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STUDY MATERIALEXECUTIVE PROGRAMMECOMPANY LAWPAPER 1ICSI House, 22, Institutional Area, Lodi Road, New Delhi 110 003tel 011-4534 1000, 4150 4444 fax 91-11-2462 6727email info@icsi.edu website www.icsi.edu
THE INSTITUTE OF COMPANY SECRETARIES OF INDIATIMING OF HEADQUARTERSMonday to FridayOffice Timings – 9.00 A.M. to 5.00 P.M.Public Dealing TimingsWithout financial transactions – 9.30 A.M. to 5.00 P.M.With financial transactions – 9.30 A.M. to 4.00 P.M.Phones41504444, fo@icsi.eduLaser Typesetting by Delhi Computer Services, Dwarka, New DelhiPrinted at IPP/JULY 2017(ii)
EXECUTIVE PROGRAMMECOMPANY LAWIn view of increasing emphasis on adherence to norms of good corporategovernance, Company Law assumes an added importance in the corporate legislativemilieu, as it deals with structure, management, administration and conduct of affairs ofCompanies. A thorough study of various provisions of the Companies Act is a must forbecoming a competent and efficient Company Secretary. In the light of this, the studymaterial has been published to impart thorough knowledge to the students preparingfor the Company Law paper of the CS Executive Programme.The study material is based on those sections of the Companies Act, 2013 and therules made there under which have been notified by the Government of India andcame into force w.e.f. April 01, 2014 (including Amendments/clarifications/circularsissued there under upto June, 2017).Company Secretaryship being a professional course, the examination standardsare set very high, with emphasis on knowledge of concepts, applications, proceduresand case laws, for which sole reliance on the contents of the study material may not beenough. Besides Company Secretaries Regulations, 1982 requires the students to beconversant with the amendments to the laws made upto six months preceding the dateof examination. This study material may therefore be regarded as basic material andmust be read along with the notified provisions of Companies Act 2013 and Rulesmade thereunder.The amendments made upto June, 2017 have been incorporated in this studymaterial. However, it may happen that some developments might have taken placeduring the printing of the study material and its supply to the students. The students aretherefore advised to refer to the bulletin 'Student Company Secretary' and ICSI JournalChartered Secretary and other publications for updation of study material. In the eventof any doubt, students may contact the Directorate of Academics atacademics@icsi.edu.Although due care has been taken in publishing this study material yet thepossibility of errors, omissions and/or discrepancies cannot be ruled out. Thispublication is released with an understanding that the Institute shall not be responsiblefor any errors, omissions and/or discrepancies or any action taken in that behalf.Should there be any discrepancy, error or omission noted in the study material, theInstitute shall be obliged if the same are brought to its notice for issue of corrigendumin the e-bulletin' and Student Company Secretary'.
(iv)EXECUTIVE PROGRAMMESYLLABUSFORMODULE 1 - PAPER 1: COMPANY LAW (100 MARKS)Level of Knowledge: Expert KnowledgeObjective: To acquire knowledge and develop understanding of the regulatory framework of companieswith reference to various provisions of Companies Act and its schedules, rules, notifications, circulars,clarifications there under including case laws and Secretarial standards.Detailed Contents:1. Introduction Historical Development of Concept of Corporate Law in India Company – Definition, Meaning, Nature and its Characteristics Nature and Forms of Business Company vis-à-vis other Forms of Business Concept of Corporate Personality, Corporate Veil, Limited Liability and Citizenship2. Incorporation and its Consequences Types of Companies and their incorporation Promoters – Meaning, Position, Duties, Rights, Responsibilities and Liabilities Formation of Companies – Procedural Aspects Memorandum of Association & Articles of Association and their Alteration Contracts and Conversion