not.

The manner in which Members have cast their votes, that is, affirming or negating the Resolution or otherwise, should not be available to the Chairman, scrutiniser or any other person till the votes are cast in the Meeting or voting at the Meeting ends. The purpose of the requirement to maintain such confidentiality is to ensure that no one is influenced by the manner in which votes have been cast by those who have voted already.

The  result of the voting, with details of the number of votes cast for and against the Resolution, invalid votes and whether the Resolution has been carried or not shall be displayed on the Notice Board of the company at its Registered Office and its Head Office as well as Corporate Office, if any, if such office is situated elsewhere. Further, the results of voting alongwith the scrutiniser’s report shall also be placed on the website of the company, in case of companies having a website and of the Agency, immediately after the results are declared.

Results of the voting should be displayed at the Registered Office of the company. Such results should also be displayed at the Head Office as well as Corporate Office, if such offices are situated elsewhere i.e. other than the Registered Office. Placing of voting result on the website as well as on the Notice Boards at the Registered Office/ Head Office/ Corporate Office of the company is being required for wider coverage and for convenience of the Members who may visit such offices. In case of companies whose equity shares are listed on a recognised stock exchange, the company should,  simultaneously, forward the results to the concerned stock exchange or exchanges where its equity shares are listed. [Rule 20(4)(xvi) of the Companies (Management and Administration) Amendment Rules, 2015]

(g)          Resolution passed

The Resolution, if passed by a requisite majority, shall be deemed to have been passed on the date of the relevant General Meeting. For the purpose of this paragraph, the requisite number of votes should be the votes required to pass the Resolution as the ‗Ordinary Resolution' or the 'Special Resolution', as the case may be, under Section 114 of the Act.

Such majority would be determined after the voting at the relevant General Meeting.

(h)          Custody of scrutinisers’ register, report and other related papers

The register and all other papers relating to voting by electronic means should remain in the

safe custody of the scrutiniser until the Chairman considers, approves and signs the Minutes and thereafter, the scrutiniser should hand over the register and other related papers to the company. [Rule 20(4)(xv) of the Companies (Management and Administration) Amendment

Rules, 2015]

The scrutinisers’ register, report and other related papers received from the scrutiniser(s) shall be kept in the custody of the Company Secretary or any other person authorised by the Board for this purpose.

Reporting Structure for FDI in India under Automatic Route

Reporting Structure

Step 1 – On the day of receipt of funds (in INR) client needs to provide Equity Declaration along with the requesting bank for FIRC and KYC report. In our case, we have received the funds from other bank in India. We will identify the bank and initiate the request letter only on receipt of the equity declaration and request letter from your company.

Step 2 – Within 30 days  of receipt of funds, client needs to submit Advance reporting form along with following documents through online reporting portal www.ebiz.gov.in

1.       Certified copy of  FIRC

2.       Copy of KYC report of the remitter.

Step 3 – FDI instruments should be issued within 180 days from receipt of Inward remittance and Within 30 days of issuance of shares FCGPR A needs to be submitted along with following documents through online reporting portal www.ebiz.gov.in

1.       A certificate from the Company Secretary of the company certifying that:

·         All the requirements of the Companies Act, 2013 have been complied with

·         Terms and conditions of the Government’s approval, if any, have been complied with

·         The company is eligible to issue shares under these Regulations

·         The company has all original certificates issued by authorized dealers in India evidencing receipt of amount of consideration in

accordance with paragraph 8 of Schedule 1 to Notification No. FEMA 20/2000-RB dated May 3, 2000

2.       A certificate from Statutory Auditor or Chartered Accountant indicating the manner of arriving at the price of the shares issued to the persons resident outside India

Step 4 – Finally FCGPR B ( Annual Returns)– Needs to be submitted every year before 15^st July