Articles - Business Law

Articles - Business Law 13

Published in Articles - Business Law Read 68 times 0
Rate this item
(1 Vote)
Resolutions under the Companies Act, 2013
A Company being an artificial person, any decision taken by it shall be in the form of a Resolution. Accordingly, a resolution may be defined as an agreement or decision made by the directors or members (or a class of members) of a company.
A proposed resolution is a motion.
When a resolution is passed a company is bound by it. The resolutions could be on just about any subject in case of Board meetings since they are ultimately responsible for running the Company. The Act generally specifies the matters in respect of which resolutions are required to be passed by the members in general meetings.
Basically, there are three types of resolutions: Ordinary Resolution, Special Resolution and Unanimous Resolution.
In case of Board Meetings, there is no concept of Special Resolutions and also unanimous resolutions are required in very few cases. However, in case of general meetings, all three are covered.

Section 114 of the Companies Act, 2013 defines an Ordinary and Special Resolutions. It states:

114  (1) A resolution shall be an ordinary resolution if the notice required under this Act has been duly given and it is required to be passed by the votes cast, whether on a show of hands, or electronically or on a poll, as the case may be, in favour of the resolution, including the casting vote, if any, of the Chairman, by members who, being entitled so to do, vote in person, or where proxies are allowed, by proxy or by postal ballot, exceed the votes, if any, cast against the resolution by members, so entitled and voting.

(2) A resolution shall be a special resolution when—
(a) the intention to propose the resolution as a special resolution has been duly specified in the notice calling the general meeting or other intimation given to the members of the resolution;
(b) the notice required under this Act has been duly given; and
(c) the votes cast in favour of the resolution, whether on a show of hands, or electronically or on a poll, as the case may be, by members who, being entitled so to do, vote in person or by proxy or by postal ballot, are required to be not less than three times the number of the votes, if any, cast against the resolution by members so entitled and voting.

Other than these two, there is also a concept of a unanimous resolution implying approval of all the members present and voting, without a single vote cast against it. Unanimous resolution been covered under section 162 (1) of the Companies Act 2013 which states that:
162 (1) At a general meeting of a company, a motion for the appointment of two or more persons as directors of the company by a single resolution shall not be moved unless a proposal to move such a motion has first been agreed to at the meeting without any vote being cast against it.”
However, in addition to above, for private companies, the Companies Act 2013 also inserts one more resolution which requires unanimous approval of all the members. As per sub-section 4 of section 5 for inclusion of “entrenchment provision” in the Articles of Association of an already existing Company, it should be “agreed to by all the members of the company in the case of a private company and by a special resolution in the case of a public company.” Other than these all other specified matters require either an ordinary or a special resolution.

Matters which require ordinary and/or special resolutions as per the Companies Act, 2013.

