©2014 Deloitte Touche Tohmatsu India Private Ltd

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Accounting,
Disclosures,
Auditors
Rotations,
Audits etc.
SEBI:
LA, Insider
Trading etc.
Transactions with Board of
Directors and
KMPs
KMP
Meetings of the Board and
Committees
Board of
Directors and
Board
Committees
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Resident
Director
Managing
Director / Whole time Director
Independent
Director
Small
Shareholders’
Director
Woman Director
Nominee
Director Additional
Director
Alternate
Director
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 The Companies Act, 2013 (New Act) has raised the bar for the boards in India. The New Act has made several significant changes, which seek to redefine the board governance in India.
 Overall, the New Act aims to raise the governance profile of Indian companies and their boards, at par with the roles and responsibilities assumed by boards globally
Requirement
Woman
Director
Companies Act, 2013
• At least 1 Woman Director - Listed and public company having PSC Rs. 100 Crore or more or
TO of Rs. 300 Crore or more
Clause 49 – Listing Agreement
At least 1 Woman Director
Resident
Director
Nominee
Director
Small
Shareholder’s
Director
• At least 1 Resident Director - Every company
• Resident Director shall be a person who has stayed in India for 182 days or more in the previous calendar year.
•
Subject to AOA, the Board may appoint any person as Nominee Director in pursuance of provision of any law or of any agreement or by the CG/SG.
•
Listed Company may upon notice of not less than 1000 or 1/10 th of the total number of such shareholder, whichever is lower have small shareholder’s director.
No provision specified
No Provision specified
No Provision specified
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 Requirement
Listed Company at least 1/3 rd of its total number of directors as IDs AND
Public Companies – At least 2 ID’s
PSC >= 10 crore or TO >= 100 Crore or more or aggregate, outstanding loans or borrowings or debentures or deposits > 50 Crore.
 Tenure - ID shall not hold office for more than 2 consecutive terms of up to 5 consecutive years each.
(Cooling off period of 3 years)
 Performance evaluation – Annual evaluation shall be done by the Board.

Code of Conduct - ID shall abide by the code of conduct as specified in
Schedule IV of the Act for appointment as ID.

Separate Meetings of ID - ID of the Company are required to hold at least one meeting in a year.

Declaration to be given by the Independent Director - 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
 Entitlements of Independent Directors – Sitting fees, reimbursement of expenses and profit related commission as approved by the members but will not be entitled to any stock option
 Liability of Independent Director Would be liable for such acts of omission or commission by a company which has occurred with his knowledge and attributable through board processes and with his consent and connivance or where he has not acted diligently
 Selection of Independent Director - An Independent Director may be selected from a data bank maintained by any institution as notified by the central government.
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Additional Compliances - Listing Agreement
 Requirement - Where chairman of the Board is Non executive at least
1/3 rd of the Board and in case chairman is executive, at least ½ of the
Board should comprise of ID.
 Exclusion of Nominee Director - Nominee director shall not be considered as ID

Tenure - Person already served as ID for 5 years or more as on
October 1, 2014 shall be eligible for appointment for one more term of up to 5 years only

