COMPANY LAW QUESTIONNAIRE.doc

COMPANY LAW QUESTIONNAIRE

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PART - 1

INTRODUCTION

The companies Act lays down detailed provision regarding various matters and casts an obligation upon directors and officers of the company to carry the requirement of law. It is the duty of the directors and management to ensure that various provisions have been complied with. However where non-compliance has a bearing upon the accounts and transaction of the company, the auditor may have an obligation to bring it to the notice of the shareholders. These sections are given in the italics in the questionnaire.The questionnaire proper is in three parts. Part 2 must be filled in first in the case of private companies to decide whether the company is private or public. Part 3 is to be filled by the Secretary of the company. The replies should be got on a separate page and be signed by him or, if there is no Secretary, by the Chief Executive of the company. We should verify this to the extent possible from the various statutory registers maintained under the relevant sections of the Companies Act.

Part 4 of the questionnaire is the main section. The replies must be given by the staff member concerned by putting his initials against each question thereof in one of the three columns Yes, No or Not Applicable (N.A.)

Staff must be careful in answering questions as some of them are negatively worded and they must be answered accordingly. Any question answered with a No will indicate a prima facie irregularity. It is possible, however, that the company will be exempted under some other provision of the concerned section of the Act. If this is so, the relevant sub-section should be stated alongside with the words exempted.

Certain of the questions can only be answered at the final stage of the audit, when the draft accounts, the draft Board Report and the draft notice to the Annual General Meeting are available. These have been marked with an @sign. Questions, which need not be answered by private companies (qualifying as such under part 2 of this questionnaire), are marked with an asterisk -*.

PART 2

(Section 3)

(to be filled in only in the case of private companies)

S.NoDescriptionYesNoN.A.

1If the company is a Private Company:Does its articles of association: a) restrict the right to transfer its shares; b) limit the no. of members to 200 excluding employees and ex-employees; c) prohibit any invitation to the public to subscribe for any of its shares/debentures; d) prohibit any invitation or acceptance of deposits from persons other than members , directors or relatives? (Take a copy of latest MOA and put in Permanent file)

1.1Has it complied with the provisions of its Articles restricting share transfers?

1.2Is thetotal number of members less than 200 excluding employees and ex-employees ?(Joint holders to be counted as one) State the actual no. of members.------

1.3c.Has it avoided inviting the public to subscribe to its shares?

1.4Have you ensured that either under unsecured loans or under current liabilities there are no deposits or loans from other than members, directors or their relatives? Refer to the schedule detailing these persons and amounts of loans.----

2Has it ensured that the total of shares held in it by a Public company, does not exceed 50% of the paid-up share capital? Also it is not a subsidiary of a Public company in which case, it becomes a Public company itself

Note:If the answer to any of the above questions is no, the company will be a public company. If none of the answers is no the company will be a private company and all the questions in parts 3 and 4 of this questionnaire marked with an asterisk will not apply to it and need not be answered.

S.NoDescriptionYesNoN.A.

3In the case of a Private Company:

WEF 13.12.2002, is the Minimum paid up capital Rs 1 lakh?

PART 3

ASSOCIATE PARTIES & DEFINITIONS

(Sections 2, 4, 108, 294AA, 297, 299, 295 and 303)

S.NoDescriptionCross ref. of details or Mark N.A.

1Holding Companies:

1.1 Give the name of this companys holding company.

1.2 Give the names of the holding company of the immediate holding company and the further holding companies of the former.

2Subsidiary Companies

2.1 Give the names of the subsidiary companies of this company.

2.2 Give the names of the subsidiaries of the immediate subsidiaries.

3Give the names of all direct and indirect subsidiaries of the companies included in 1.1 and 1.2 above.

4Give the names of all individuals, firms, groups, bodies corporate and any other entity who jointly or severally held 25% or more of the paid-up share capital with an intention to act in concert.

5Give the names of all bodies corporate that held 10% or more of the subscribed equity share capital.

6Give the names of all directors of this company at the year-end and at any time during the year.

7Give the names of all relatives of such directors (as listed in Schedule 1A and read with section 6(c). If no such declaration, given by any director/directors keep note of it.

8Give the names of all firms in which the directors are partners.

9Give the names of the firms in which the directors relatives are partners.

10Give the names of all private companies in which any director is (a) member or (b) director.

11Give the names of all partners of firms listed in 10 and 11 above.

12Give the names of all companies whose directors jointly hold 2% or more of the paid-up share capital of this company.

13Give the names of all companies in which the directors of this company hold jointly 2% or more of the paid-up share capital.

14Give the names of all firms whose partners and their relatives jointly hold shares -

15a. Either worth Rs.5 lakhs or more or

b. Hold 5% or more of the paid-up share capital of this company.

16Give the names of all bodies corporate which together with their directors and their relative jointly hold shares -

a. either worth Rs.5 lakhs or more

b. holds 5% or more of the paid-up share capital

17Give the names of all bodies corporate in which the directors of the company are jointly capable of exercising 25% or more voting power.

18Give the names or all bodies corporate whose

19a. Managing Director

b. Manager or

c. Board of Directors is accustomed to act in accordance with the directions of any director or directors of this company.

20Give the names of all individuals who are accustomed to act in accordance with the directions of the Board of Directors of this Company.

21Give details of number of shares held by

22i) Central or State Government

ii) any Government Company

iii) any nationalized bank

iv) any Financial Institution

v) any nominee of the foregoing

PART 4

QUESTIONNAIRE

Index

1. Investments

2. Debtors

3. Advances Given

4. Loans Given

5. Share Capital

6. Reserves

7. Loans & Funds Borrowed

8. Creditors & Provisions

9. Contingent Liabilities

10. Contributions & Donations

11. Sale Purchasing or Buying Agents

12. Sole Selling Agents

13. Auditors

14. Remuneration to others

15. Depreciation

16. Directors Remuneration

17. Dividends

18. Accounts

19. Memorandum & Articles

20. Directors

21. Contract with Directors

22. Meetings

23. Miscellaneous

24. Postal ballot

25. Levy for Cess towards rehabilitation and revival fund26. Sick Industrial Company

27. Special ResolutionsYesNo.N.A.

1Investments (Sections 49, 77, 293(1(c), 292, 372A, 373, Sec 227(1A)(c).

Note :

The questions should be answered if the company-

(a) had any investments outstanding at the beginning of the year, or

(b) purchased any investments during the year and disposed them of before the year-end or

(c) Purchased any investments during the year and did not dispose them of before the year.

1.0Have all investments been approved at a Meeting of the Board? Ensure Short term deposits with banks are also considered as investments for the purpose of this section. (Pl see Query 30 Vol XXII of Compendium of Opinions-page 191)

1.1Do the investments exclude any share of the company itself or of any company listed in item 1 of Part 3?Sec77

1.2Are all investments of the company registered in its own name and a register of such holdings is maintained? Where in pursuance of sub-sec (2), (3), (4) or (5) of Sec 49, investments made by the company are not held by it in its own name, has the company maintained the following details: (a) Details of nature, value & such other particulars of the investment in the register maintained for this purpose

(b) Bank or person in whose name or custody the securities are held.

1.3

Whether investment made, otherwise than in trust securities, of the amount of compensation received for compulsory acquisition of the whole or substantially whole of an undertaking or any premises/properties used by such undertaking (without which it cannot be carried on)has been approved by members? Sec 293 (1) ( c ) *

1.4Whether the power to invest the funds has been delegated (by way of board resolution) to any committee of directors, managing director or any other principal officer of the company? If yes, whether the resolution delegating the power specifies the total amount upto which funds may be invested, and the nature of investment which may be made, by the delegate.