of Companies Commencement of Business Doctrine of Ultra-Vires, Constructive Notice, Indoor Management, Alter Ego3. Financial Structure Concept of Capital and Financing of Companies– Sources of Capital; Classes and Types ofShares; Equity Shares with Differential Rights; Issue of Shares at Par, Premium and Discount;Forfeiture and Surrender of Shares; Bonus Issues; Rights Issues; Issue of Sweat Equity Shares;Employees Stock Option Scheme; Private Placement; preference shares and other forms ofsecurities Alteration of Share Capital– Reduction of Capital; Buy–Back of Shares Prospectus– Definition; Abridged Prospectus; Red–Herring Prospectus; Shelf Prospectus;Information Memorandum; Contents, Registration; Misrepresentations and Penalties Debt Capital – Debentures, Debenture Stock, Bonds; Recent Trends and Dynamics of CorporateDebt Financing; Debenture Trust Deed and Trustees; Conversion of and Redemption ofDebentures Securing of Debts:Charges ; Creation, Modification and Satisfaction of Charges Allotment and Certificates – General Principles and Statutory Provisions related to Allotment;
(v)Minimum Subscription; Irregular Allotment; Procedure of Issue of Share Certificates and Warrants4. Membership in a Company Modes of Acquiring Membership Rights and Privileges of Members, Register of Members Dematerialisation and Rematerialisation of Securities Transfer and Transmission of Securities in Physical and Dematerialized forms Nomination5. Management and Control of Companies Directors– Types, Director’s Identification Number (DIN), Appointment/Reappointment,Qualifications, Disqualifications, Vacation of Office, Retirement, Resignation and Removal ofManaging and Whole–Time Directors and Manager Role and Responsibilities of Directors Powers and Duties Loans to Directors Remuneration of Directors Office or Place of Profit Contracts in which Directors are Interested Board of Directors and its Committees Company Secretary – Appointment, Role and Responsibilities Company Secretary as a Key Managerial Personnel Meetings: Meetings of Board and Committees– Frequency, Convening, Proceedings, Video Conferencing ofBoard/Committee(s); Resolution by Circulation; Minutes and Evidence General Meetings – Kinds of Meetings; Law, Practice and Procedure Relating to Convening andProceedings at General and Other Meetings; Notice, Quorum, Chairman, Proxy, Voting includingVoting through Electronic Means; Resolutions, Circulation of Members’ Resolution, etc.; PostalBallot; Recording, Signing and Inspection of Minutes; Distribution of Powers of a Company – Division of Powers between Board and General Meetings;Acts by Directors in Excess of Authority; Monitoring and Management Sole Selling and Buying Agents – Meaning, Appointment and Reappointment, Removal; Powersof Central Government and Rules Framed for the Purpose6. Investments, Loans and Deposits Law relating to making investments in and granting loans to other bodies corporate and givingguarantees and providing security Acceptance of Deposits, Renewal, Repayment, Default and Remedies7. Accounts and Audit Books of Accounts Financial Statements Auditors – Appointment, Resignation and Removal; Qualification and Disqualification; Rights,Duties and Liabilities Audit and Auditor’s Report
(vi) Cost Audit and Special Audit8. Dividends Profit and Ascertainment of Divisible Profits Declaration and Payment of Dividend Treatment of Unpaid and Unclaimed Dividend Transfer of Unpaid and Unclaimed Dividend to Investor Education and Protection Fund Board’s Report and Disclosures Contents and Annexure to Board’s Report Directors’ Responsibility Statement – Preparation and Disclosures Compliance Certificate – Need and Objective; Issue and Signing by Practising CompanySecretary Corporate Governance Report9. Registers, Forms and Returns Statutory Books and Registers prescribed under various provisions of the Company Law–Maintenance, Authentication Place of Keeping and Inspection Filing of various Forms and Returns with the Authorities Procedure and Penalties for Delayed Filing Annual Return –Nature and Significance; Contents; and