The Companies Act, 2013

Presentation by-
Nidhi, Aditi,Anjali, Garima, Dinkey

Submitted to-
Dr. Priyanka Sihag
Topics under this Act
1. Meetings
2. Board of directors
3. Foreign Company
 Annual General Meeting Under the Companies Act,
2013
• An Annual General Meeting (AGM) is held to have an interaction between the management and
the shareholders of the company. The Companies Act, 2013 makes it compulsory to hold an
annual general meeting to discuss the yearly results, auditor’s appointment and so on. A company
should follow the procedures under the Companies Act, 2013 to conduct the AGM.

Companies Required to Hold an AGM

• All companies except one person company (OPC) should hold an AGM after the end of each
financial year. A company must hold its AGM within a period of six months from the end of the
financial year.
• The
time gap between two annual general meetings should not exceed 15
months.

Procedure to Hold an AGM

• The company must give a clear 21 days’ notice to its members for calling the
AGM. The notice should mention the place, the date and day of the meeting,
and the hour at which the meeting is scheduled. The notice should also mention
the business to be conducted at the AGM. A company should send the notice of
the AGM to:
• All
members of the company including their legal representative of a deceased
member and assignee of an insolvent member.
• The statutory auditor(s) of the company.
• All director(s) of the company.
The notice may be given in writing through speed post or registered
post or via electronic mode. The notice should be sent to the address of
the member as per the records of the company.
An AGM can be called at a notice period shorter than 21 days if at least
95% of the members entitled to vote in the meeting agree to the shorter
notice. The consent may be given in writing or through electronic mode.
Agenda of an AGM

• The matters discussed or business transacted in an AGM consists of:

• Consideration and adoption of the audited financial statements.
• Consideration of the Director’s report and auditor’s report.
• Dividend declaration to shareholders.
• Appointment of directors to replace the retiring directors.
• Appointment of auditors and deciding the auditor’s remuneration.
• Apart from the above ordinary business, any other business may be
conducted as a special business of the company.
• The ordinary business of the company will be passed by an ordinary resolution
where the votes cast in favour are more than the votes cast against the
resolution.
• However, in case of special business transactions, the resolution may be
passed as an ordinary resolution or a special resolution, depending on the
applicable legal provisions. A special resolution requires at least 75% votes in
favour of the resolution.
• An AGM should be conducted during the business hours between 9 a.m. and 6
p.m. only.
• The meeting can be conducted on any day, which is not a national holiday,
including holidays declared by the Central Government.
• The meeting can be held at any place which is within the limits of the city or
town or village in which the registered office is situated.
 Members’ Rights in an AGM

• The members (including shareholders) of the company are

entitled to attend and vote at the AGM.
• Members can cast their votes by a physical ballot or postal
ballot or through e-voting.
• Members can appoint proxies to attend an AGM and vote on
their behalf.
• The proxy should be appointed in writing, and the proxy form
should be signed by the member.
• In case the proxy is appointed by a corporate shareholder, the
proxy form should be signed and sealed by an authorised
signatory of the corporate.
• The members can elect one among themselves as the
chairman of the meeting. However, if the articles of
association of the company provide for a chairman, such
person shall chair the AGM of the company.
 Quorum for an AGM

In the case of a private company, two members present at the meeting

shall be the quorum for the AGM. In the case of a public company, the
quorum is:
• Five members present at the meeting if the number of members is
within one thousand.
• Fifteen members present at the meeting if the number of members is
more than one thousand but within five thousand.
• Thirty members present at the meeting if the number of members is
more than five thousand.
In case the quorum for the meeting is not present within half an hour
from the scheduled time, the meeting will be adjourned to the same day
in the following week for the same time and at the same place.
 Minutes of an AGM
Every company has to prepare the minutes of the AGM compulsorily. The
minutes of the AGM means the written record of the proceedings of the
meeting. They state the events that took place and the resolutions passed in
the AGM.

Extension of Time for Holding an AGM

The Registrar of Companies can extend the time available to hold an
AGM by three months.
The company should apply for an extension through e form GNL-1
specifying the reasons for the extension and the period for which the
company requires an extension.
The RoC will record the reasons for giving the extension. However, no
extension is available to hold the first annual general meeting.
 Reasons for Seeking an Extension of AGM

• Mergers and acquisitions.