@ *1.5

Check if loans/guarantee/security /investment made by a banking company, insurance company, housing finance company or a company established with the object of financing industrial enterprises or a company whose principal business is the acquisition of shares, stock, debentures etc. or a private limited company or a loan/guarantee/security/investment by a holding company to its existing wholly owned subsidiary. *

@ *1.6

Work out aggregate of a) loans to other bodies corporate b) guarantees given, security provided c) investments in securities of other bodies corporate excluding what is mentioned above and exclude any investments made u/s 81(1) in rights shares. Check the percentage of this to i) the Companys paid share capital and free reserves (include securities premium but exclude share application) and free reserves ii) free reserves. If the aggregate of loans etc. exceeds the higher of 60% of i) or 100% of ii) then check if a prior special resolution has been obtained from members and the prior approval of public financial institutions where any term loans are subsisting for such excess.

In case of loan, guarantee, security has the resolution been passed by postal ballot?

% of loans etc. to PUSC+free reserves:

% of loans etc. to Free reserves:

Members meeting/postal ballot date:

Approval of FI letters dates: *

1.7If Board has given guarantee, without being previously authorized by a special resolution, has a) a resolution been passed in Board meeting authorizing to give the guarantee; b) there existed exceptional circumstances which prevented the company from obtaining authorization by a special resolution passed in general meeting; c) the board resolution is confirmed within 12 months in general meeting of the company or AGM held immediately after passing of Board resolution, whichever is earlier.

@ *1.8If within the limits specified above, has the Board approved the same in a meeting with the consent of all directors present at the meeting.

In case of any default in payment of interest or principal on terms loans taken from FI, then has approval of FI been taken?

Dates of Board meeting:

Dates of FI letters if term loan interest/Principal in arrears:*

1.9Is the minimum rate of interest charged for any loans which are not exempt more than the prevailing bank rate? ( see 1.4)

Bank rate when loan given and minimum

Interest rate charged to be documented. *

(Prevailing bank rate 6% upto Feb 12, 2012 & 9.5% w.e.f. Feb 13, 2012 prospectively for all loans given/renewed after Feb 12, 2012)

1.10If the Company has defaulted with provisions of Sec 58A then has it been ensured that it has not given any loans, given any guarantee or provided security or made any investment when the default is subsisting? *

1.11Is a register kept as required u/s 372A (5) for all investments, loans, guarantee and security?*

1.12Where any investments have been sold or disposed of, has there been a profit on the same?

1.13Where company is not an investment or a banking company, the shares, debentures and other securities have been sold at price not less than that at which they were purchased by the company?

Sec227(1A) (c)

2Debtors [Section 293 (1)(b)]:

*Have all debts due by any director been settled within the normal credit period of the company. (Else members approval required for remitting or giving time for payment)*

3Advances & Deposits Given [Sections 293(1)(b) and 227(1A)(a) and (d)]

3.1Have all advances paid to directors been cleared within a reasonable time? (Else members approval required for giving time for payment)

Sec 293(1) (b)*

3.2If any items are shown as deposits, do these totally exclude any items which could be classified as loans or as advances? Sec 227(1A) (d)

3.3In case the advances are secured are the securities adequate and are they in the legal custody or lien of the company?

Sec 227 (1A) (a)

3.4Are the terms and conditions of the secured advances in the interests of the company? Sec 227(1A) (a)

4Loans Given [Sections 77,227(1A)(a), 292, 295, 296, 185(2013) ]

The questions should be answered if the company has

a.Given loans in earlier years which were outstanding at the beginning of this year, or

b.Given loans during the year which were repaid during the year itself, or

c.Given loans during the year which were outstanding at the year-end?

4.1

Have all loans given been approved at Board Meetings before they were made? Sec 292

4.2Where the power to grant loans is delegated to a committee of directors, managing director, manager or any other principal officer, does the board resolution delegating the power, specify the amount ceiling and purpose of the loan? Sec.292(4)

4.3In case the loans are secured, are the securities adequate and are they in the legal custody or lien of the company?

Sec 227(1A) (a)

4.4Are the terms and conditions of the loans are in the interests of the company? Sec 227(1A) (a)

*4.5Has the company observed the restriction which forbids loans to any parties included in items 1, 8, 9, 10, 11, 12, 25, 26 and 27 of part 3? CG approval would be required for such loans. S 295 *

@ *4.6Regarding total limits of intercorporate loans plus investments see under Investments Item 1 Part IV

4.7Has the company ensured that loans are not made for acquisition of its own shares either to its own members or to the members of any companies listed in item 1 of part 3? Sec 77 *

4.8Has the company ensured that the loan made in pursuance of Sec77(2)(c) to persons bonafide in the employment of the company to subscribe fully paid shares to be held by way of beneficial ownership, does not exceed in amount his salary or wages at that time for a period of six months Sec 77(3)

4.9Has the company given loan (including any loan represented by a book debt) or issued guarantee to any director or his interested parties*? If yes, has it been given in the normal course of business, employment terms or pursuant to any scheme approved by the members by a special resolution and the interest charged at a rate not less than the bank rate declared by RBI?

Sec 185 (2013)

* - Interested parties are Directors

Directors of holding company

Their partners or relatives

Any firm in which such director or relative is a partner

Any private company in which any such director is a director or member

Any body corporate wherein 25% voting right is controlled by director(s) Any body corporate, the Board of Directors, MD or Manager accustomed to act in accordance with the directions/instructions of the Board/any director of the Lending Company

5Share Capital (Sections 69 to 81, 91, 92, 94 to 97, 100, to 103, 108A to H, 149 (1A)(f), 274 (1)(c), 292, 372, 373,619(B),69(2013) & 70(2013): (In the case of Listed companies or companies proposing to list, check SEBI regulations)

*5.1Where any fresh shares have been allotted have the various provisions enshrined in Sections 69 to 75 been complied with?

*5.2Is the fresh issue first offered to existing members? Sec 81.S 81(3)(a) Not applicable to Private companies *

5.3If shares have been allotted for cash, has cash actually been received? S 227(1A)

5.4Have the calls on shares been authorised by a resolution of the Board of Directors? Sec 292

5.5Have the calls been made uniformly on all shares of any one class?

5.6If any preference shares have been redeemed have the provisions of section 80 been complied with? (either out of a fresh issue of shares or a Capital redemption reserve is created)

5.7In case of increase in the authorised capital have the provisions of sections 94 to 97 been complied with?

For altering its share capital have the provisions of Sec 94 been complied with by means of passing members resolution?

5.8In case of reduction of share capital have the provisions of sections 100 to 103 been complied with?(now confirmation of Tribunal required)

5.9Where any commission has been paid to any person in connection with the issue of shares, have the provisions of section 76 been complied with?

5.10Where shares are issued at a discount have the provisions of section 79 been complied with?(resolution by company in general meeting and confirmation by Central Govt)

5.11Have directors paid any calls on share held by them within the time stipulated? If yes, disclose as required by Sch VI.

*5.12Have all the conditions specified in section 149 (1) and (2) (read with section 69) been complied with before any business is commenced by a new Public company?

5.13In the case of Public company, w e f 13/12/02 is the Paid up capital at least Rs 5 lakhs? Sec 3(1)(iv)(b)

5.14BUY BACK: Has any buy back of shares been made out of a) free reserves (if yes, has capital redemption reserve been created per S 69(2013)) or b) securities premium a/c or c) proceeds of any shares or specified securities (other than an earlier issue of same kind) S 77A

5.15Has any buy back of shares been approved by articles of association?

Has the offer of buy back been made after 365 days from the date of preceding offer of buy back?

Has the buy back been not more than 25% of the total paid up capital and free reserves of the Company?

Has the buy back in any one financial year been not more than 25% of the total paid up capital in that financial year?