Certification by Practising CompanySecretary10. Inspection and Investigation Inspection of Documents Powers of the Inspector Seizure of Books And Documents Inspector’s Report Power of the Registrar of Companies Investigation into Affairs of the Company11. Majority Rule and Minority Rights Law relating to Majority Powers and Minority Rights Shareholder Remedies – Actions by Shareholders; Statutory Remedies; Personal Actions Prevention of Oppression and Mis-Management12. Merger, De-merger, Amalgamation, Compromises and Arrangements – An Overview13. Producer Companies Concept, Formation, Functioning and Dissolution14. Limited Liability Partnerships Concept, Formation, Membership, Functioning and Dissolution15. Application of Company Law to Different Sectors Banking Insurance
(vii) Others16. Offences and Penalties Introduction Officer in Default Penalties17. Compounding of Offences18. Winding up of Companies –An Overview Concept and Modes19. Striking Off Name of Companies20. An Introduction to E-Governance and XBRL
(viii)LIST OF RECOMMENDED BOOKSMODULE IPAPER 1 : COMPANY LAWReadings:1.Dr. Avtar Singh:Company Law; Eastern Book Company, 34, Lalbagh, Lucknow –226 0012.C.R. Datta:Datta on the Company Law; Lexis Nexis, Butterworths Wadhwa,Nagpur3.A. Ramaiya:Guide to the Companies Act; Lexis Nexis, Butterworths Wadhwa,Nagpur4.K.C. Garg, R.C.Chawla, Vijay Gupta:Company Law; Kalyani Publishers, 1/1, Rajinder Nagar, CivilLines, Ludhiana – 141 001.5.A.K. Majumdar, Dr.G.K. Kapoor, SanjayDhamija:Company Law and Practice; Taxmann, 59/32, New Rohtak Road, NewDelhi-110 005.6.V.S. Datey:Guide to Tax and Corporate Laws; Taxmann, 59/32, New RohtakRoad, New Delhi-110 005.7.M.C. Kuchhal:Modern Indian Company Law; Shri Mahavir Book Depot, 2603,Nai Sarak, Delhi-110 006.8.H.K. Saharay:Company Law; Universal Law Publishing Co., C-FF-1A, DilkhushIndustrial Estate, G.T. Karnal Road, Delhi. -110033.References:1.D.K. Jain:Company Law Ready Reckoner; Bharat Law House Pvt. Ltd.; T1/95, Mangolpuri Industrial Area, Delhi-110083.2.R. Suryanarayanan:Company Law Ready Reckoner; Commercial Law Publishers,151, Rajinder Market, Opp. Tis Hazari Court, Delhi-110054.3.Palmer:Company Law (Vol. 1); Stevens & Sons Ltd., London.4.L.C.B. Gower:Principles of Modern Company Law; Stevens & Sons Ltd.,London.5.Taxmann’s:Circulars & Clarifications on Company Law; Taxmann, 59/32, NewRohtak Road, New Delhi-110 005.6.Bare Act:Corporate Laws; Taxmann, 59/32, New Rohtak Road, New Delhi110 005.The Companies Act, 1956; Universal Law Publishing Co., C-FF1A, Dilkhush Industrial Estate, G.T. Karnal Road, Delhi. -110 003.
(ix)Journals:1.Chartered Secretary:ICSI, New Delhi2.Student CompanySecretary:ICSI, New Delhi3.Corporate Law Adviser:Corporate Law Advisers, 613, Metro View Apt., Sector 13, PocketB, Dwarka, New Delhi-110075.4.Company Law Journal:Company Law Journal (India) Pvt. Ltd., 53/15, Old RajinderNagar, Post Box No. 2844, New Delhi-110060.Note: The latest edition of all the books referred to above should be read.
(x)ARRANGEMENT OF STUDY LESSONSPAPER 1: COMPANY LAW (100 Marks)Lesson 293031323334SubjectINTRODUCTIONTYPES OF COMPANIESPROMOTION AND INCORPORATION OF COMPANIESMEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATIONCONTRACTS AND CONVERSIONSCONCEPT OF CAPITAL AND FINANCING OF COMPANIESALTERATION OF SHARE CAPITALPRIVATE PLACEMENT AND PROSPECTUSDEBT CAPITALCREATION AND REGISTRATION OF CHARGESALLOTMENT OF SECURITIES AND ISSUE OF CERTIFICATESMEMBERSHIP IN A COMPANYTRANSFER AND TRANSMISSION OF SECURITIESINSTITUTION OF DIRECTORSINDEPENDENT DIRECTORSBOARD AND ITS POWERSAPPOINTMENT AND REMUNERATION OF KEY MANAGERIAL PERSONNELGENERALMEETINGSLOANS AND INVESTMENTS BY COMPANYDEPOSITSACCOUNTS AND AUDITDIVISIBLE PROFITS AND DIVIDENDSBOARD’S REPORT AND DISCLOSURESREGISTERS, FORMS AND RETURNSINSPECTION AND INVESTIGATIONMAJORITY RULE AND MINORITY RIGHTSMERGER, DE-MERGER, AMALGAMATION, COMPROMISE ANDARRANGEMENTS – AN OVERVIEWPRODUCER COMPANIESLIMITED LIABILITY PARTNERSHIPSAPPLICATION OF COMPANY LAW TO DIFFERENT SECTORSOFFENCES, PENALTIES AND THEIR COMPOUNDINGWINDING UP OF COMPANIESSTRIKING OFF NAME OF COMPANIESAN INTRODUCTION TO E-GOVERNANCE AND XBRLTEST PAPER