Limit on Directorship - A Person is eligible to appoint as ID in Max 7 listed companies (Where ID holds position of WTD in any Listed
Company then Max 3 Listed Companies)
 Training to ID’s - Company shall provide suitable training to ID.
MCA has issued clarification on June 09, 2014 on the following matters:
 Following shall not be considered as Pecuniary relationship of ID:
•
Transactions which are on arms length and in the ordinary course of business;.
• Receipt of remuneration from other companies;
 Appointment of ID, if eligible shall be made within 1 year from April 01,
2014.
 Appointment may be made for less than 5 years but that will be constituted as 1 term of appointment.
 Appointment of ID shall be formalized through appointment letter.
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such other prescribed officer
Chief
Financial
Officer and
Whole-time director
Chief
Executive
Officer
Managing
Director
Company secretary
Manager
 Every listed company and every other public company having a paid-up share capital of 10 crore rupees or more shall have whole-time key managerial personnel.
 Now, a company other than companies mentioned above and which has a paid up share capital of Rs. 5 Crore or more shall have a whole-time Company Secretary
 KMP shall not hold office in more than one company except in subsidiary company at the same time.
(transitional period of 6 months available)
 Any vacancy in the office of KMP shall be filled up within the period of 6 months.
 Appointments of the KMP shall be made in the
Board Meeting.
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Guidance to the Director’s
Facilitate the convening of meetings
Obtain approvals from the
Board, shareholders, government or such other authorities
Represent before various
Regulators
Assist the Board in the conduct of the affairs of the company
Advise the Board in ensuring good corporate governance
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Assist in complying with the corporate governance requirements and best practices
Discharge such other duties as have been specified under the act or rules
Such other duties as may be assigned by the Board from time to time
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act in accordance with the articles of the company.
act in good faith in order to promote the objects of the company for the benefit of its members as a whole.
Exercise his duties with due and reasonable care, skill and diligence and shall exercise independent judgment.
Not involve in a situation in which he may have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company.
Not achieve or attempt to achieve any undue gain or advantage either to himself or to his relatives, partners, or associates.
Not assign his office and any assignment so made shall be void
Act in the best interests of the company, its employees, the shareholders, the community and for the protection of environment
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Director to vacate the office in the event not attended any Board Meeting during last year whether leave of absence has been granted or not
A director may resign from his office by giving notice in writing.
The Board shall, on receipt of such notice, intimate the Registrar and also place such resignation in the subsequent general meeting of the company
The director shall also forward a copy of resignation along with detailed reasons for the resignation to the Registrar
The notice shall become effective from the date on which the notice is received by the company or the date, if any, specified by the director in the notice, whichever is later
If all the directors of a company resign from their office or vacate their office, the promoter or in his absence the
Central Government shall appoint the required number of directors to hold office till the directors are appointed by the company in General Meeting.
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Provisions
Additional disclosures in the Directors’
Responsibility
Statement by all companies
What it means for the Boards and the Management
• The board would now have to articulate their policy on directors’ appointment and remuneration
• The board would have to explain if there are any qualifications in the secretarial audit report
• The board would have to lay down its policies for regulatory compliance and risk management and ensure these are operating effectively
• The board would have to devise proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively
Effect
Timeshare of
Boards on
Significant increase in the
Board’s time
Reconstitution of the board and reconstitution of its committees
• The board would now have to select a woman director
• The board of listed companies to have one elected director to represent small shareholders as defined by the New Act
• The board of listed companies would have to have at least one third members as independent as defined by the New Act
• Three new committees have to be constituted over and above the Audit
Committee
–
 Nomination and Remuneration Committee
 Stakeholders Relationship Committee