Is the ratio of debt owed (both secured and unsecured) by company not more than twice the capital and free reserves after such buy back (unless a higher ratio has been prescribed by CG in certain classes of companies)

Are all shares for buy back fully paid up?

Is the buy back as per SEBI GL in case of listed companies?

Is the buy back as per any other guidelines as have been prescribed? S 77A (2)

5.165.16 Has any buy back of shares more than 10% (but less than 25%) of total paid up capital and free reserves of the Company been approved by a special resolution of members?

If the buy back is or less than 10% of total paid up capital and free reserves has it been authorized by the Board in a meeting? S 292

5.17Has the buy back been completed within 12 months from the date of passing special resolution or Board resolution?

5.18Has company filed a declaration of solvency as required under S 77A (6) with ROC and SEBI (for listed Cos) before making buy back?

5.19Have the shares bought back been extinguished /physically destroyed within seven days of the last date of completion of buy back?

5.20Confirm that company has not issued any shares of same kind (incl right shares) within 6 months except by way of bonus issue or discharge of subsisting obligations like conversion of warrants, stock option schemes, sweat equity or conversion of preference shares or debentures into equity?

5.21Does company maintain a register as prescribed in S 77A (9) for buy back shares?

5.22 Has company filed a return within 30 days of completion of buy back with ROC (and SEBI (for listed cos))

5.23 Have the provisions of S 79A been complied with for issue of Sweat equity shares?

5.245.25

5.26 Are issues of equity shares with differential voting rights in accordance with Companies (issue of share capital with differential voting rights) rules 2001? S 86Are preferential allotment of shares in the case of unlisted public companies authorized by articles of association and a special resolution passed by members in a general meeting authorizing the Board of Directors to make such issue?

Are preferential allotment of shares in the case of unlisted public companies completed within a period of 12 months from the date of special resolution and 60 days of receipt of share application money? If not, has the application money been repaid within 15 days thereafter, failing which has it been repaid with simple interest accrued @ 12% p.a? If not repaid, has this interest been accrued? Also check no deduction under income tax act claimed.

5.27Check no shares of holding company are held by subsidiary company except where it holds such shares as a representative or trustee or acquired before becoming subsidiary. (Sec 19(2013))

5.28Check no default made by the Company in repayment of deposits accepted, interest payment thereon, redemption of debentures or preference shares or payment of dividend to any shareholder, or repayment of any term loan or interest payable thereon to any FI/bank.

Note: Buy-back is not prohibited, if the default is remedied and a period of 3 years lapsed after such default ceased to exist. (Sec 70(2013))

6Reserves (Sections 78, 205 and 205A)

@6.1Has the securities premium account been utilised only for the objects specified in section 78?

@6.2Has the transfer to reserves from the Profit & Loss Account been in accordance with the companies (Transfer of Profit to Reserves) Rules 1975? Sec 205

@6.3Has the withdrawal from reserves for dividend payment been in accordance with the Companies (Payment of Dividends out of Reserves) Rules 1975?

6.4In case of revaluation of fixed assets has the increase been shown under Revaluation Reserve?

6.5In case of revaluation of assets, is every balance sheet for first years subsequent to the date of revaluation showing the amount of increase made?

7Loans & Funds Borrowed [Sections 58A, 76, 125 to 127, 143, 292, 370 and 371, 293(1(d)] (In case of NBFC see RBI regulations)

7.1If the company has accepted public deposits have the various provisions of section 58A and the Companies Acceptance of Deposit Rules, 1975 been Complied with?

Specifically:

Note that deposits received from a director, relative of a director or member in a private company alone are exempt now; amounts received from directors in public companies are covered by S 58A.

Check if the Net owned funds of the Company is Rs 1 CR or more if it has invited public deposits.

Check if amount raised by the issue of bonds or debentures secured by the mortgage of any fixed assets referred to in Schedule VI of the Act excluding intangible assets of the company does not exceed the market value of such fixed assets (Notification dated 21 March 13)Check if penal interest at 18% has been paid for overdue deposits claimed and not paid (20% in case of small depositors)

Except as aforesaid, interest rate not to exceed 12.5%.

In the case of any default in respect of any small depositor (deposit of Rs 20000 or less) has intimation been given to National Company law Tribunal?

Has no further deposit been accepted unless each small depositor has been fully paid his dues? S 58AAIf the Company has accepted deposits from small shareholders and subsequently obtained loans from bank for working capital, the Company has to repay the interest on deposits or deposits that are matured to the small shareholders first.

7.2Has the Company ensured that it has not given loans to persons holding either its own debentures or the debentures of companies listed in item 1 of Part 3?

7.3If any debentures are issued, has a resolution of the Board of Directors been taken to approve the same? Sec 292

7.4Has a resolution of the Board been taken to approve any other borrowings? Sec 292

7.5Where any of the borrowings are secured by a charge on the companys assets or otherwise, has a notice of the charge been served on the Registrar within 30 days of creation of charge or within extended period of 300 days allowed by the Registrar? (300 days as per General Circular No 13/2007 dated 27.09.2007) Sec 127

7.6Has a register incorporating the prescribed particulars of all charges been kept? Sec 143

7.7

Has a members SPECIAL resolution been taken specifying the total amount that can be borrowed if total borrowed funds exceed aggregate of paid-up capital and free reserves? ( Sec 180(1)(c) & (2)(2013) )

Rs.

Secured Loans

Unsecured Loans

Total

Paid-up Capital

Total Reserves

Less: Non-free reserves

Total

Note: Temporary loans which are repayable on demand or within 6 months, cash credit arrangements, bills discounted and any other short term loans shall be excluded for the purpose of above computation.

7.8 In respect of non convertible portion of debentures, has the Company created a debenture redemption reserve out of its profits every year until such debentures are redeemed? (50% of value of debentures issued through Public issue and 25% for privately placed debentures- for NBFCs no need to create DRR for privately placed debentures- for banks and AIFI no need to create DRR)

7.9Confirm the amount credited to DRR has not been used for any purposes other than for redemption of debentures?

8Creditors & Provisions (Section 205A and 417)

8.1Have all unpaid dividends been deposited into a separate bank account with 37 days of the declaration?Have the amounts of all dividends (including interim dividend) been deposited in a separate bank account within 5 days of declaration of the dividend? Sec 205(1A) and S 205A

8.2Have any amounts of a) dividends b) applications moneys received c) matured deposits d) matured debentures e) interest accrued on matured deposits/debentures remaining unpaid for seven years been paid over to the Investor education and Protection fund? (See annexure -2) Sec 205C

8.3Have all security deposits made by employee been kept in a separate post office savings bank or scheduled bank account- Sec 417

9Contingent Liabilities (Sections 77, 295 and 370):

9.1Has the company observed restriction which forbids guaranteeing any loans made for the purpose of purchase of shares in the Company or its holding company? Sec 77

9.2Has the company ensured that guarantees if any provided are within the limits of S 372A (see under investments)

9.3Has a register been maintained to incorporate details of guarantees given? Sec 372A

10Contributions & Donations (Sections 181-183 (2013)):

10.1Has the Company made any Contribution/Donation during the year?

10.2If the answer to the above is Yes are the total contributions below 5% of the average net profits for the previous three years? If not, whether prior permission of the Company in general meeting taken ((exception in case of National Defence Fund and such other funds approved by CG for national defence)? Sec 181 & 183(2013)

Net ProfitsRs.

Last Year

Last Year 1

Last Year - 2

Total

Average

5% of average profits

10.3Is political contribution made by the company as per the provisions of Section 182 (2013)?