EXECUTIVE PROGRAMMECOMPANY LAWCONTENTSLESSON 1INTRODUCTIONPageLearning Objectives/Lesson Outline 1Meaning and Definition of a Company.2Nature and Characteristics of a Company.2Company vis-a vis other Forms of Business 10Development of Company Law in India.12Concept Paper on Company Law, 2004 and Dr. J J Irani Committee Report 15Companies Bill 2012 16Companies Act 2013 16Doctrine of Lifting of or Piercing the Corporate Veil.17Illegal Association.20Lesson Round-Up 21SELF-TEST QUESTIONS.22Learning Objectives/Lesson Outline 25Introduction 26Classification of Companies.27Private CompanySmall CompanyPublic CompanyLimited CompanyUnlimited CompanyAssociation Not For ProfitGovernment CompaniesForeign CompaniesHolding, Subsidiary Companies and Associate CompaniesAssociate CompanyInvestment CompaniesProducer CompaniesNidhi CompaniesDormant Companies. . .2738404142424755575859596071LESSON 2TYPES OF COMPANIES
(xii)PagePublic Financial InstitutionsStatutory CorporationsLesson Round-UpGlossary. 71727475SELF-TEST QUESTIONS.76Learning Objectives/Lesson OutlineDefinition of the word PromoterPromoter’s Contract - Ratification thereofLegal Position of a PromoterDuties of a PromoterPromotors Duties under the Indian Contract ActTermination of Promoters’ DutiesRemedies available to the Company against the PromoterLiabilities of PromotersRights of PromotersFormation of CompaniesIncorporation of Companies – Procedural AspectsFiling of Documents with Registrar of CompaniesIssue of Certificate of Incorporation by RegistrarConclusive EvidenceAllotment of Corporate Identity NumberDocuments of incorporation to be preservedHow to Incorporate Company under the Companies Act, 2013Punishment for furnishing False or Incorrect Information at the time of IncorporationPowers of TribunalProvision Specifically Relating to Incorporation of an OPCIncorporation of Companies with Charitable Objects under Section 8Rule 8 (Companies Incorporation) Rules, 2014Lesson Round-UpGlossary . . . . 02SELF-TEST QUESTIONS.103LESSON 3PROMOTION AND INCORPORATION OF COMPANIESLESSON 4MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATIONLearning Objectives/Lesson OutlineMemorandum of Association .105106
(xiii)PageForm of Memorandum of AssociationContents of MemorandumDoctrine of Ultra ViresLoans, borrowings, guarantees and Ultra Vires RuleImplied PowersPowers which are not ImpliedShareholder’s right in respect of ultra vires actsEffects of ultra vires TransactionsDeclaration for SubscriptionSigning of MemorandumAlteration of Memorandum of AssociationAlteration of Name ClauseAlteration of Registered Office ClauseRule 30-31 of Companies (Incorporation) Rules, 2014Alteration of Objects Clause of the CompanyRegistration of AlterationAlteration of Liability ClauseAlteration of Capital ClauseAlteration of Memorandum of AssociationArticles of AssociationRegistration of ArticlesEntrenchment ProvisionsStatutory RequirementsContents of ArticlesConsistency of Articles of Association with Companies Act, 2013Alteration of Articles of AssociationEffect of altered ArticlesAlterations of Memorandum or Articles to be noted in every CopyDistinction between Memorandum and ArticlesLegal Effect of Memorandum and ArticlesConstructive Notice of Memorandum and ArticlesMonies Payable by Members is a DebtInterpretation of Memorandum and ArticlesDoctrine of Indoor ManagementExceptions to the Doctrine of Indoor ManagementDoctrine of Alter EgoLesson Round-UpGlossarySELF-TEST QUESTIONS. . . . . . . . 140142143144144145 147148LESSON 5CONTRACTS AND CONVERSIONSLearning Objectives/Lesson OutlineContracts