Corporate Social Responsibility Committee
Considerable increase in the Board’s time
Corporate Social
Responsibility
Committee
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The boards have to:
 lay down policy on CSR,
 constitute a Committee
 give reasons if the company has not been able to spend the mandatory amount.
Considerable increase in the
Board’s time
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Provisions
Fiduciary duties of the directors additionally
What it means for the Boards and the Management
The fiduciary duties of the directors have been laid down by law under the New
Act and hence the directors’ would have to be aware of these duties and act accordingly in the boards.
Effect
Timeshare of
Boards on
Marginal increase in the board’s time
Appointment of whole time key management personnel
The whole time key management has been defined by the New Act and their appointment, including the remuneration, will be through a board resolution and would have to be recommended by the Nomination and Remuneration
Committee.
Marginal increase in the board’s time
Independent Directors definitions, selection, tenure and entitlements
• The boards would have to:
 take note of the changes in the criteria and the tenure of the Independent
Directors and take necessary action to reconstitute the boards if necessary and set out policies in this regard.
 make the selection of new Independent Directors following the process set out in the New Act and the Rules.
 examine their existing policies on the entitlements of the Independent
Directors.
 take fresh declaration from the Independent Directors.
Considerable increase in the board’s time
Performance evaluation of the board, Chairman and the directors
The boards would have to lay down the procedures and methods for annual formal evaluation of performance of the board, its committees and individual directors, Chairman and of the Independent Directors (before reappointment)
Substantial increase in the board’s time
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Are the directors aware of their roles, responsibilities and duties under the New Act? How would the company help in this process?
How will the board satisfy itself about the adequacy and effectiveness of the systems of internal financial controls, and regulatory compliance so that it could give affirmations in the
Directors’ Responsibility
Statement?
How should the board assure itself of the reliability of disclosures to be made on behalf of the board?
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How will the performance of the board and its directors be evaluated?
What process should the board follow in evaluating the performance of the board and of the Independent
Directors prior to reappointment?
Should the board and the Independent Directors document all processes related to board functioning and management oversight?
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Particulars Audit committee Nomination and
Remuneration committee (NRC)
Applicability Listed company
Public company with paid up capital
>= 10 crores; or
Turnover of >= 100 crores; or aggregate loans, borrowings, debentures or deposits > 50 crores
Constitution Minimum 3 directors, majority being IDs
Listed company
Public company with paid up capital >= 10 crores; or Turnover of >= 100 crores; or aggregate loans, borrowings, debentures or deposits > 50 crores
Minimum 3 or more
NED of which at least ½ shall be IDs
Stakeholder relationship committee (SRC)
Where total number of shareholders, deposit holders, debenture holders and other security holder exceeds
1,000 at any time during a FY
To be decided by
BOD
Corporate Social
Responsibility committee (CSRC)
Company having:
• net worth of INR 500 crores or more; or
• turnover of INR 1000 crores or more; or
• net profit of INR 5 crore or more during any FY
Minimum 3 Directors of which at least 1 shall be
ID
For private limited company not required to have independent director.
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Additional requirements – Companies Act, 2013
 Disclosure in the Board’s Report to be given regarding the constitution of the Audit Committee;

Disclosure in the Board Report, if Board has not accepted any recommendation of the Audit Committee .
 Transition period of 1 year is available to the existing companies for reconstitution of the Audit Committee.
 Even MCA clarified that constitution of Audit Committee under this Act shall be made within 1 year from the commencement of these rules or appointment of Independent Director by them, whichever is earlier.
 Increased responsibilities of Audit Committee :
•
Approval of related party transactions
• Scrutiny of inter-corporate loans and investments
•
Valuation of undertakings or assets of the company, wherever it is necessary
• Evaluation of internal financial controls (IFC) and risk management systems
• Setting up Vigil Mechanism for directors and employees to report genuine concerns
•
Oversight over the financial statements and governance process of subsidiaries / associates and joint ventures
• Oversee Vigil Mechanism
Additional Requirements - Listing Agreement – In force w.e.f October 01, 2014
 Qualified and independent AC shall be set up with minimum 3 Directors as members and 2/3 rd of the members of audit committee shall be ID.
 All members of AC shall be financially literate and at least one member shall have accounting or related financial management expertise.

The Audit Committee should meet at least 4 times in a year and not more than four months shall elapse between two meetings
 The Chairman of the Audit Committee shall be an ID and shall be present at AGM to answer shareholder queries;
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Additional requirements – Companies Act, 2013
 Transitional period of 1 year has been provided for constitution of NRC from the commencement of these rules or appointment of ID, whichever is earlier.
 Chairperson of the Company may be appointed as a member but cannot be Chairperson.
 The committee to formulate the criteria for determining qualifications, positive attributes and independence of a director and recommend to the board a policy, relating to the remuneration for the directors, key managerial personnel and other employees.
 To identify persons who may be appointed in Senior Management..

To carry out evaluation of every director’s performance and recommend to the board his/her appointment and removal based on the performance.
 Disclosure of NRC in the Board’s Report
Additional Requirements - Listing Agreement – In force w.e.f. October 01, 2014
 NRC shall comprise at least 3 directors, all of whom shall be NEDs and at least 50% shall be IDs

The Chairman of the Committee shall be an independent director.
 The Chairman of the Committee shall be present at Annual General Meeting to answer shareholder queries. However, it would be up to the Chairman to decide who should answer the queries.
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Companies Act, 2013
 Chairperson shall be a non-executive director and such other members as may be decided by the Board.