11Sole Selling Agents (Sections 294, 294A and 294AA):

NOTE:

Sole Selling Agents are selling agents who exclusively receive commission for either:-

(a) Sales of certain type of products, or

(b) Sales in certain geographic areas, or

(c) Sales to certain class of customers

11.1Has the appointment of sole selling agents been approved by a members resolution? Sec 294

11.2Is the appointment only for a period upto five years?Sec 294

11.3If the paid-up capital of the company exceed Rs. 50 lakhs has the appointment been approved by (a) a special resolution of the members, and (b) the Central Government? Sec 294AA

11.4Are the Sole Selling agents other than those listed in items 23 or 24 of Part 3? If so, is approval from Central Government taken? Sec 294

11.5Have the provisions of section 294A been complied with when paying compensation for loss of office to a sole selling agent?

11.6Are the products for which sole selling agents appointed other than those declared by the Central Government under section 294AA (1) as not recognizing such agents?

12Sole Purchasing or Buying Agents (Sections 294 and 294AA):

NOTES:

Sole buying agents purchasing agents who exclusively receive commission for either:-

(a)Purchase of certain types of goods, or

(b)Purchase from certain geographic areas, or

(c) Purchase from certain class of suppliers

12.1Are the sole buying agents other than those listed in items 23 or 24 of Part 3? Sec 294

12.2If the paid-up capital of the company exceeds Rs.50 lakhs, has the appointment been approved (a) by a special resolution of the members and (b) by the Central Government? Sec 294

13Auditors (Section 224,224A,198, 225, 233A, 233B)

13.1Has the company taken our consent in writing before proposing our reappointment as auditors last year also stating that the appointment is within the limits specified u/s 224(1B) i.e not exceeding 20 public companies per auditor and of 10 audits for public companies having paid up capital of Rs.25 lakhs or more? Sec 224

13.2Have we been reappointed at the Annual General Meeting? Sec 224

13.3Have we been intimated of our reappointment within 7 days of the Annual General Meeting? Sec 224

13.4Have we intimated the Registrar of our accepting the reappointment within 30 days of the Annual General Meeting? Sec 224

13.5Has the resolution for reappointment either specified the audit fees and expenses or specified the manner in which they shall be fixed? Has the payment of service tax been specifically mentioned? Sec 224

13.6If the shareholding of parties in items 28 of Part 3 is greater than 25% of the subscribed capital, has our reappointment been done by a special resolution? Sec 224A

13.7If the shareholding of parties in item 28 of Part 3 is greater than 51% of the paid-up capital, has our reappointment been done by the C&AG? (The remuneration however shall be fixed by the company in general meeting. S 224(8)(aa) Sec 619(2)

13.8Has the appointment of any branch auditors been made by either the members or the Board as authorized by members in consultation with the companys auditors? Sec 228

13.9If a special audit vide section 233A has been ordered, have we obtained a copy of the report?

13.10If a cost audit has been ordered under section 233B have we obtained a copy of the report?

13.11Are the observations or comments in the audit report which have an adverse effect on the functioning of the Company given in thick type or italics? S 227(3)(e)

13.12Whether the audit report states also that the P&L and BS comply with the accounting standards referred to in S 211? S 227(3)(d)

13.13Whether the audit report states whether any director is disqualified from being appointed as director in terms of S 274(1)(g)? S 227(3)(f) (not applicable to nominee directors)

13.14Whether the audit report states whether the cess payable u/s 441A has been paid and if not, details of the amount of cess not so paid?

13.15Confirm that the auditor is not a) having any dues exceeding Rs 1000 /or given any guarantee or provided security for an amount exceeding Rs 1000 b) holding any security which carries voting rights in the auditee company. S 226(3)

13.16Audit committee: If a Public company has a paid up capital of not less than Rs 5 Cr is there an audit committee of directors? S 292A

13.17Are the following satisfied?

1. Are there not less than 3 directors in AC?

2. Are at least two thirds of members of AC directors other than MD/WTD?

3. Does the AC act as per the terms of reference specified by the Board?

4. Does the annual report of Company disclose the composition of AC?

5. Do the auditors, internal auditor and director finance attend all meetings?

6. Does AC have discussions on internal control systems and scope of audit with the auditors?

7. Does AC review the half yearly and annual financial statements before submission to Board?

8. Where Board does not accept any recommendations of AC are the reasons recorded and communicated to shareholders?

9. Is the Chairman of AC present at AGM to provide any clarification on matters related to audit?

14Remuneration to Others (sections 199, 200, 387 and 388):

@14.1If any employee is paid a commission on net profits is the profits computed as per question 16.1 below? Sec 199

14.2Has the company refrained from bearing any tax which is the liability of its employees or directors? (In case Company has followed the recent tax amendment for payment of taxes, whether a legal opinion obtained regarding compliance with this section?) Sec 200

@ *14.3

If the company has a manager [as defined in section 2(24)] have the provisions of sections 387 and 388 been complied with?

15Depreciation (section 205 and 349):

15.1Has depreciation been provided as per Schedule XIV of the Companies Act, 1956? Has method been disclosed in Notes to Accounts?

Specifically have assets purchased costing Rs 5000 or less per item have been depreciated fully unless such items under Plant and Machinery constitute more than 10% of the actual cost of total plant and machinery?

Where applicable depreciation on extra shift working for plant and machinery has been provided?

Confirm no extra shift depreciation provided in respect of items marked NESD.

Where applicable depreciation related to continuous process plant has been provided at the rate provided? (5.28% SL or 15.33% WDV)

Sec 205/Sch XIV

Has a portion of profits not exceeding 10% been transferred to Reserves when dividend is declared as per Companies (Transfer of Profits to reserves rules), 1975.

Where higher percentage transferred to reserves whether the above rules have been complied with?

15.2If depreciation is lower has approval been obtained for any payment of dividend? In case depreciation is higher, is it based on proper technical evaluation and per As-6?

16Directors Remuneration (Sections 198, 309, 311, 318 to 321, 349, 350 & 202(2013)) :

@ *16.1For the purpose of managerial remuneration have the net profits been recomputed after making the adjustment as per section 349/350?*

@16.2Does the managerial remuneration(excluding sitting fees) include all payments to directors, any expenditure incurred for their benefit (direct or indirect), the approximate cost of all perquisites provided out of assets belonging to the company and all contributions to various funds of which the directors are also beneficiaries?*

@16.3Has the remuneration paid to each director as computed in 16.2 above been within the following maximum limits?*

Description

Remuneration as per (16.2 above) as

percentage of recomputed net

profit (16.1 above)

To any one managing or whole time director

5%

To all managing and

whole time directors

taken together

10%

To all other directors taken

together (if the company

has also a managing or

whole time director)

1%

To all directors taken

together (if the company

has no managing or whole

time director)

3%

To all the directors taken

together

11%

@16.4Is the remuneration paid to Managing Director in accordance with Section 269 and Schedule XIII to the Companies Act, 1956?*

See Annexure-1 for circular on Min remuneration.

Specifically check if:

MDs Age is between 25 and 70

MD is not an NRI

He is not disqualified per Sch XIII

If he is MD in more than one company total remuneration does not exceed the higher maximum limit from any one of the Companies.

Approval of shareholders obtained.

Secretary or Practicing secretary has certified compliance.

@16.5If any minimum remuneration paid to any director, exceeds schedule XIII has the Central Government approved it? *

@16.6Is the remuneration paid sanctioned by either the Articles of Association or any resolution of the members? Sec 309 *

16.7Approval:*

*16.7.1If any remuneration or commission is paid to a director who is not a managing or whole time director, has this been approved by a special resolution of the members..

*16.7.2Has the Central Government approval been taken if it is paid in the course of the year itself?