Matters requiring sanction by Ordinary Resolutions (OR)
u/s 4 In case a company had been incorporated by furnishing wrong or incorrect information for approval of its name, the Registrar may direct the Company to change its name within 3 months by passing an OR, after giving an opportunity of being heard.
u/s 16 If the name is too identical or resembles an already existing company’s name or a registered trade mark, the CG shall direct the company to change its name within 3/6 months, as the case may be, by passing an OR.
u/s 61 A limited company having a share capital may, if so authorized by its articles, alter its memorandum in its General Meeting to— (a) increase its authorized share capital by such amount as it thinks expedient; (b) consolidate and divide all or any of its share capital into shares of a larger amount than its existing shares. (c) convert all or any of its fully paid-up shares into stock, and reconvert that stock into fully paid-up shares of any denomination; (d) sub-divide its shares, or any of them, into shares of smaller amount than is fixed by the memorandum, so, however, that in the sub-division the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived; (e) cancellation of uncalled share capital.
u/s 63 Capitalization of company’s profit or reserve to issue fully paid bonus shares
u/s 65 Unlimited company to provide for reserve share capital on conversion Into a limited company by an OR.
u/s 73 & 76 A company may by passing an OR in General Meeting and subject to such rules as may be prescribed in consultation with the Reserve Bank of India, accept deposits from its members on such terms and conditions, including the provision of security, if any, or for the repayment of such deposits with interest, as may be agreed upon between the company and its members, subject to certain conditions. or accepting deposits from public u/s 76
u/s 102 read with 123, 139, 140, 142, 152, 4 main business transacted at the Annual General Meeting- (i) the consideration of financial statements and the reports of the Board of Directors and auditors; (ii) the declaration of any dividend; (iii) the appointment of directors in place of those retiring; (iv) the appointment of, and the fixing of the remuneration of, the auditors.
u/s 148 Remuneration of cost accountant shall also be fixed by ordinary resolution.
u/s 161 Pursuant to the AOA or by an OR passed in General Meeting; the Board may appoint an alternate director.
u/s 169 A company may, by ordinary resolution, remove a director, not being a director appointed by the Tribunal under section 242 (Oppression and Mismanagement.), before the expiry of the period of his office after giving him a reasonable opportunity of being heard.
u/s 181 Contribution to bonafide charitable and other funds an amount >5% of its average net profits for three immediately preceding financial years, to be done by passing ordinary resolution.
u/s 192 Restriction on non-cash transactions involving directors of the company or its holding, subsidiary or associate company or a person connected with him without prior approval by means of an OR in General Meeting.
u/s 196 Subject to the provisions of section 197 (relating to managerial remuneration in case of absence or inadequacy of profits) and Schedule V, appointment of a managing director, whole-time director or manager by the Board of Directors shall be subject to approval by a resolution at the next General Meeting of the company.
u/s 197 The remuneration shall be paid to director subject to the provisions of section 197 and shall be determined in accordance with the provisions of Article of Association, or a resolution or if the article authorizes by a SR. 15 304 OR to be passed in a General Meeting requiring the company to be wound up voluntarily as a result of the expiry of the period for its duration, if any, fixed by its articles or on the occurrence of any event in respect of which the articles provide that the company should be dissolved.
u/s 310 In case of winding up, appointment of official liquidator and fixing remuneration of liquidator.
u/s 311 To fill the vacancy in the office if official liquidator caused by death of liquidator, removal, resignation or otherwise.
u/s 314 The Company Liquidator call General Meeting for the purpose of obtaining the sanction of the company by ordinary resolution or by special resolution, as the case may require.
u/s 318 After considering the report of the Company Liquidator if majority of the members are satisfied that the company shall be wound up, they may pass a resolution for its dissolution.
u/s 366 For companies about to be registered as a company limited by guarantee, the members should have passed a resolution declaring the undertaking by each member.