The role of the committee is to consider and resolve the grievances of security holders of the company
Listing Agreement – In force w.e.f October 01, 2014
 Company to constitute a Stakeholders Relationship committee, in which Chairperson shall be a non-executive director and such other members as may be decided by the Board.
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1
• Composition - At least 3 directors, out of which at least 1 shall be ID
2
• Committee shall formulate and recommend to the Board, CSR Policy and also monitor the same from time to time.
3
• Committee shall recommend the amount of expenditure to be incurred on CSR activities.
4
• Committee shall institute a transparent monitoring mechanism for implementation of the CSR projects or programs or activities undertaken by the company.
5
• Board Report shall disclose the composition of CSR Committee.
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Considering the Companies Act, 2013, Companies (Meetings of Board and its powers) Rules, 2014,
Secretarial Standard – 1* and relevant clauses of Listing Agreement, following are the compliance requirements for convening the Meetings of the Board of Director’s
• At least 4 meetings of Board every year in such a manner that not more than 120 days shall intervene between 2 consecutive Board meetings
Time
Notice
• Not less than 7 days notice in writing to every director at his address registered with the company and such notice shall be sent by hand delivery or by post or by electronic means.
Shorter
Notice
• Board Meeting may be called at shorter notice subject to that at least one independent director ("ID"), shall present at the meeting.
Shorter
Notice
• In case of absence of ID, decisions taken shall be circulated to all the directors and shall be final only on ratification thereof by at least one ID, if any.
*Agenda
• Agenda, setting out the business to be transacted at the meeting, and notes on Agenda should be given at least 7 days before the meeting.
Quorum
• 1/3rd of the total strength or 2 directors whichever is higher.
(Participation through VC or any other audio visual mode shall be counted for the purpose of quorum)
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*Section 118 of the Act, provide that the Companies shall observe the SS
– 1 & 2, however the final SS are not yet approved by the CG, our review is based upon the SS existing as on date, which might undergo change upon issuance of final SS by CG.
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Applicable provisions Board Meeting through Video Conferencing or other Audio Visual means
VC/AV
C
• Make necessary arrangements to avoid failure of video or audio visual connection
Notice
• Notice of the meeting shall inform the directors regarding the participation option available to them i.e. video conferencing mode or other audio visual means.
(E mode)
E mode
• Director intending to participate through E - mode shall give prior intimation to the Chairperson or the company secretary of the company
E mode
• Director, who desire, to participate through E mode may intimate his intention through the electronic mode at the beginning of the calendar year and such declaration shall be valid for 1 calendar year
E mode
• In the absence of any intimation, it shall be assumed that the director shall attend the meeting in person.
Place
•
Scheduled venue of the meeting as set forth in the notice convening the meeting, which shall be in India, shall be deemed to be the place of the meeting
Register
• Registers shall be deemed to have been signed by the Directors participating through electronic mode, if they have given their consent to this effect and it is so recorded in the minutes of the meeting
Identity
• Every participant shall identify himself for the record before speaking on any item of business on the agenda
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1
Don’ts of VCC or AVs means
• approval of the annual financial statements
2
• approval of the Board’s report
3
• approval of the prospectus
4
• Audit Committee Meetings for consideration of accounts
5
• approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover
Specific provisions w.r.t the Minutes of the Board Meeting held through VC or other audio visual mode:
• Minutes shall disclose the particulars of the directors who attended the meeting through video conferencing or other audio visual means.
• Draft minutes of the meeting shall be circulated among all the directors within 15 days of the meeting either in writing or in electronic mode as may be decided by the Board.
• Every director who attended the meeting shall confirm or give his comments in writing within 7 days or some reasonable time as decided by the Board failing which his approval shall be presumed.
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Take due care to safeguard the integrity of the meeting by ensuring sufficient security and identification procedures
Ensure availability of proper video conferencing or other audio visual equipment
Record proceedings and prepare the minutes of the meeting
Store for safekeeping and marking the tape recording(s) as part of the Secretarial records at least before the time of completion of audit of that particular year
Ensure that no un authorized person will attend the meeting
Ensure that participants attending through E mode are able to hear and see the other participants
At the commencement of the meeting, a roll call shall be taken by the Chairperson
After the roll call, the
Chairperson/Company
Secretary shall inform the
Board about the names of persons other than directors present in Board meeting
Chairperson shall ensure that the required quorum is present throughout the meeting.