• Delay in finalising the financials.
• Delay in audit reports due to absence of auditors because of reasons such as
death, resignation, incapacity to sign or other such valid reasons.
• Information loss in a computer due to virus or system-related issues.
• Non-readiness of the economic records due to natural calamity, loss of
commercial data, and vacancy of directors.
• Change in a financial year.
• Non-availability of shareholders leads to the absence of a quorum.
• Non-availability of directors on valid grounds. For example, there is the
sudden demise of a director due to which the limit of directors goes below
the minimum requirement of directors.
• Confiscation of books of accounts by the IT department, Serious and Fraud
Investigation Cell or other government officials.
Steps for Filing an Application Seeking Time Extension for Conducting AGM
• The director of the company will initiate a meeting of the board of directors
concerning which notice has to be sent to all the directors 7 days before
holding the board meeting.
• Hold a board meeting on the particular date mentioned in the notice.
• Pass a board resolution for time limit extension for holding the annual
general meeting detailing the unsettled reason for an AGM
extension.
• File Form GNL-1 with the Registrar of Companies where the company is
registered.
• The exact cause for not holding AGM within the stipulated date and other
important data has to be provided in Form GNL-1.
• A certified exact copy of the board resolution has to be provided along with
Form GNL-1 as an attachment.
• The form will go through the office of the Registrar of Companies.
• The Registrar will verify the application on the precise grounds and may
permit an extension when he/she thinks it’s valid to grant the same.
• Get the certificate of the extension privilege in the holding of AGM of the
company from the Registrar.
 Reporting of the AGM

• After the conduct of AGM, every listed company has to file a report
on the AGM in form MGT-15 within a period of 30 days from the
conclusion of the AGM.

Consequences and Penalty for Default in Holding an AGM

• In case a company fails to hold an AGM within the stipulated time or

extension obtained by it, the Tribunal may itself or on an application
made by any director or member order an AGM to be conducted as
per its directions.
• If the company further defaults in holding a meeting in accordance
with the directions of the Tribunal, the company and every officer of
the company who commits the default shall be punishable with a fine
of up to Rs 1 lakh. In case of continuing default, a fine of Rs 5,000 per
day is levied for each day during which the default continues.
Special Procedure For The Year 2020
• Update as of 5th May 2020: Companies are allowed to hold Annual General
Meeting via Video Conferencing (VC) or Other Audio-Visual Means (OAVM) in the
year 2020.
• Made on account of threat posted by COVID-19
Content of Notice:
As per General Circular no 17/2020 dated 13th April 2020, the following matters must also be stated while
publishing the notice as per 20(4)(v) of the rules –
1) A statement that the EGM has been convened as per the Act and provisions of the General circular no
14/2020.
2) The date and time of the EGM through VC or OAVM.
3) Availability of the notice of the meeting on the website and stock exchange.
4) Details of how members not having registered email address can vote using remote e-voting or e-
voting during the meeting.
5) The manner in which the email addresses of members can be registered.
6) The manner in which the members holding physical shares and not registered their email addresses
can cast their vote through remote e-voting or through the e-voting system during the meeting.
7) The manner in which the members can opt to receive dividends directly into their bank accounts via
ECS or any other means,
8) Any other detail that needs to be conveyed.
Mode of issuing Notice
• In the current circumstances, the notices can be sent via e-mails registered with
the company or depository participants. Before sending out notices together with
the financial statements, company must publish atleast once in a vernacular
newspaper in the district in which the registered office of the company is situated
and one english newspaper also preferably having electronic editions.
Access to Auditor’s Report
• Due to the difficulty in sending out physical copy of the financial statements
(including Board’s report, Auditor’s report, or other documents), these can be sent
out via e-mail to the members, trustees and the persons entitled.
Dividend dispatch measures
• The companies can make adequate arrangements to allow the members to give their
mandate for receiving dividends directly in their bank accounts through the ECS or
any other means. For shareholders not have not shared bank accounts details may
receive the dividend warrant/cheque by post.
Matters considered in the AGM
Mode of conducting a meeting
Place of conducting AGM
Quorum of the AGM
How is voting done?
Only the items of special business, considered to be unavoidable by the
Board, may be transacted, apart form ordinary business.
The meeting must be conducted through Video Conferencing or other
audio-visual means (OAVM).
At any other place in the district where the registered office of the
company is located taking cautionary steps as stipulated. It can also hold
meeting virtually with some members physically present and providing
the facility of VC or OAVM, for allowing other members of the company
to participate in such meeting.
All the members physically present in the meeting and those attending
the meeting through the.facility of VC or OAVM shall be taken together
for arriving at the quorum under section 103 of the Act.
All resolutions will continue to be passed via the facility of e-voting
system.
Director Under Companies Act, 2013
• The Companies Act, 2013 defines a director as a person appointed to the
company’s Board. The directors manage the company affairs and are the heads
of a company. The directors of a company are jointly known as the Board of
Directors.