Matters requiring sanction by Special Resolutions (SR)
u/s 5 SR for alteration of Article of Association for including the provisions of “Entrenchment” in case of public company. In case of private company, approval of all the members required.
u/s 12 To change the registered office of the company outside the local limits of the city, town or village in which it is situated or from jurisdiction of one ROC to another ROC or from one state to another state.
u/s 13 For alteration of Memorandum of Association of the Company.
u/s 14 For alteration of Article of Association of the Company.
u/s 13 & 27 Change in the object clause of the MOA if the Company has unutilized amount of public money raised for objects as stated in the prospectus or to vary the terms of contract.
u/s 41 To issue Global Depository Receipt in any foreign country.
u/s 48 Where a company has share capital of different classes, the rights attached to any class of shares may be varied by consent of members holding ¾ th of the shares issued of that class or by a SR passed in their meeting.
u/s 54 Issue of Sweat Equity Shares. (Excepting this, shares cannot be issued at a discount.)
u/s 62 For issuing further shares to employees of the company under the scheme of employee stock option and/or issue to persons other than members. SR for determining the terms of issuing debentures convertible into shares or loans raised by the company into shares.
u/s 66 For reduction of Share Capital.
u/s 68 SR passed in General Meeting authorizing buy-back of shares.
u/s 71 For issuing Debenture convertible into shares, wholly or partly.
u/s 94 The company may keep registers; returns etc. in that place of office, where the 1/10th Members is residing and whose names have been entered in the Register of Members, if approved by SR in General Meeting.
u/s 140 Removal of auditor appointed u/s 139, before the expiry of his term and after obtaining approval of CG.
u/s 149 (1) Company may appoint more than 15 directors after passing a SR.
u/s 149 (10) Re-appointment of an independent director for a further period of 5 years after passing a SR.
u/s 165 The members of a company may, by SR specify any lesser number of companies in which a director of the company may act as Directors.
u/s 180 Restriction on power of the Board. ( Effective w.e.f. 12/09/2013)
u/s 186 Loans and investment by a Company.
u/s 188 SR before entering into contracts by companies having such paid up share capital or for transactions not exceeding such sums as prescribed (in the rules).
u/s 196 Appointment of persons aged 70 years or more as the Managing Director, Whole Time Director or Manager.
u/s 197 The remuneration shall be paid to director subject to the provisions of section 197 (relating to managerial remuneration in case of absence or inadequacy of profits) and shall be determined in accordance with the provisions of Article of Association, or a resolution or if the article authorizes by a SR.
u/s 210 SR is required to be passed for intimation to the CG that the affairs of the Company ought to be investigated.
u/s 212 SR is required to be passed for intimation that the affairs of the Company ought to be investigated by the Serious Fraud Investigation Office.
u/s 248 SR required or consent of 75% of shares holders required for making an application to the ROC for striking off the name of the Company.
u/s 262 Approval of shareholders, of both the companies, in General Meeting for scheme of merger and amalgamation of sick company with other company.
u/s 271 SR passed resolving winding up of the Company by the Tribunal.
u/s 304 For Voluntary Winding Up of the Company.
u/s 314 The Company Liquidator call General Meeting for the purpose of obtaining the sanction of the company by OR or by SR, as the case may require.
u/s 319 SR granting powers to the company liquidator to accept shares etc as consideration for sale of property of the company. AND/OR In case the company liquidator elects to purchase the member’s interests, the manner of raising the money must be determined by a SR
u/s 321 Arrangement between the company (about to be or is in the course of being wound up) and the creditors shall be binding on both of them if it is sanctioned by a SR and acceded by creditors holding 3/4th of the total amt due.
u/s 343 Company Liquidator to exercise certain powers subject to sanction by a SR and prior approval of the Tribunal.
u/s 347 SR, in case of voluntary winding up, for determining the manner for disposing the books and papers of a company completely wound up and to be dissolved.
u/s 371 For adoption of Table F in Schedule I. Moreover, the Articles of Association of a Company may prescribe more stringent provisions for a particular matter as compared to the one specified by law for that matter and the Company is bound to follow it.
Published in Articles - Business Law Read 158 times 0
Rate this item
(0 votes)

Procedure & Checklist for Transfer of Flats under Maharashtra Co-op Society Act n its Bye laws

An application for transfer of shares and interest in the capital or property of the society should be made in the prescribed form, along with the share certificate An application for membership of the proposed transferee should be made in the prescribed form Valid reasons for the proposed transfer should be furnished All the liabilities of the society should be discharged Transfer fee should be paid Entrance fee of the proposed transferee should be paid Premium (to be fixed at the general body meeting) has to be paid.

This will not apply to transfer of shares and interest of the transferor in the capital or property of the society to a member of his family, his nominee or his legal representative  after his death and in case of mutual exchange of flats amongst the members or a registered gift deed executed by the member. No objection certificate required under any law, an order or sanction issued by the government or a financing agency should be furnished The managing committee or the general body cannot refuse any application for admission to membership or transfer of shares and interest in the capital or property of the society except on the grounds of non-compliance of the provisions of the Act.

If the decision of the committee or general body meeting, on the application for the transfer of shares and interest in the capital or property of the society is not communicated to the applicant within three months of its receipt, the transfer application will be deemed to have been accepted and the transferee will be deemed to have been admitted as a member of the society .

Any transfer made in contravention of the Act, rules or the bye-laws will be void and will not be effective against the society. The transferee will be eligible to exercise the rights of membership on receipt of a letter in the prescribed form from the society. 

“No Objection Certificate” of the Society is not required to transfer the shares and interest of the transferor to the transferee. However in case such a certificate is required by the transferor or transferee, he shall apply to the society and committee of the Society may consider such a application on merit within one month. [Bye Law No. 38(d)]