*16.7.3Has a new special resolution been taken every five years? Sec 309

16.7.4When a MD or WTD gets a commission ensure he does not get any commission or remuneration from any subsidiary. S 309(6)

*16.8Has every increase in the directors remuneration been approved by the Central Government, if the same does not fall within Sch XIII?# Sec 310*

-

In this section, directors remuneration does not include sitting fees provided it does not exceed the limit as stated below (16.9). Directors include managing and whole time director.# - No approval of the Central Government is required for a subsidiary of a listed company on complying with ALL of the following conditions:

a) Have the Remuneration Committee and Board of Directors of the Holding Company given their consent for the amount of remuneration of the director?

b) Has the amount been considered as remuneration paid by the Holding Company for the purpose of section 198 of the Companies Act?

c) Has the remuneration of the director been approved by the Holding Company in its General Meeting?

d) Is all the shareholders of the Subsidiary are Body Corporate?

Note: In case of sick companies, neither Central Govt. approval nor above mentioned procedures need to be adopted, provided the remuneration is fixed by BIFR (Board for Industrial and Financial Reconstruction).Also no approval of Central Govt. is required, if the managerial person is not having any interest in the capital of the Company or its holding company, directly or indirectly or through any other statutory structures (i.e. any entity which is entitled to hold shares in any company formed under any statute) and not having any direct or indirect interest or related to the directors or promoters of the Company or its holding company at any time during last two years before or on the date of appointment and is having a graduate level qualification with expert and specialized knowledge in the field of his profession.

*16.9Are the sitting fees for attending Board Meetings (restricted to a maximum of Rupees twenty thousand per meeting in case of companies with Paid up share capital and free reserves of Rs 10 Cr or turnover of Rs 50 Cr and not exceeding Rs 10000 in other cases ) paid as prescribed under Rule 10B of the Companies (Central Government) General Rules and Forms 1956?* (Notification dated 24 July 03)

16.10If any compensation is paid to any director for loss of office, have the provisions of Sections 318 to 321 been complied with?

16.11Where there is any Board resolution for appointment or reappointment of MD, has form 23 required to be filed u/s 192 been filed with ROC? (also applicable to Private Companies)

16.12Is there any compensation being paid for loss of office to managing or whole time director or manager? If yes, has the payment been made in accordance with the provisions of S.202(2013)?

17Dividends (Sections 93, 205 and 207):

17.1If the previous years dividend has been paid in proportion to the paid-up value of the shares and not equally on all shares and do the Articles authorize this? Sec 93

@17.2After provision for current years dividend payable are the free reserves and surplus adequate to cover the following:

a) any amount un provided liabilities, such as gratuity, claims against the company, tax appeals or disputes, interest due, penalties, etc.

b) any amount un provided on depreciation or amortization

c) Any loss non-moving, slow-moving, damaged or obsolete inventories.

d) d) Any un provided doubtful debts, loans or advances.

e) Any other un provided losses as indicated in the notes, foot-notes, etc. to the Balance Sheet?

@17.3Have the provisions of the Companies (Transfer of Profit to Reserves) Rules 1975 been complied with? Sec 205

17.4Have the provisions of section 80A if applicable complied with before declaring dividend on its equity shares. (redemption of irredeemable preference shares issued before Companies (Amendment Act) 1988) Sec 205

17.5If depreciation is not fully provided for, whether approval of central government has been obtained before declaring dividend. Sec 205

18Accounts [Sections 209, 210, 211 372(10), 212, 227(3)(bb), 215, 217 and 594)]

18.1Does the company maintain books and records to enable it to ascertain all details of its assets, liabilities, income and expenditure readily? Sec 209

18.2Has all expenses and income accounted for an accrual basis?

Sec 209

18.3Are all books kept at the companys Registered Office only? In case if it is kept elsewhere within India, this should be intimated to the Registrar within seven days of the decision.

Sec 209

18.4Where any records are kept at branches, are detailed accounts and return sent to the Registered Office at least quarterly. Sec 209

18.5Have all records for the previous 8 years been maintained? Sec 209

18.6Have the previous years annual accounts been adopted at the Annual General Meeting? Sec 210

@ *18.7

In case the Balance Sheet is in any form other than those prescribed in Schedule VI, has Government approval been taken?Is the rounding off of final accounts as permitted by Company Law? i.e If turnover is Rs 500 Cr or more round off in Crores; if Rs 100 Cr and above but less than Rs 500 Cr, in millions and if Less than Rs 100 Cr in thousands?

Sec 211

18.8In case the company had any subsidiaries (item 2 Part 3) in the previous year, were their annual reports together with a statement attached to this companys annual accounts?

Confirm the subsidiary companys financial year does not end on a day which precedes the holding companys financial year end by more than 6 months.

Sec 212

18.9Where any branches are not audited by us, have we obtained the branch audit reports?

@18.10Have the annual accounts been signed by the Secretary, the Managing Director and any one other director after approval at a Board Meeting? Sec 215

@18.11Has the Board approved the accounts unanimously?

@18.12Has the Board report dealt with:

(a) the state of affairs;

(b) the dividend recommended;

(c) the appropriation of profits;

(d)any significant post balance sheet changes or events;

(e) the conservation of energy, technology absorption, foreign exchange earnings and outgo;

(f) Details of high paid employees; (Rs 5 lakh p.m.) (The details need not be specified in the Annual report and mention can be made that the shareholders will be provided with the details on request.)

(g) Directors responsibility statement (S 217(2AA))

(h) Reasons for failure to complete buy back within the time limit specified in S 77A(4)

18.13If the Company is a foreign company has it filed the accounts of the previous year with the Registrar? Sec 594

18.14 Financial year: a) is the financial year not more than 15 months?

If it is more than 15 months, is it mot more than 18 months and ROC special permission obtained?

Does the BS date precede the date of AGM by a) not more than 9 months in the case of first AGM and b) not more than 6 months (unless time for AGM extended by ROC) in the case of other AGMs?

Has the Annual report been submitted to ROC within 30 days of holding AGM?

Has the Annual Return been filed with ROC within 60 days from the date of holding AGM?

19Memorandum & Articles [Sections 13, 16, 17, 31, 149 (2A)}

19.1Does Memorandum state that the liability of the members is limited? Sec 13

19.2Have all changes in the Memorandum relating to change of regd office from one state to another or with respect to its objects been approved by a special resolution and by the Central Govt?

Is any change in Objects clause of MOA approved only by a resolution passed by Postal Ballot? Sec 17 & 192A Postal Ballot is applicable only in the case of listed companies.

Have the changes in the Memorandum been amended in the copies that are available in the Company?

19.3Changes in Articles: - Have the changes in the Articles been amended in the copies that are available in the Company?

19.3.1Has every change in the Article been approved by a specia

l resolution? In the case of amendment to Articles for deleting or inserting provision related to definition of Private company, has the resolution been passed by Postal ballot? Postal Ballot is applicable only in the case of listed companies.

19.3.2Where a change of articles increases the maximum no. of directors beyond 12, has central government sanction been taken?

-*not applicable to private company

Sec 31/259

Conversion of public into a private company ROCs approval is required and Central Government approval is not required.

*19.3.3Where a company commences any new business, has a special resolution authorising such commencement been taken? Sec 149(2A)

19.3.4Is the business carried on by the company within its objects?

20Directors [Sections 253, 255 to 257, 263, 266A to 266G, 270, 274 260, 313, 284, 275, 267, 268, 310, 311, 269, 317 and 309(2), 194(2013) & 195(2013)]:

Form 29- Has consent to act as directors been given to ROC (in the case of public company) in addition to Form 29?

20.1Whether the company has not appointed or reappointed any individual as director unless he has been allotted a director identification numberunder sec 266B? (Proviso to Sec 253)

20.2Whether the company has, within one week of intimation of DIN by the directors, furnished the same to the registrar or any other authority as specified by the Central Government?

