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UNIT III

Management and Administration

Q1) What are the registers to be maintained by a company?

A1) Every company shall keep and maintain the following registers:—

(a) Register Of Members indicating separately for each class of equity and preference shares held by each member residing in or outside India;

(b) Register of Debenture-holder and

(1) Every company shall, from the date of its registration, keep and maintain a register of its members in one or more books in Form No. MGT-1.

In the case of existing companies, registered under the Companies Act, 1956, particulars shall be compiled within six months from the date of commencement of these rules.

(2) For Company not having share capital-

(a) ROM shall contain following Particulars:

Name of the member;

Address (registered office address in case the member is a body corporate);

e-mail address;

Permanent Account Number or CIN;

Unique Identification Number, if any;

Father’s/Mother’s/Spouse’s name;

Occupation; Status;

Nationality;

In case member is a minor

Name of the guardian and

DOB of the member;

Name and address of nominee;

Date of becoming member;

Date of cessation;

Amount of guarantee, if any;

Any other interest if any,

Instructions, if any, given by the member with regard to sending of notices etc.

Every company which issues or allots debentures or any other security shall maintain a separate register of debenture holders or security holders, as the case may be, for each type of debentures or other securities in one or more books in Form No.MGT-2.

Q2) What are the provisions of maintaining Foreign Register?

A2) A company may keep a part of the register in any country outside India , if so authorized by its articles, in such manner as may be prescribed called “foreign register”, containing the names and particulars of the members, debenture-holders, other security holders or beneficial owners residing outside India.

Foreign register of members, debenture holders, other security holders or beneficial owners residing outside India.

(1) A company which has share capital or which has issued debentures or any other security may, if so authorised by its articles, keep in any country outside India, a part of the register of members or as the case may be, of debenture holders or of any other security holders or of beneficial owners, resident in that country (hereafter in this rule referred to as the “foreign register”).

(2) The company shall file Form MGT-3 with the Registrar for notice of the situation of the office within 30 days from the date of the opening of any foreign register along with the fee as provided in Annexure B where such register is kept and any change in the situation of such office or of its discontinuance, within 30 days from the date of such change or discontinuance.

(3) A foreign register shall be deemed to be part of the company’s ROM or of Register of Debenture holder or of any other security holders or BO. maintained in the same format as the Principal Register open to inspection and extracts may be taken there from and copies thereof may be required, in the same manner, mutatis mutandis, as is applicable to the principal register closed but advertisement before closing the register shall be inserted in at least two newspapers circulating in the place where it is kept.

(4) If a foreign register is kept by a company in any country outside India, the decision of the appropriate authority in regard to the rectification of the register shall be binding.

(5) The company shall –

(a) Transmit to its registered office in India a copy of every entry in any foreign register within 15 days after the entry is made; and

(b) Keep at such office a duplicate register of every foreign register duly entered up from time to time.

(6) Every such duplicate register shall, for all the purposes of this Act, be deemed to be part of the principal register.

(7) with respect to duplicate registers, the shares or as the case may be, debentures or any other security, registered in any foreign register shall be distinguished from the shares or as the case may be, debentures or any other security, registered in the principal register and in every other foreign register; and no transaction with respect to any shares or as the case may be, debentures or any other security, registered in a foreign register shall, during the continuance of that registration, be registered in any other register.

(8) The company may discontinue the keeping of any foreign register; and thereupon all entries in that register shall be transferred to some other foreign register kept by the company outside India or to the principal register.

Q3) What are the provisions regarding closure of register?

A3) Closure of register of members or debenture holders or other security holders.-

(1) A company closing the register of members or the register of debenture holders or the register of other security holders shall give at least seven days previous notice and in such manner, as may be specified by Securities and Exchange Board of India, if such company is a listed company or intends to get its securities listed, by advertisement at least once in a vernacular newspaper in the principal vernacular language of the district and having a wide circulation in the place where the registered office of the company is situated, and at least once in English language in an English newspaper circulating in that district and having wide circulation in the place where the registered office of the company is situated and publish the notice on the website as may be notified by the Central Government and on the website, if any, of the Company.

(2) The provisions contained in sub-rule (1) shall not be applicable to a private company provided that the notice has been served on all members of the private company not less than seven days prior to closure of the register of members or debenture holders or other security holders.

Q4) What is the penalty for not maintaining registers?

A4) If a company does not maintain; a Register Of Members or a Register Of Debenture holders other security holders or fails to maintain them in accordance with the provisions of sub-section (1) or sub-section (2),Company & Every officer of the company shall be liable for a fine which shall not be less than Rs.50,000/- but which may extend to Rs3,00,000/- and failure is a continuing one- fine which may extend to Rs.1000/- for every day, after the first during which the failure continues.