In case any statement is interrupted or garbled, the
Chairperson/Company
Secretary shall request for repeat or reiteration by the
Director
At the end of discussion on each agenda item, the
Chairperson shall announce the summary of the decision taken on such item
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Every company shall cause minutes of the proceedings of every general meeting , and every resolution passed by postal ballot and every meeting of its Board of Directors or of every committee of the Board.
1
• Distinct Minute book shall be maintained for each type of meeting namely Board, Committees, shareholders, creditors.
2
• Resolution passed by Postal Ballot shall be recorded in the Minutes book as if they are passed in GM.
3
4
•
Minutes are required to be kept within 30 days of the conclusion of every such meeting in the books kept for that purpose with their pages consecutively numbered along with the date of such entry.
• Brief Report on Postal Ballot shall be entered in the minutes book along with the date of such entry within 30 days from the date of passing of resolution.
5
• Signing of Minutes – Board or Committee Minutes (Chairman of the said meeting or Chairman of the next succeeding Meeting)
6
7
8
• Signing of Minutes – General Meeting (chairman of the same meeting within the aforesaid period of 30 days or in the event of the death or inability of Chairman, any director authorized by the Board)
• General Meeting minutes book shall be kept at the Registered office, preserved permanently and kept in the custody of the
Company Secretary or any other director authorized by Board.
• Board Meeting minutes book shall be kept at the Registered office or any other place as Board may decide , preserved permanently and kept in the custody of the Company Secretary or any other director authorized by Board.
9
• In case of Board or Committee Meeting – Names of Director’s present and name of the dissenting director shall be mentioned.
10
•Every company shall observe Secretarial Standards for Board and Shareholders Meeting as approved by CG
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Provisions
Reconstitution and additional responsibilities of
Audit Committees
What it means for the Boards and the Management
• The boards would now have to approve a charter for Audit Committees.
• The roles and responsibilities of the Audit Committee has been extended beyond what these were in the old Act and in Clause 49.
• Boards of public companies may have to reconstitute the Audit Committees ensuring that majority of the committee members, including its Chairperson, are financially literate.
• There is a stronger emphasis than before of the role of the Audit Committee on internal financial controls and risk management. This will make the task of the Audit Committee more onerous.
Effect
Timeshare of
Boards respective
Committee on or
Significant increase in Audit
Committee’s time
Performance evaluation of directors and board committees
• Nomination and Remuneration Committee will now have to develop criteria to assess the performance of each individual director on the board.
• Boards led by their Chairperson, will have to develop an assessment criteria to evaluate each Independent Directors performance.
• As Audit Committee is required to have a majority of Independent Directors, it may be helpful to assess the performance of the Audit Committee and other board committees, in addition to that of its executive and Independent
Director members.
Substantial increase in the
Nomination and
Remuneration
Committee’s time
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Provisions What it means for the Boards and the Management
Mandatory constitution of board committees
• The three other new committees have been formed. Some of the committees were a part of Clause 49. But for the first time these committees form a part of the statute book
• Many companies having separate board committees for remuneration and nomination will have to reconstitute a single Nomination and Remuneration
Committee with Independent Directors forming a majority.
Effect
Timeshare of
Boards respective
Committee on or
Considerable increase in the board’s time
Additional disclosures on remuneration
• Companies need to understand implications of making remuneration policies for directors, Key Management Personnel and other employees available publicly
Considerable increase in the
Nomination and
Remuneration
Committee’s time
©2014 Deloitte Touché Tohmatsu India Private Limited
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Is the Audit Committee adequately constituted for it to undertake the statutory responsibilities?
Does the Audit Committee have an annual calendar of activities, covering meetings and typical agenda points to cover?
Does the full Audit Committee formally participate in the process to set the policies for internal financial controls, risk management and compliance before recommending to the board?
Does the company have clearly written and articulated policies and processes for assessing and managing major financial risks?
Are the committee members aware of the implications of the public disclosure?
Does the CSR Committee have the expertise to evaluate and monitor the working of the CSR activities?
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How will the Nomination and Remuneration Committee evaluate performance of each director?
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Companies Act, 2013
 Every listed company and Companies which accept deposit from public or have borrowed money from banks and public financial institutions in excess of INR 50 crore shall establish a vigil mechanism for directors and employees to report their genuine concerns or grievances.