20.3Whether the company, while furnishing any return, information or particulars relating to director or containing any reference to any director, has quoted the Director identification number in such return etc.

*20.4Is atleast two-third of the directors liable to retire by rotation at the annual general meeting? Sec 255 In the case of public company, check the Articles and if it states that all directors retire by rotation, then the provision in the Articles is applicable.

*20.5Have at least one-third of the directors plus any additional directors retired at the last Annual General Meeting? Sec 256

20.6Appointment:

20.6.1Has every director been appointed by a resolution of the shareholders?

20.7If the Articles provide for qualification shares have these been acquired by every director within 2 months of his appointment? . Sec 270

20.8Has any director been disqualified through the operation of section 274 or 267?

20.9Has a Board resolution been passed approving appointment of any additional directors? Sec 260

20.10Alternate Directors:

20.10.1If any alternate directors have been appointed by the Board, is this permitted either by the Articles or by a members resolution?

20.10.2Have alternate directors vacated office on the return of the original directors to the State? Sec 264

*20.11Has any change relating to the appointment, reappointment, terms of service contract, remuneration or any other matter of a managing or whole-time director in conformity with Schedule XIII to the Companies Act, 1956. Sec 269 .

*20.12Is the appointment or reappointment of every managing or whole time director in conformity with Section 269 of the Companies Act, 1956?

*20.13Has the Managing Director been reappointed every five years?

*20.14Has an abstract of the terms of appointment of every managing director or any subsequent variation thereof been circulated to all members vide section 302(2)?

20.15If the Companys paid up capital is Rs 5 cr or more is it having an MD or whole time director or manager as required under S 269?

-not applicable to private company

20.16If any other director is appointed other than retiring director, check the following: - Sec257.

1. Whether notice has been recd. By a company proposing a person to be a director within 14 days from the date of holding the AGM and whether the shareholders are communicated either by post or newspaper advertisements. -

not applicable to private company

20.17Casual vacancy:- Sec262:

Check the Articles. The casual vacancy may be filled by a Board Resolution and check if they hold office only till the date in which the director in whose place they are appointed would have held office.

- not applicable to private company.

20.18Appointment of small shareholder- director.

Small shareholders mean shareholders who hold nominal value of shares not exceeding Rs.20,000

In case of public companies which has a paid-up capital of Rs.5 crores or more and if the total no. of shareholders exceed 1000 small shareholders , check the following:

1. This director is appointed in accordance with Sec 642 read with Sec 252 :

a. Small shareholder director can be appointed only for a period of 3 years and is eligible to be reappointed.

b. This director cannot be a small shareholders director in more than 2 companies.

c. Appointment should be made only by postal ballot in the case of listed companies.

20.19Check whether the director of the company is a director in more than 15 companies as per declaration by the director- Sec275.

While computing the no. of companies in which the director of this company is a director, check under Sec278, list of certain companies that are to be excluded. (unlimited, S 25, Private)

20.20Check no forward dealings have been entered into by any director or key managerial personnel with the Company or its holding, subsidiary or associate Company. (Sec. 194 (2013) )

20.21Check no trading by any director or key managerial personnel of the Company carried out during the availability of non-public price-sensitive information. (Sec 195 (2013) )

21Contracts with Directors (Section 297 to 301 & 314):

21.1Have all contracts or dealing with any party listed against items 8, 9, 10, 11, 12, 13, 14 or 15 of Part 3 been brought to the notice of the Board at the earliest date? Sec 297

21.2Have all contracts or dealings referred to above, other than those with parties listed against items 14 or 15 of Part 3, been approved by a Board resolution? Sec 297

21.3Has every interested director refrained from participating in or voting on any resolution covered by question 21.2 above? Sec 300

21.4In case of companies with a paid-up of capital Rs.1 crore or more, has prior Central Government approval been taken for contracts covered by question 21.2 above? Sec 297 (Applicable to Private Ltd Cos also)

21.5Have all directors made a general disclosure of their interest at the first Board Meeting in each year as per section 299(3)?

21.5.1Have all contracts or arrangements referred to in 21.2 above which tantamount to an office or place of profit in the company, having a remuneration of Rs 10000 or more per month been approved by a special resolution of the members? S 314 (Applicable to Private Ltd cos too) (Even perquisites and taking a place free of rent will tantamount to office or place of profit; check this out)

21.5.2Have such contracts also been approved by the Central Government, if the consideration Involved averages out to Rs. 50,000 p.m. or more? S 314(1B) (Applicable to Private Ltd. Cos too) (WEF Feb 03 increased to Rs 50000 from Rs 20000; wef 6 Apr 11 increased from Rs 50000 to Rs 250,000)-refer to Directors relatives (office or place of profit ) rules, 2003 and amendment rules , 2011

21.6Is there a procedure whereby every party appointed to an office or place of profit declares that it is not connected to a director in any of the ways mentioned in items 8 to 13 of part 3?

21.7Has a register incorporating all details of every contracts or disclosure covered by questions 21.1 and 21.5 above been maintained vide section 301?

21.8Has the Company entered into any non-cash transactions (i.e. consideration other than cash) with any director or his interested parties or its holding/ subsidiary/associate companies ? If yes, prior approval at general meetings of the Company as well as its holding company (where holding company is involved) taken? (Sec. 192 (2013))

22Meetings (Section 165, 166, 193, 285, 103(2013)):

22.1Has a statutory meeting been held within 6 months and after one month from the date of the company was entitled to commence business * Sec 165

@22.2Will the next Annual General Meeting be held within 6 months of the end of the financial year? Sec 166

22.3Has the first annual general meeting been held within 18 months of Incorporation? Sec 166

@22.4Will the Annual General Meeting be held within 15 months of the preceding Annual General Meeting? Sec 166

22.5In the case of private company, as specified in the Articles*. Check for the length of notice of meetings -21 clear days in the case of public company. In case this is less than 21 days,

a. In case of AGM, consent for shorter notice be given by all the members and

b. In case of other meetings, by shareholders holding not less than 95% of the share capital or not less than 95% of the voting power in case of companies not having share capital.

22.6

*Check if there is proper quorum for the meeting- Sec103(2013)*

In the case of Public Company, 5 members personally present if no. of members as on meeting date not exceeding 1000, 15 members if more than 1000 but not exceeding 5000, 30 members if exceeding 5000.

In the case of Private Company, 2 members personally present, shall be the quorum.

22.6.1Has a Board Meeting been held at least in each quarter? Sec 285

22.6.2Have at least 4 Board meetings been held in every calendar year? Sec 285

22.6Have the minutes of all meetings held entered in the members and Boards minutes books? Sec 193

22.7Has every page of the minutes been initialed and the last page signed and dated by the Chairman? Sec 193

22.8Do the Board minutes give the names of all directors present there at? Sec 193

22.9In case of each resolution passed at the meeting the names of directors, if any dissenting from, or not concurring in the resolution is mentioned.

22.10If circular resolution is passed check if: Sec289

The resolution is permitted to be approved by a circular resolution and it is been approved in the next Board Meeting.

The following cannot be passed by way of circular resolution:

1. Sec262, Sec292, Sec297, Sec299, Sec308, Sec316, Sec386, Sec372A.

Minutes to be bound once a year.

23Miscellaneous:

23.1Has the appointment or re-appointment of any firm or body corporate to an office or place of profit in the company been restricted to maximum 5 years? Sec 204

23.2If the company has appointed manager (as defined in Section 2(24), have the provisions of section 384 to 388A and 302(1) been complied with?

23.3Has the company ensured that it does not at the same time have a managing director as well as a manager as above? Sec 197A

23.4If the company has a paid-up capital of Rs. 500 lakhs or more, has it appointed a qualified Secretary?