• The Board of a company is also responsible for protecting the interests of the
shareholders of the company
Under the Act, a person can be appointed as
one of the following types of director in a
company:
• Managing director
• Whole-time director
• Independent director
• Small shareholders director
• Additional director
• Alternative director
• Nominee director
Company to have Board of Directors

• Every company shall have a Board of Directors consisting of

individuals as directors and shall have—

a) a minimum number of three directors in the case of a public

company, two directors in the case of a private company, and one
director in the case of a One Person Company; and

(b) a maximum of fifteen directors

• Every company shall have at least one director who stays in India for
a total period of not less than one hundred and eighty-two days
during the financial year.
• Every listed public company shall have at least one-third of the total number of
directors as independent directors and the Central Government may prescribe the
minimum number of independent directors in case of any class or classes of public
companies.
• Every independent director shall at the first meeting of the Board in which he
participates as a director and thereafter at the first meeting of the Board in every
financial year or whenever there is any change in the circumstances which
• An independent director shall hold office for a term up to five consecutive years on
the Board of a company, but shall be eligible for reappointment on passing of a
special resolution by the company
• No independent director shall hold office for more than two consecutive terms,
but such independent director shall be eligible for appointment after the
expiration of three years
Manner of selection of independent directors

• An independent director may be selected from a data bank containing names,

addresses and qualifications of persons who are eligible and willing to act as
independent directors, maintained by any body, institute or association, as may by
notified by the Central Government.
• The appointment of independent director shall be approved by the company in
general meeting as provided in sub-section (2) of section 152
• The Central Government may prescribe the manner and procedure of selection of
independent directors who fulfil the qualifications and requirements specified
under section 149.
Appointment of director elected by
small shareholders.
• A listed company may have one director elected by such small shareholders in
such manner and with such terms and conditions as may be prescribed.
Appointment of directors
• Where no provision is made in the articles of a company for the appointment of
the first director, the subscribers to the memorandum who are individuals shall be
deemed to be the first directors of the company until the directors are duly
appointed
• in case of a One Person Company an individual being member shall be deemed to
be its first director until the director or directors are duly appointed by the
member in accordance with the provisions of this section.
• Every director shall be appointed by the company in general meeting.
• No person shall be appointed as a director of a company unless he has been
allotted the Director Identification Number under section 154
• Every person proposed to be appointed as a director by the company in general
meeting or otherwise, shall furnish his Director Identification Number.
• A person appointed as a director shall not act as a director unless he gives his
consent to hold the office as director and such consent has been filed with the
Registrar within thirty days of his appointment
 Application for allotment of Director
Identification Number.
• Director Identification Number or DIN (MCA) is an 8-digit unique identification
number, which is allotted by the central government to each individual who wants
to be a director of any company or who already is a director of any company.
• Every individual intending to be appointed as director of a company shall make an
application for allotment of Director Identification Number to the Central
Government in such form and manner and along with such fees
Allotment of Director Identification
Number.
• The Central Government shall, within one month from the receipt of the
application under section 153, allot a Director Identification Number to an
applicant
Definition
Definition of Body Corporate under Companies Act, 2013 Section 2(11): Body Corporate or
Corporation includes a Company incorporated outside India, but does not include-
i. A co-operative society registered under any law relating to co-operative societies; and
ii. ii. Any other body corporate (not being a company defined in this act), which the Central
Government may by notification specify in this behalf.