DOCUMENTS REQUIRED FOR TRANSFER OF A FLAT

  1. Notice of Intention to transfer shares in the prescribed form 20(1) [15 days Notice of Intention as per Bye law 38(a)]
  2. Letter of consent of the proposed transferee in the prescribed form 20 (2) [under Bye law No. 38(a)]
  3. Application, for transfer of shares and interest in the capital/property of the society, in the prescribed form. [ (Form No. 21 ] . The application should contain valid reasons for the proposed transfer. As per MCS Act 1960 Section 29 (2) it is necessary that the transferor should hold shares or interests in the society for at least a period of one year. 
  1. Application for membership of the proposed transferee in the prescribed form No.23 (being an individual).
  2. Resignation in the prescribed form [as per Bye law no.27 (a) Appendix No.13]
  3. Transfer Form along with Transfer Fee Rs. 500/- &  payment of amount of Premium at the rate fixed by the general body meeting but within the limits as prescribed under the circular, issued by the Department of Co-operation/Govemment of Maharashtra from time to time. No additional amount towards donation or contribution to any other funds or under any other pretext shall be recovered from transferor or transferee [Form No. 21 (1) ]
  4. Payment of Entrance Fee Rs. 100/-.
  5. Declaration by the Transferor for not holding immoveable property in any Urban Agglomeration, specified under the provisions of the Urban Land Ceiling and Regulation Act, 1976, exceeding 500 Sq.Meters.[ Form No. 25]
  6. Declaration by the Transferee for not holding immoveable property in any Urban Agglomeration, specified under the provisions of the Urban Land Ceiling and Regulation Act, 1976, exceeding 500 Sq.Meters.[ Form No. 26 ]
  7. Undertaking to discharge all the liabilities to Society by transferor.
  8. Undertaking to be furnished by the prospective Member to use the flat for the purpose for which it is allotted. [(Form No. 4)]
  9. Stamp duty paid Agreement copy along with Copy of N.O.C. issued by Appropriate Authority Income Tax, if applicable.(as per section 269AB of the Income Tax Act) (Above 75,00,000 Agreement). 
  10. Original Share Certificate.
  11. Certified True Copy of Registration Receipt.
  12. Proof of payment of Stamp Duty.
  13. Copy of Possession Letter issued by the Transferor to the Transferee, that the Transferee has been put Peaceful, vacant & physical possession. (Possession Letter)
  14. Obtaining No Dues Certificate from the Society.
  15. Letter to the Electricity Department to transfer the Electric Meter.
Published in Articles - Business Law Read 136 times 0
Rate this item
(0 votes)

List of statutory registers to be maintained under the Companies Act, 2013

Sr. No.

FORM NAME

NAME OF REGISTER

CHAPTER

RELEVANT SECTION & RULE

1

MGT-1

Register of Members

VII

S.88(1)(a) & R.3(1) OF COS (MANAGEMENT & ADMINISTRATION) RULES, 2014

2

MGT-2

Register of Debenture Holders/ Other Securities Holders

VII

S.88(1)(b) & (c) AND R.4 OF COS (MANAGEMENT & ADMINISTRATION) RULES, 2014

3

REGISTER

Register of Directors and Key Managerial Personnel and Their Shareholding

XI

S.170 & R.17 OF COS (APPOINTMENT & QUALIFICATION OF DIRECTOR) RULES, 2014

4

SH-2

Register of Renewed and Duplicate Share Certificate

IV

S.46(3) & R.6(3)(a) OF COS (SHARE CAPITAL & DEBENTURE) RULES, 2014

5

SH-3

Register of Sweat Equity Shares

IV

S.54 & R.8(14) OF COS (SHARE CAPITAL & DEBENTURE) RULES, 2014

6

SH-6

Register of Employee Stock Option

IV

S.62(1)(b) & R.12(10) OF COS (SHARE CAPITAL & DEBENTURES) RULES, 2014

7

SH-10

Register of Shares/Other Securities Bought Back

IV

S.68(9) & R.17(12) OF COS (SHARE CAPITAL & DEBENTURES) RULES, 2014

8

CHG-7

Register of Charges

VI

S.85 & R.10(1) OF COS (REGISTRATION OF CHARGES) RULES, 2014

9

MBP-2

Register of Loans, Guarantee, Security And Acqisition Made By Company

XII

S.186(9) & R.12(1) OF COS (MEETINGS OF BOARDS & ITS POWERS) RULES, 2014

10

MBP-3

Register of Investment Not Held In Its Own Name By The Company

XII

S.187(3) & R.14(1) OF COS (MEETINGS OF BOARDS & ITS POWERS) RULES, 2014

11

MBP-4

Register of Contracts With Related Party And Contracts And Bodies Etc. In Which Directors Are Interested