Audit committee shall oversee the vigil mechanism (Conflicted member on specified matter shall be recused and rest of the members shall take the decisions).
 In case of other companies, the Board of directors shall nominate a director to play the role of audit committee for the purpose of vigil mechanism to whom other directors and employees may report their concerns.
 Role - Provide for adequate safeguards against victimization of employees and directors, direct access to the Chairperson of the
Audit Committee, in exceptional cases and suitable action in case of repeated frivolous complaints being filed by a director or an employee.
 Disclosure
– On the website and in the Board’s Report
Listing Agreement – In force w.e.f October 01, 2014

Whistle Blower policy - Company shall establish a vigil mechanism for directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of the company’s code of conduct or ethics policy.

Audit Committee shall review the functioning of the vigil mechanism.
 Role - Provide for adequate safeguards against victimization of employees and directors, direct access to the Chairperson of the
Audit Committee, in exceptional cases.

Disclosure
– On the website and in the Board’s Report regarding the mechanism and a affirmation that no personnel has been denied access to the audit committee
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Section
No
7
Particulars
Incorporation of
Company
Responsibility
Ensure true and correct information is submitted and no material information is suppressed at the time of incorporation of company
Penalty on non-compliance a) Imprisonment - six months to ten years and b) Fine – 100% to 300% of the amount involved in the fraud
Persons liable
First directors, promoters, persons connected with incorporation
42 Contravention of provisions of private placement
Ensure compliance with the provisions relating to offer or acceptance of monies under private placement
Amount involved in the offer or invitation or two crore rupees, whichever is higher.
Company, its promoters and directors
100 Conduct of extraordinary general meeting
Ensure extraordinary general meeting is conducted as per the provisions on the request of the members
Reimbursement of reasonable expenses incurred in calling the meeting to the requisitionists
102 Statement to be annexed to notice of general meeting.
Ensure appropriate disclosure in the statement annexed to notice of annual general meeting. In case any benefit accrues on account of nondisclosure or insufficient disclosure, compensate the company to the extent of benefit received
Fine - fifty thousand rupees or five times the amount of benefit derived whichever is more
Directors who were in default in calling the meeting
Promoter, director, manager or other key managerial personnel
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Section
No
127
Particulars
Distribution dividends
Responsibility Penalty on non-compliance Persons liable of Ensure dividend/warrant in respect thereof is paid within 30 days from the date of declaration
Company
– interest @18% per annum for the period of default
Director: Imprisonment upto two years; or
Fine – upto one thousand per rupees per day of default; or with both imprisonment and fine
Company, every director of the company if he is knowingly a party to default
128
129
Books of accounts Ensure the books of accounts and other relevant books, papers and financial statement, for every financial year for the company has been prepared and kept at its registered office
Imprisonment - upto one year; or
Fine - fifty thousand rupees to five lakh rupees; or with imprisonment and fine both
MD, the WTD in charge of finance, the CFO or any other responsible person
Financial statement
Ensure provisions relating to preparation of financial statement has been complied with
Imprisonment - upto one year; or
Fine - fifty thousand rupees to five lakh rupees; or with both imprisonment and fine
MD, the WTD in charge of finance, the CFO or such other responsible person
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Section
No
Particulars
137 Copies of financials statements to be filed with the registrar
Responsibility Penalty on non-compliance Persons liable
Ensure financial statements along with the relevant attachments has been filed with the registrar within the time specified under section 403