(xiv)PagePre-incorporation contractsContract made after incorporation of businessCommencement of New Business by an Existing CompanyCommon SealConversion of Companies already registeredConversion of a Private Company into a Public Company and Vice VersaRule 33 of Companies (Incorporation) Rules, 2014Private Company (which is a subsidiary of public company) Deemed to be a Public CompanyConversion of Section 8 Company into a Company of other kindConversion of One Person Company into a Public Company or Private CompanyRule 7- Conversion of Private Company into an OPCConversion of CompaniesLesson Round-UpGlossary. . . . T QUESTIONS.159Learning Objectives/Lesson OutlineMeaning of the term “Capital”Publication of Authorised, Subscribed and Paid-Up CapitalMeaning and Nature of a ShareKinds of SharesCapital shall be Deemed to be Preference CapitalPreference Shares Compared with Equity SharesIssue of Securities at a PremiumIssue of Sweat Equity SharesCompanies (Share Capital and Debentures) Rules, 2014Shares with Differential Voting RightsIssue and Redemption of Preferential SharesFurther Issue of SharesBonus SharesPrescriptions under Companies (Share Capital and Debentures) Rules, 2014Employee Stock Option SchemeIssue of Shares on Preferential BasisRule 13 of Companies (Share Capital and Debentures) Rules, 2014Lesson Round-UpGlossary . . . . . . 5185189189SELF-TEST QUESTIONS.190LESSON 6CONCEPT OF CAPITAL AND FINANCING OF COMPANIES
(xv)PageLESSON 7ALTERATION OF SHARE CAPITALLearning Objectives/Lesson OutlineAlteration of Share CapitalDifference between Share and StockReduction of Share Capital under Companies Act, 2013Confirmation of reduction of capital [Section 66(3)]Publication of the order of the TribunalDeliver a copy of order of Tribunal to RegistrarDiminution of Share CapitalReduction of Share Capital without sanction of the CourtBuy Back of SecuritiesLesson Round-UpGlossary . . 191192195195196196197197200201206206SELF-TEST QUESTIONS.207Learning Objectives/Lesson Outline 209Meaning and Definition of Prospectus.210Invitation to Public.210Provisions of Companies Act, 2013 with respect to prospectus 211Private Placement.211Public Offer.216Deemed Prospectus.216Matters to be stated in Prospectus.217Reports to be set out in the Prospectus 221Other matters and Reports to be stated in the Prospectus 223Filing a copy of Prospectus with Registrar 225Penalty for Contravention of Section 26 226Rule 7 of Companies (Prospectus and Allotment of Securities) Rules, 2014 227Offer of Sale by Members 229Shelf Prospectus 230Red-Herring Prospectus 231Abridged Prospectus 231The Golden Rule or Golden Legacy.232LESSON 8PRIVATE PLACEMENT AND PROSPECTUS
(xvi)PageLiability for Untrue Statement.232Remedies for Misrepresentation in Prospectus.233Remedies against Directors or Promoters.233Criminal Liability for Mis-statements in Prospectus.235Who is entitled to Remedies.235Penalty for Fraudulently Inducing to Invest Money.236Prohibition of Personation for Acquisition.236Lesson Round-UpGlossary 237238SELF-TEST QUESTIONS.238Learning Objectives/Lesson Outline 241Borrowing.242LESSON 9DEBT CAPITALPower of Company to Borrow.242Unauthorised or Ultra Vires Borrowing.242Intra vires Borrowing but Outside the Scope of Agents’ Authority.243Judicial pronouncement relating to borrowing powers of company 244Types of Borrowing 245Borrowing on Security of Property.246Charge on Uncalled Capital.247Debentures 247Kinds of Debentures 247Pari passu clause in case of debentures 248Debenture Stock.249Distinction between Debentures and Shares 249Regulatory framework for Debt Securities 250Provisions for Issue of Debentures under Companies Act, 2013 251No Debenture shall carry Voting Right 251Creation of Debenture Redemption Reserve Account.252Appointment of Debenture Trustees 253Duties of Debenture Trustees 254Judicial Pronouncements about Debentures.255Register of Debentureholders.256Remedies Open to Debentureholders.256Foreign Bonds.257
(xvii)PageRecent Trends in Corporate Debt Financing.257Instruments in Money Market.259Lesson Round-Up 259Glossary 260SELF-TEST QUESTIONS.260 . . . 72273273 . 275276276278279279LESSON 10CREATION AND REGISTRATION OF CHARGESLearning Objectives/Lesson OutlineDefinition of a ChargeKinds of ChargesJudicial pronouncementsCrystallisation of Floating ChargePostponement of a Floating ChargeDifference between Mortgage and ChargeRegistration of Charges- Provisions of Companies Act, 2013Condonation of Delay in filing of ChargeRule 12 of Companies (Registration of Charges) Rules, 2014Certificate of Registration of ChargeAcquiring Property under Charge and Modification of ChargeSatisfaction of ChargesNotice of ChargeRegister of ChargesIntimation of Appointment of Receiver or ManagerLesson Round-UpGlossarySELF-TEST QUESTIONSLESSON 11ALLOTMENT OF SECURITIES AND ISSUE OF CERTIFICATESLearning Objectives/Lesson OutlineSecuritiesGeneral Principles Regarding AllotmentProvisions relating to Allotment-Companies Act 2013Judicial Pronouncements about return of AllotmentIssue of Certificates