Q5) What is annual return?

A5) An annual return is a document that contains details of a company’s share capital, indebtedness, directors, shareholders, changes in dictatorships, corporate governance disclosures etc. The regulations of the Companies Act, 2013 specifies that every company must prepare and file annual return with the registrar each financial year before the 29th of November. In this article, we look at the information filed by company in its annual return in detail.

Q6) Who are authorized signatories of annual return?

A6) An annual return should have the authorized digital signature of a director and the company secretary. In the absence of a company secretary, a company secretary in practice can fulfill this responsibility. If the particular firm is a one-person company or small company, the annual return can be signed by a director only.

Q7) What are the contents of annual return?

A7) A company’s annual return must contain the following details:

Details of registration.

Particulars of the company’s registered office.

Principal business activities pursued by the company.

Particulars of Holding, Subsidiary and Associate Companies.

Particulars of the shares, debentures and other securities of the company.

Particulars of turnover and net worth of the company.

Details of shareholding pattern.

Indebtedness.

Details of members, debenture holders and other securities holder.

Details of shares/Debenture transfers of the particular financial year.

Particulars of promoters.

Particulars of directors.

Particulars Key Managerial Personnel.

Details of meetings of members/class of members/Board/Committees of the Board of Directors.

Remuneration of directors.

Remuneration of Key Managerial Personnel.

Details on penalties/punishment/compounding of offences on company, directors and other officers in default.

Details of matters pertaining to certification of compliances and disclosure.

Details in respect of shares held by or on behalf of the Foreign Institutional Investor (FII).

Details of other pertinent disclosures.

Q8) What is Annual General Meeting?

A8) An Annual General Meeting (AGM) is held to have an interaction between the management and the shareholders of the company.

Q9) Which Companies Are Required to Hold an AGM?

A9) 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. However, in the case of a first annual general meeting, the company can hold the AGM in less than nine months from the end of the first financial year. In such cases where the first AGM is already held, there is no need to hold any AGM in the year of incorporation. Do note that the time gap between two annual general meetings should not exceed 15 months. 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.

Q10) What is Extra-ordinary General Meeting?

A10) Matters requiring immediate consideration by members, which cannot be deferred till next Annual General Meeting, to meet such emergencies, the companies can provide for holding of emergency meetings of the members which are known as Extra Ordinary General Meeting.

Q11) Explain the procedure for the Declaration and Payment of Dividend.

A11) Procedure for the Declaration and Payment of Dividend

Following are the steps involved in the payment of dividend:

Computation of the amount of depreciation

Firstly depreciation shall be computed according to the rate specified in Schedule XIV or on any other basis decided by the Central Government.

2. Transfer of profits to reserves

Before the declaration of the dividend, part of the profits has to be transferred to the reserves of the company. The Higher amount of earnings can be transferred to reserves voluntarily subject to the conditions.

3. Board Meeting

Another important step is to pass board resolution in the board meeting of the directors of the company otherwise it cannot be declared at the annual general meeting.

4. Annual General Meeting

An ordinary resolution is required to be passed at the general meeting of the members. The notice of the meeting will mention the declaration of the dividend which will be sent to both members as well as creditors of the company.

5. Time limit

For declaration of the dividend, it is required to open a separate bank account. The declared amount of dividend shall be transferred to the account. Within 30 days of the annual general meeting, a dividend warrant is required to be sent to the shareholders.

6. Transfer to unpaid dividend account

Amount remaining unclaimed is required to be transferred to unpaid dividend account within 7 days from the expiry of 30 days of dividend declaration. The unpaid or unclaimed dividend for 7 years is transferred to Investor Education Protection Fund within 30 days.

7. Circumstances under which dividend is not required to be paid

In case dividend cannot be paid due to operation of law;

In case members have given directions to the company which cannot be complied with;

In the event of dispute regarding the payment of dividend;

In case company has adjusted dividend against amount due from the shareholders;

In case the company has made any default in compliance with the provisions of section 73 and section 74, dividend cannot be paid.

8. Tax limit

The dividend declared by the company out of current or accumulated profits is charged with an additional tax rate of 15%. This tax is required to be paid within 14 days of the declaration of the dividend.

9. Provisions related to Listed Company

All listed companies have to give prior information regarding the board meeting of the company to the stock exchange where the securities of the company are listed.

10. Penalty in case of non-distribution of dividends

In case where a company fails to pay dividend within 30 days period from the date of its declaration to the shareholders then the company shall be penalized with interest at 18% per annum for the period of default and every director shall be imprisoned for a term which may extend to two years maximum and fine may also be levied of 1000 rupees for the day during which the default continues.

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