Company - fine of one thousand rupees for every day of default but not exceeding ten lakh rupees
Persons: Imprisonment - upto six months; or
Fine - one lakh rupees to five lakh rupees; or with both imprisonment and fine
Company, MD and
CFO, if any and if not, then any director responsible and in the absence of any such director, all such directors
152, 155
& 156
Appointment of directors
Ensure compliance with the provisions relating to appointment, retirement and furnishing of director identification number to the company etc
Imprisonment - upto six months; or
Fine – upto fifty thousand rupees and fine of five hundred rupees for every day of continuing default
Any individual or director
165 Number of directorships
Ensure compliance with provisions relating to number of directorship in a company (max - 20, subject to directorship in the public company, including a company which is a subsidiary of a public company, shall not exceed 10)
Fine - five thousand rupees to twenty-five thousand rupees for every day of continuing default
Any person proposed to be appointed as director
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Section
No
Particulars Responsibility
166 Duties of directors Act in accordance with the articles of association and according to provisions mentioned in section 166
Penalty on non-compliance
Fine - one lakh rupees to five lakh rupees
Persons liable
Director
167 Vacation of office of the director
Vacate the office of director on account of disqualification as specified in subsection (1) section
167
Imprisonment - upto one year or
Fine - one lakh rupees to five lakh rupees, or with both imprisonment and fine
Director
184 Disclosure of director's interest
Make appropriate disclosure of director's interest in other companies, firms, association of persons etc.
Imprisonment – upto one year; or
Fine - fifty thousand rupees to one lakh rupees; or with both imprisonment and fine
Director
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Section
No
Particulars Responsibility
185 Loans to directors Ensure compliance with section
185(1) relating to advancement of loan to director or providing guarantee/security to director
Penalty on non-compliance Persons liable
Company - Fine - five lakh rupees to twenty-five lakh rupees
Director - imprisonment upto six months; or
Fine - five lakh rupees to twentyfive lakh rupees; or with both imprisonment and fine
Company and director
189 Register of contracts in which directors are interested
Ensure maintenance of register of contracts and arrangements entered into with the interested directors and related parties
Fine - twenty-five thousand rupees
Director
191 Payment to director for loss of office
Ensure compliance with provisions relating to payment to directors for loss of office in connection with the transfer of undertaking, property or shares
Fine -twenty-five thousand rupees to one lakh rupees
Director
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Section
No
Particulars
194 Forward dealing in securities by KMP
Responsibility Penalty on non-compliance Persons liable
Not to engage in forward dealings in the securities of the company or in its holding, subsidiary or associate company
Imprisonment – upto two years; or
Fine - one lakh rupees to five lakh rupees; or with both fine and imprisonment
Director or KMP
203
238 Dissenting share holders in a scheme of merger
243
Appointment of
KMP
Oppression and mismanagement
Ensure compliance with provisions of section 203 for appointment of whole-time KMP
Company - one lakh rupees to five lakh rupees and
Director - fine upto fifty thousand rupees and one thousand rupees for every day of continuing default
Company, every director and every KMP, who is in default
Register the circular/scheme for acquisition of shares from dissenting shareholders in a scheme of merger
Fine - twenty-five thousand rupees to five lakh rupees.
Not to act as MD, director or manager of the company for a period of five years if the contract between the company and such managing director, director or manager, as the case may be, has been terminated or set aside
Imprisonment – up to six months; or
Fine - may extend to five lakh rupees; or with both fine and imprisonment
Director in default
Any person who knowingly acts as a MD or other director or manager of a company
& every other director of the company who is knowingly a party
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