(xviii)PageSignificance of Share CertificateSplit CertificateLegal Effect of share CertificatePersonation of ShareholdersCalls and ForfeitureCallsRequisites of a Valid CallAcceptance of Uncalled CapitalQuantum and Interval between two CallsForfeiture of sharesLegal Pronouncements about Forfeiture of SharesRe-issue of Forfeited SharesSurrender of SharesLesson Round-UpGlossary . TEST QUESTIONS.293 . . 7307308309309310LESSON 12MEMBERSHIP IN A COMPANYLearning Objectives/Lesson OutlineWho are MembersModes of Acquiring MembershipWho may become a MemberMinimum Number of MembersCessation of MembershipExpulsion of a MemberPersonation and PenaltyRegister of MembersRule 3 of Companies (Management and Administration) Rules, 2014Rule 5 of Companies (Management and Administration) Rules, 2014Rule 8 of Companies (Management and Administration) Rules, 2014Judicial pronouncementIndex of MembersRule 6 of Companies (Management and Administration) Rules, 2014Inspection of RegistersRule 14 of Companies (Management and Administration) Rules, 2014Register prima facie evidenceRectification of a register of MembersForeign RegisterRule 7 of Companies (Management and Administration) Rules, 2014Closing of Register of Members
(xix)PageRule 10 of Companies (Management and Administration) Rules, 2014Rule 15 of Companies (Management and Administration) Rules, 2014Power of the Central Government to Investigate into the Ownership of SharesRule 9 of Companies (Management and Administration) Rules, 2014Rights of MembersIndividual RightsCollective Membership RightsVoting Rights of MembersShareholders’ Pre-emptive RightsVariation of Member’s RightsRights of Dissenting MembersNomination by Security holders . . 311311312313313314314315316316317317Liability of MembersLesson Round-UpGlossarySELF-TEST QUESTIONS. .318319319320 . . . 40342342343345LESSON 13TRANSFER AND TRANSMISSION OF SECURITIESLearning Objectives/Lesson OutlineTransferability – Provisions of Companies Act, 2013Transfer or Transmission of SecuritiesPower to Refuse Registration and Appeal against Refusal (Section 58)Rectification of Register of Members under Section 59Stamp Duty Payable and Affixation/Cancellation of StampsLost Transfer DeedsDelegation of Powers for TransferTransfer of DebenturesTransfer of Shares to a minorTransmission of SecuritiesDistinction between Transfer and TransmissionJudicial Pronouncements about Transfer of SharesTransfer of Securities Registered with a DepositoryCompliance with Section 56 – A Mandatory provisionBlank TransferForged transferTransposition of NameDeath of transferor or transferee before registration of transferRights of TransferorEffects of Transfer
(xx)PageCompany’s lien on sharesTransfer of Shares in Depository ModeLegal Framework for Depository SystemsFree Transferability of securitiesSafeguards on Transfer of Securities in Dematerialized ModeLesson Round-UpGlossary. . 346347347349349350351SELF-TEST QUESTIONS.351Learning Objectives/Lesson OutlineIntroductionMinimum/Maximum Number of DirectorsNumber of DirectorshipsIndian Resident DirectorWoman DirectorIndependent DirectorsDirector elected by Small Shareholders- Section 151Appointment of DirectorsDirector Identification NumberDisqualification for Appointment of Directors – Section 164Duties of Directors - Section 166Vacation of Office of Director - Section 167Resignation of DirectorsRemoval of Directors – Section 169Lesson Round-Up . . . LF-TEST QUESITONS.374Learning Objectives/Lesson OutlineIntroductionNumber of Independent DirectorsManner of selection of an Independent DirectorCode for Independent DirectorsTenure of Independent DirectorsLiability of Independent DirectorRetirement by Rotation not applicable to Independent DirectorsRemuneration of Independent DirectorLesson Round-Up . 375376377379380383384384385385SELF-TEST QUESTIONS.385LESSON 14INSTITUTION OF DIRECTORSLESSON 15INDEPENDENT DIRECTORS
