CO. LAW...............contd.

Managing director and whole time director diff

Appointment of MD does not require the consent of shareholders but for the appointment of a whole time director approval is required. A managing director can be a managing director of more than one company but a whole time director , being a whole time employee of the company, can not be a whole time director in more than one company. A managing director of a public company by can be appointed for a maximum period of five years at a time, whereas there is no restriction regarding the term of appointment of whole time director.

Company Secretary
CS acts as the link between the directors and the shareholders, the medium through which the company communicates with the outside world. While the directors are the brains of the company , the CS is its ears and hands. Only an individual may be appointed as a CS CS must be a member of ICSI or has requisite qualifications as prescribed by the Central Government. Every company having a paid up share capital of Rs 2 Cr or more must have a CS.

Maximum and Minimum Managerial Remuneration

In case of public company, total managerial remuneration payable to directors, managing directors or manager and whole time directors in respect of any financial year should not exceed 11% of the net profits of that company for financial year. If in any financial year a company has no profits or its profits are inadequate, the company is required to seek the approval of the Central Government for payment of any remuneration to the managerial personnel.

Powers of Directors (by means of resolution)

The power to make calls The power to authorize the company to buyback its own shares or other specified securities The power to issue debentures The power to borrow money otherwise than on debentures The powers to invest the funds of the company The power to make loans The power to fill up casual vacancy among directors Power to recommend the rate of dividend to be declared by the company Power to appoint the first auditors of the company

Meetings of Board
Notice At any time summon a meting of the board on the requisition of directors. It has to be sent to in writing to every director in India and at his usual address in India to every other director who is outside India for the time being.

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Quorum Minimum number of qualified persons whose presence is necessary for transacting legally binding business at the meeting. For a meeting of the board shall be one third of its total strength higher or 2 directors, whichever is higher. Unless a quorum is present, the business transacted is void. If a meeting of the Board could not be held for want of quorum then unless the articles otherwise provide, the meeting shall automatically stand adjourned till the same day in the next week and at the same time and place.

Duties of directors
All money received from applicants for shares is deposited in scheduled bank or money is returned to applicants Call EGMs At every AGM Board shall lay down before the company a balance sheet and P& L A/c. To make a declaration of solvency of the company in the case of members voluntary winding up. Must act bonafide for the benefit of the company Must not be negligent

Liability of directors
For ultra vires act, beyond MOA or AOA For breach of trust For acting dishonestly For gross negligence in the performance of their duties For wilful misconduct For the acts of his co-ordinators For misstatement or concealment of the prospectus

Criminal liabilities of a director: For misstatement in the prospectus For failure to file a return with RoC For failure to issue certificates of shares and debentures within specified time limits For not keeping registers of members and debentureholders For failure to lay before the company at AGM, annual accounts and balance sheet For holding number of directorships in more than 15 companies For taking the loan from the company without taking permission from the Central Government

MEETINGS AND RESOLUTIONS

There are 3 types of General Meetings of shareholders: 1. staututory meeting 2. annual general meeting 3. extraordinary general meeting

Statutory meeting
it is the first official general meeting of the shareholders. all public comapnies having share capital are required to hold such meeting compulsorily. it must be held after one month but within 6 months of obtaining the "certificate of commencement of business" this meeting is held only once in the lifetime of the comapny objective: to provide an opportunity to the members, as early as possible, of acquainting themselves with the assets and properties acquired so far and to dicsuss the success of flotation. with notice send: statutory report to all members

Statutory Report
directors prepare it and send it to every member a document known as the statutory report at least 21 days before the day on which the meeting is to be held. to be filed with ROC

Contents of the Statutory Report

1. the total number of shares allotted 2. total cash received in respect of the shares allotted. 3. an abstarct of the receipt and payments up to datewithin 7 days of the receipt and the balance in hand. 4. the names, addresses and occupations of the company's directors, auditors, MD, or manger and secretaryand the changes if any. 5. particulars of any contract to be submitted to the meeting for approval. 6. the details of arrears of calls due from directors and MD's or managers 7. particulars of any commission or brokerage paid or to be paid

Annual General Meeting

every comapny must in each year hold in addition to any other meetings a general meeting as its annual general meeting. ti is held each year with a view to reviewing and evaluating the overall progress of the company. also called as ordinay business meeting. most important for the members of the company

 matters to be discussed are: 1.consideration of annual accounts, balance sheets and reports 2.declaration of dividend 3.appointment of directors in the place of those retiring and 4.the fixation of the remuneration of the auditors

default in holding the meeting

fine: 50k rupees and in the cas of continuing default the fine may be further extended to Rs. 2500 for every day of default.

EXTRAORDINARY GENERAL MEETING

All gneral meetings other than statutory and annual general meeting are called as EGM's. can be convened by the comapny at any time. the business transacted at an EGM comprises anything which cannot be postponed till the next AGM e.g. chanages in MOA and AOA, reduction ans reorganisation of share capital WHO CAN CALL SUCH MEETINGS: 1. by the directors 2. by the directors on requisition by the requistionist themselves (if directors dnt call up) by the company law board

Next :
1. voting rights 2. proxy 3. minutes 4. quorum