Sec 383A and Rules

23.5If any assets were acquired together with any charge that existed thereon, has the same been registered? Sec 127

23.6Have the directors always acted within the provisions of the Articles? Check if Articles in any case provides for a special resolution even though the ACT provides for only an ordinary resolution?

23.7Has members resolution been taken for selling, leasing or disposing of a substantial portion of the assets or business? *Has this approval been obtained through a Postal Ballot? Sec 293 (1)(a)

Postal ballot is applicable only in the case of listed companies.

23.8Has approval of the members been taken for any variation in terms of any contracts referred to in any prospectus or statement in lieu of prospectus issued by the company any time in the past?

Sec 61

23.9Registered office: Has any registered office change from one state to another been approved by Special resolution and confirmed by Central Government? Sec 17.

Has any registered office change from one place to another within the state (from the jurisdiction of one ROC to another) been confirmed by Regional Director? S 17A

Has any change of registered office outside the local limits of any city, town or village been approved by Special resolution passed by Postal Ballot? S 146(2) Postal Ballot is applicable only for listed companies.

23.10In case of Companies not required to have a whole time secretary and with paid up capital of Rs 10 lakhs and less than Rs.2 crores has certificate by a secretary in practice been filed with ROC? S 383A

Whether a company secretary is appointed where the paid up capital exceeds 2 crores?

24Postal Ballot- S 192AYesNo.N.A.

Have the following been done only through postal ballot in case of listed companies?

a) alteration in the Object Clause of Memorandum;*

(b) alteration of Articles of Associations in relation to deletion or insertion of provisions defining private company; *

(c) buy-back of own shares by the company under sub-section (1) of section 77A;

(d) issue of shares with differential voting rights as to voting or dividend or other wise under sub-clause (ii) of clause (a) of section 86;

(e) change in place of Registered Office out side local limits of any city, town or village as specified in sub-section (2) of section 146;*

(f) sale of whole or substantially the whole of undertaking of a company as specified under sub-clause (a) of sub-section (1) of section 293;*

(g) giving loans or extending guarantee or providing security in excess of the limit prescribed under sub-section (1) of section 372A;*

(h) election of a director under proviso to sub-section (1) of section 252;

(j) Variation in the rights attached to a class of shares or debentures or other securities as specified under section 106.

25Levy for Cess towards rehabilitation and revival fundYesNo.N.A.

Has the Company paid cess as prescribed by CG (not less than .005% and not more than .1% of turnover or gross receipts whichever is more)?

(Ref no. ----date----; amount Rs -----

26Sick industrial companyYesNo.N.A.

Has the company, if an industrial company(i.e. company with one or more industrial undertakings coming under S 3(aa) of IDR Act, 1951 but not including a SSI undertaking), become a sick industrial company S 2(46AA): i.e.:

a) Is the accumulated loss in any FY equal to or more than 50% of its average net worth during 4 years immediately preceding such FY? or

b) Has it failed to repay its debts within any three consecutive quarters on demand by a creditor or creditors of the Company?

If yes, has the Board of directors made a reference to the National Company law Tribunal and prepared a scheme of revival and rehabilitation and submitted the same to Tribunal? S 424A

(Not applicable to Govt company unless prior approval of central or state government obtained)

Has this reference been made within 180 days of the Board coming to know of the relevant facts giving rise to the reference?

Is the application to Tribunal accompanied by a certificate from an auditor from a panel prescribed by the Tribunal indicating:

a) The reasons of the net worth of such company being 50% or less than 50%? or

b) The default in repayment of debt making such company a sick company, as the case may be. (?!)

27Special Resolutions (S.180(2013))

27.1Has the consent of the members by a special resolution obtained in the case of:

(a) Sell, lease or otherwise dispose of the whole or substantially the whole of the undertaking (exceeding 20% of the net worth or total income during the previous financial year) of the Company?

(b) Investing in trust securities the amount of compensation received by it as a result of any merger or amalgamation?

(c) Remittance or giving time for the repayment of any debt due from a director?

Minimum remuneration Notification No GSR 36(E), dated 16 Jan 02:

Annexure-1

Notwithstanding anything contained in this Part, where in any financial year during the currency of tenure of the managerial person, a company has no profits or its profits are inadequate, it may pay remuneration to a managerial person by way of salary, dearness allowance, perquisites and any other allowances,- (A) not exceeding the ceiling limit of Rs.24,00,000 per annum or Rs.2,00,000 per month calculated on the following scale :-

S.NoEffective capital of CompanyMonthly remuneration payable shall not exceed (Rs.)

1Less than rupees 1 crore75,000

2Rs.1 crore or more but less than Rs. 5 crores1,00,000

3Rs. 5 crores or more but less than Rs. 25 crores1,25,000



6Rs. 100 crores or more2,00,000

Provided that the ceiling limits specified under this sub-paragraph shall apply, if (i)Payment of remuneration is approved by a resolution passed by the Remuneration Committee; (ii)The company has not made any default in repayment of any of its debts (including public deposits) or debentures or interest payable thereon for a continuous period of thirty days in the preceding financial year before the date of appointment of such managerial person. (B)not exceeding the ceiling limit of Rs.48,00,000 per annum or Rs.4,00,000 per month calculated on the following scale :-


1Less than rupees 1 crore1,50,000






Provided that the ceiling limits specified under this sub-paragraph shall apply, if (i)payment of remuneration is approved by a resolution passed by the Remuneration Committee; (ii)the company has not made any default in repayment of any of its debts (including public deposits) or debentures or interest payable thereon for a continuous period of thirty days in the preceding financial year before the date of appointment of such managerial person; (iii)A special resolution has been passed at the general meeting of the company for payment of remuneration for a period not exceeding three years; (iv)a statement along with a notice calling the general meeting referred to in clause (iii) is given to the shareholders containing the following information, namely;

I.General Information: (1)Nature of industry (2)Date or expected date of commencement of commercial production (3)In case of new companies, expected date of commencement of activities as per project approved by financial institutions appearing in the prospectus. (4)Financial performance based on given indicators (5)Export performance and net foreign exchange collaborations (6)Foreign investments or collaborators, if any. II.Information about the appointee: (1)Background details (2)Past remuneration (3)Recognition or awards (4)Job profile and his suitability (5)Remuneration proposed (6)Comparative remuneration profile with respect to industry, size of the company, profile of the position and person (in case of expatriates the relevant details would be w r t the country of his origin) (7)Pecuniary relationship directly or indirectly with the company, or

relationship with the managerial personnel, if any. III.Other information: (1)Reasons of loss or inadequate profits (2)Steps taken or proposed to be taken for improvement (3)Expected increase in productivity and profits in measurable terms. IV.Disclosures: (1)The shareholders of the company shall be informed of the remuneration package of the managerial person.