(xxi)PageLESSON 16BOARD AND ITS POWERSLearning Objectives/Lesson OutlineDistribution of PowersMeetings of the BoardCompliance with Secretarial Standards related to Board MeetingsQuorum for Board MeetingsPassing of Resolution by CirculationBoard CommitteesAudit Committee under Section 177Nomination and Remuneration Committee under Section 178Stakeholders Relationship CommitteePenalty for ContraventionCorporate Social Responsibility CommitteeOther Board CommitteesPowers of Board under Section 179Restriction on Powers of BoardDisclosure of Interest by DirectorsRelated Party Transactions under Section 188Rule 15 of the Companies (Meeting of Board and its Powers) Rules, 2014Penalties for non-complianceRegister of Contracts or Arrangements in which Directors are interestedContract of Employment with Managing Director or Whole-Time DirectorsPayment to Directors under Section 191Restriction on Non-Cash Transactions involving DirectorsContract by OPCProhibitions on Dealings in Securities under Section 194Prohibition on Insider Trading under section 195Lesson Round-Up . . . 8410413418419419420420421421422SELF-TEST QUESTIONS.422LESSON 17APPOINTMENT AND REMUNERATION OF KEY MANAGERIAL PERSONNELLearning Objectives/Lesson Outline 423Introduction.424Appointment of Managing Director, Whole-Time Director or Manager.425Appointment with Approval of Central Government 426Disqualifications.427Reappointment of Managing Director.428
(xxii)PageAppointment of Key Managerial Personnel.429Functions of Company Secretary.431Managerial Remuneration.431Remuneration by a Company having Inadequate Profits 433Remuneration to directors in other CapacitySitting Fees to Directors for attending the MeetingsMonthly Remuneration to Director or Manager. .436436437Remuneration Drawn in Excess of Prescribed LimitInsurance Premium not part of Remuneration. 437437Disclosure of Remuneration in Board Report.437Calculation of Net Profit for the purpose of Managerial Remuneration.438Recovery of Managerial Remuneration under Section 199.438Compensation for Loss of Office of MD, WTD or ManagerSecretarial AuditLesson Round-Up. 438439439SELF-TEST QUESTIONS.440 . . . . . 61466467467LESSON 18GENERAL MEETINGSLearning Objectives/Lesson OutlineIntroductionMembers’ MeetingsAnnual General MeetingExtra Ordinary General MeetingClass MeetingsProcedure for convening of a valid general meetingNotice of MeetingContents of NoticeNotice through Electronic ModePersons entitled to Receive NoticeStatement to be annexed to NoticeQuorum for MeetingsChairman of MeetingPresence of Statutory Auditor and Secretarial AuditorProxiesVotingDemand for PollManner to get the poll process scrutinizedPostal Ballot
(xxiii)PageCirculation of Members’ ResolutionRepresentation of Presidents and Governors in Meetings (Section 112)Representation of Corporations at Meeting of Companies and of Creditors (Section 113)Ordinary and Special ResolutionsResolutions requiring Special NoticeResolutions passed at Adjourned MeetingsResolutions and Agreements to be filed with the RegistrarMaintenance of minutes of meetingSecretarial Standard on MinutesPenaltyReport on Annual General MeetingApplicability to One Person CompanyLesson Round-UpSELF-TEST QUESTIONS. . . g Objectives/Lesson OutlineIntroductionTerminologies under Section 186 of Companies Act, 2013Loans and Investments by Companies under Section 186Register of Loans made, Guarantees given, Securities provided and Investment madeSections 185 – Loan to DirectorsSection 186 compared with Section 185Investments to be held in Company’s own nameRegister of Investments not Held in Company’s own namePunishmentLesson Round-UpGlossary . . 4874884884914944
STUDY MATERIAL EXECUTIVE PROGRAMME COMPANYCOMPANY LAWLLAAWWLAW PAPER 1 ICSI House, 22, Institutional Area, Lodi Road, New Delhi 110 003 tel 011-4534 1000, 4150 4444 fax 91-11-2462 6727 email info@icsi.edu website www.icsi.edu