XII

S.189(1) & R.16(1) OF COS (MEETINGS OF BOARDS & ITS POWERS) RULES, 2014

 

Published in Articles - Business Law Read 132 times 0
Rate this item
(0 votes)
Currently every business organization is engaged in finalizing books of accounts and preparation of Balance Sheet for the financial year 2017-18. This financial year is divided into two indirect taxes provisions namely, pre-GST (Excise, Service Tax and VAT) and post-GST. This being the first financial year since GST implementation, it becomes important to understand the legal provisions under GST law while finalizing books of accounts and preparation of Balance Sheet. Therefore, in order to safeguard the interest of the business organizations and provide some idea regarding GST audit preparation, I am taking this opportunity to discuss the following important GST points while finalizing Balance Sheet:
Published in Articles - Business Law Read 141 times 0
Rate this item
(0 votes)
NCLAT upholds NCLT order, admitting applications filed by Power of Attorney (‘POA’) holders, on behalf of Financial Creditors u/s 7 of the Insolvency and Bankruptcy Code, 2016 (‘the Code’), against Corporate Debtor;
Published in Articles - Business Law Read 123 times 0
Rate this item
(0 votes)
Section 8 of the Arbitration and Conciliation Act, 1996 reads as:
8. Power to refer parties to arbitration where there is an arbitration agreement.—
(1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration.
(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.
(3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.

Whilst the provision of 8(1) exists Supreme Court has held that Consumer Protection Act, 1986 being a beneficent enactment presence of arbitration clause would not preclude taking recourse before the Consumer Forum.
Judgments laid down by the Hon'ble Supreme Court are National Seed Corporation Limited vs. M. Madhusudhan Reddy & Anr it held as follows:
"The remedy of arbitration is not the only remedy available to a grower. Rather, it is an optional remedy. He can either seek reference to an arbitrator or file a complaint under the Consumer Act. If the grower opts for the remedy of arbitration, then it may be possible to say that he cannot, subsequently, file complaint under the Consumer Act. However, if he  chooses to file a complaint in the first instance before the competent Consumer NCDRC, then he cannot be denied relief by invoking Section 8 of the Arbitration and Conciliation Act, 1996 Act. Moreover, the plain language of Section 3 of the Consumer Act makes it clear that the remedy available in that Act is in addition to and not in derogation of the provisions of any other law for the time being in force."
The Hon'ble Supreme Court in National Insurance Company Ltd. Vs. Hindustan Safety Glass Works Ltd. wherein it held as follows:
"...in a dispute concerning a consumer, it is necessary for the courts to take a pragmatic view of the rights of the consumer principally since it is the consumer who is placed at a disadvantage vis-à- vis the supplier of services or goods. It is to overcome this disadvantage that a beneficent legislation in the form of the Consumer Protection Act, 1986 was enacted by Parliament."
Published in Articles - Business Law Read 233 times 0
Rate this item
(0 votes)
General: Companies that want to venture out and start selling their shares to the public have ways to stabilize their initial share prices. One of these ways is through a legal mechanism called the greenshoe option. A greenshoe is a clause contained in the underwriting agreement of an initial public offering (IPO) that allows underwriters to buy up to an additional 15% of company shares at the offering price. The investment banks and brokerage agencies (the underwriters) that take part in the greenshoe process have the ability to exercise this option if public demand for the shares exceeds expectations and the stock trades above the offering price. (Read more about IPO ownership in IPO Lock-Ups Stop Insider Selling.)
Published in Articles - Business Law Read 219 times 0
Rate this item
(0 votes)

Apart from the deadlock or risks of litigation created by the minority block, there can be cases where the majority wants to do away with the minority shareholders in entirety in order to obtain an administrative stronghold. Thus the concept of minority “squeeze outs”, which are well recognized in the legal frameworks of many jurisdictions, becomes relevant.

Published in Articles - Business Law Read 194 times 0
Rate this item
(0 votes)


Disputes across national boundaries have become commonplace in today's commercial world. In an effort to avoid the uncertainties and complexities of foreign courts, most international agreements provide for dispute resolution through more neutral auspices of arbitration and mediation. These alternatives to national courts are known as alternative dispute resolution (ADR) techniques and are part of the specialty of law practice formally known as international litigation.