Foreign Company under Companies Foreign Company as per Companies

Act 1956 – Section 591 Act, 2013 – Section 2(42)
Company incorporated outside (a)Company or Body Corporate
India and having a place of business incorporated outside India having a
in India place of business in India whether
by itself or through an agent,
physically or through electronic
mode and
Impact of the new definition
• The New Act has drastically expanded the definition of Foreign Companies to include those foreign
companies as well that are doing business in India through electronic mode.
• The term ‘electronic mode’ is defined under the Companies (Specification of Definitions Details)
Rules, 2014 with regard to a company (as given under Rule 2(h) and Rule 2 (1)(c) of Companies
‘Registration of Foreign Companies’ Rules, 2014). In accordance with the aforementioned sections,
electronic mode may include all transactions that have an electronic or digital base, including –
1. Business to business and business to consumer transactions
2. Data exchange
3. Digital supply transactions
4. All online services
5. Data communication services (through mobile, email, social media, cloud computing, etc.)
Other things to be noted
• The new Companies Act 2013 also includes ‘body corporates’ in its
definition of a foreign company, due to which the scope of the definition
has been extended
• Even a virtual presence is enough for an entity to come under the
purview of the definition of a foreign company under the new
Companies Act 2013.
• The regulations and compliances for foreign companies under the new
companies act have been widened and compliance has been strictly
stipulated. Provisions of chapter 22 have been stipulated to be followed
by foreign companies as well as those under the new law.
Applicability of The Act on Foreign
Companies:
• (Chapter XXII) (Section 379 to Section 393)

Section 379: Where not less than 50% (i.e. 50% or more) of the paid-up share capital, whether

equity or preference or partly equity and partly preference, of a foreign company is held by one

or more citizens of India or by one or more companies or body corporate incorporated in

India or by one or more citizens of India and one or more companies or body corporate

incorporated in India, whether singly or in aggregate, such company shall comply with the

provisions of this Chapter and such other provisions of this Act as may be prescribed with

regard to the business carried on by it in India as if it were a company incorporated in India.

Section 379 of the 2013 Act laid down that where not less than 50%
of the paid up capital of a foreign company is held by one or more
citizens of India, or companies/body corporates incorporated in
India, such company has to comply with the provisions of Chapter
22 and other provisions of the 2013 Act, as may be prescribed, with
regard to the business carried on by it in India, as if it was a
company incorporated in India.
Currently, there are a number of foreign based websites that operate directly or
indirectly in India and may be said to have a place of business in India through
electronic mode. For instance, online travel companies in joint venture with several
airlines selling tickets of those airlines on their online portal, airline companies who
operate through their booking agents in India or Company or Body Corporate
providing online coaching to Indian students.

Further, the second part of the definition of foreign company refers to any other
‘business activity’ which will now include companies in media and broadcasting
business like Zee Entertainment Enterprise Limited which have foreign subsidiaries
like Asia Today Limited which render satellite services in India or Indian Asset
Management Companies with foreign subsidiaries in countries like Singapore and
Mauritius making investments in Indian securities or Indian mutual funds. This will
have huge implications on such business as they will have the burden of adhering to
statutory compliance under the companies act, 2013.
 Winding up procedure
Section 271 of the Companies Act, 2013 lays down circumstances in which Company may be
wound up by the tribunal-
 if the company has, by special resolution, resolved that the company be wound up by the
Tribunal;
 if the company has acted against the interests of the sovereignty and integrity of India, the
security of the State, friendly relations with foreign States,public order, decency or morality;
 if on an application made by the Registrar or any other person authorised by the Central
Government by notification under this Act, the Tribunal is of the opinion that the affairs of the
company have been conducted in a fraudulent manner or the company was formed for
fraudulent and unlawful purpose or the persons concerned in the formation or management
of its affairs have been guilty of fraud, misfeasance or misconduct in connection therewith and
that it is proper that the company be wound up;
 if the company has made a default in filing with the Registrar its financial statements or annual
returns for immediately preceding five consecutive financial years; or if the Tribunal is of the
opinion that it is just and equitable that the company should be wound up
• Section 272 of the
Companies Act,
2013 clarifies
about the list of
persons, who shall
be entitled to file
an petition for the
winding up of a
company
3. Liquidation of Company under the Insolvency and Bankruptcy Code, 2016-

A. Voluntary Liquidation of a company (SECTION 59 of the IBC, 2016)

B. Liquidation process in case of company has made default in payment of
debts
Thank you