(2)The following disclosures shall be mentioned in the Board of directors report under the heading Corporate Governance, if any, attached to the annual report: - (i)All elements of remuneration package such as salary, benefits, bonuses, stock options, pension etc. of all the directors;

(ii)Details of fixed component and performance linked incentives along with the performance criteria;

(iii)Service contracts, notice period, severance fees;

(iv)Stock option details, if any, and whether the same has been issued at a discount as well as the period over which accrued and over which exercisable. (C)exceeding the ceiling limit of Rs.48,00,000 per annum or Rs.4,00,000 per month calculated on the following scale :-


1Less than rupees 1 crore1,50,000






Provided that the ceiling limits specified under this sub-paragraph shall apply, if (i)Payment of remuneration is approved by a resolution passed by the Remuneration Committee; (ii)the company has not made any default in repayment of any of its debts (including public deposits) or debentures or interest payable thereon for a continuous period of thirty days in the preceding financial year before the date of appointment of such managerial person; (iii)a special resolution has been passed at the general meeting of the company for payment of remuneration for a period not exceeding three years; (iv)a statement along with a notice calling the general meeting referred to in clause (iii) is given to the shareholders containing the following information, namely; - I.General Information: (1)Nature of industry (2)Date or expected date of commencement of commercial production (3)In case of new companies, expected date of commencement of activities as per project approved by financial institutions appearing in the prospectus. (4)Financial performance based on given indicators (5)Export performance and net foreign exchange collaborations (6)Foreign investments or collaborators, if any. II.Information about the appointee: (1)Background details (2)Past remuneration (3)Recognition or awards (4)Job profile and his suitability (5)Remuneration proposed (6)Comparative remuneration profile with respect to industry, size of the company, profile of the position and person (in case of expatriates the relevant details would be w.r.t. the country of his origin) (7)Pecuniary relationship directly or indirectly with the company, or relationship with the managerial personnel, if any. III.Other information : (1)Reasons of loss or inadequate profits (2)Steps taken or proposed to be taken for improvement (3)Expected increase in productivity and profits in measurable terms. IV.Disclosures : (1)The shareholders of the company shall be informed of the remuneration package of the managerial person.

(2)The following disclosures shall be mentioned in the Board of directors report under the heading Corporate Governance, if any attached to the annual report : - (i)All elements of remuneration package such as salary, benefits, bonuses, stock options, pension etc. of all the directors; (ii)Details of fixed component and performance linked incentives along with the performance criteria ; (iii) Service contracts, notice period, severance fees; (iv) Stock option details, if any, and whether the same has been issued at a discount as well as the period over which accrued and over which exercisable. Provided further that the conditions specified in sub-paragraph (C) shall apply in the case the effective capital of the company is negative.

Provided also that the prior approval of the Central Government is obtained for payment of remuneration on the above scale. (b)after Explanation III, the following Explanations shall be inserted, namely,- Explanation IV :-For the purposes of this section, Remuneration Committee means that a committee which consists of at least three non-executive independent directors including nominee director or nominee directors, if any. Explanation V :-For the purposes of this clause, the Remuneration Committee while approving the remuneration under this section, shall,- (a)take into account, financial position of the company, trend in the industry, appointees qualification, experience, past performance, past remuneration etc. (b)be in a position to bring about objectivity in determining the remuneration package while striking a balance between the interest of the company and the shareholders. Explanation VI :-for the purposes of Paragraph 1, negative effective capital means the effective capital which is calculated :- (a)in accordance with the provisions contained in Explanation I of this Part; (b)less than zero. Notification GSR 565(E) dated 14.8.02

Maximum remuneration in case of managerial personnel in respect of companies in Special Economic zones in case of no profits/inadequate prfits: Rs 2,40,00,000 p.a (or Rs 20 lakhs p.m.)

Conditions:1. Company has not raised any money by public issue of shares or debentures in India

2. No default is made in repayment of its debts (incl public deposits) or debentures or interest payable for a continuous period of 30 days in any FY.

Investor education and protection fund:

Annexure-2 DCA clarification on unpaid dividend The Department of Company Affairs (DCA) has issued a clarification on the transfer of "unpaid dividend and other unclaimed amount" to the Investor Education and Protection Fund (IE&PF)

DCA has clarified that all ùnpaid dividend account' of a company on or after October 30, 1995 or which have remained unpaid or unclaimed for a period of seven years from the date of transfer should be transferred to the IE&PF together with interest accrued thereon, unless they have already been transferred to the general revenue account of the Central Government prior to the enactment of the Companies (Amendment) Act, 1999.

Regarding òther unclaimed amounts' the Department has said that all such amount which have remained unclaimed or unpaid as on October 30, 1991, (irrespective of the number of years they have remained unclaimed or unpaid as on date) and which remained unclaimed or unpaid as on October 31, 1998, should be transferred to the IE&PF unless such amounts have been paid to the parties before the enactment of the Companies (Amendment) Act, 1999.

Further, in respect of such amounts, which have become due for payment after October 30, 1991, the amounts should be transferred to the Fund if they remained unclaimed and unpaid for a period of seven years from the dates they first become due for payment, the Department said.

These òther unclaimed amounts' include application moneys received by companies for allotment of any securities and due for refund, matured deposits with companies, matured debentures with companies, and the interest accrued on them.

Further, the Department also said that since the Fund became operational only on October 1, 2001 all amounts due for transfer between November 1, 1998 and September 30, 2001 should have been transferred within the grace period of 30 days, i.e. October 31, 2001.

Prior to the amendment of Section 205A and the enactment of Section 205C by the Companies (Amendment) Act, 1999 with effect from October 31, 1998, companies were required to transfer to the general revenue account of the Central Government any moneys transferred to the "unpaid dividend account" which remained unpaid or unclaimed for a period of three years from the date of such transfer.

Therefore, all amounts transferred to the ùnpaid dividend account' of the company on or before October 30, 1995 and which had remained unpaid or unclaimed on October 30, 1998 should have been transferred to the general revenue account of the Central Government.

With the amendment of Section 205A and the enactment of 205C, it is now provided with effect from October 31, 1998 that any moneys transferred to ùnpaid dividend account' of the company and remaining unpaid or unclaimed for a period of seven years from the date of such transfer shall be transferred to IE&PF, the Department said.Companies (Amendment) Act, 2006

"610 B. (1) Notwithstanding anything contained in this Act, and without prejudice

to the provisions contained in section 6 of the Information Technology Act, 2000, the

Central Government may, by notification in the Official Gazette, make rules so as to

require from such date as may be specified in the rules, that

(a) such applications, balance-sheet, prospectus, return, declaration,

memorandum of association, articles of association, particulars of charges, or

any other particulars or document as may be required to be filed or delivered

under this Act or rules made there under, shall be filed, through the electronic

form and authenticated in such manner as may be specified in the rules;

(b) such document, notice, any communication or intimation, required to

be served or delivered under this Act, shall be served or delivered under this

Act through the electronic form and authenticated in such manner as may be

specified in the rules;

(e)such fees, charges or other sums payable under this Act or

rules made

there under shall be paid through the electronic form and in such manner as may

be specified in the rules

G.S.R. 739 (E). In exercise of the powers conferred by clause (a) of sub-section (1) of section 642 of the Companies Act, 1956 (1 of 1956), read with sub-section (3C) of section 211 and sub-section (1) of section 210A of the said Act, the Central Government, in consultation with National Advisory Committee on Accounting Standards, hereby makes the following rules, namely:-

. Small and Medium Sized Company (SMC) means, a company-

. whose equity or debt securities are not listed or are not in the process of listing on any stock exchange, whether in India or outside India;

. which is not a bank, financial institution or an insurance company;

. whose turnover (excluding other income) does not exceed rupees fifty crore in the immediately preceding accounting year;

. which does not have borrowings (including public deposits) in excess of rupees ten crore at any time during the immediately preceding accounting year; and

. which is not a holding or subsidiary company of a company which is not a small and medium-sized company.

Explanation: For the purposes of clause (f), a company shall qualify as a Small and Medium Sized Company, if the conditions mentioned therein are satisfied as at the end of the relevant accounting period.(2) Words and expressions used herein and not defined in these rules but defined in the Act shall have the same meaning respectively assigned to them in the Act.

a. Accounting Standards.-

1.The Central Government hereby prescribes Accounting Standards 1 to 7 and 9 to 29 as recommended by the Institute of Chartered Accountants of India, which are specified in the Annexure to these rules.

2.The Accounting Standards shall come into effect in respect of accounting periods commencing on or after the publication of these Accounting Standards.

1. Obligation to comply with the Accounting Standards.- 1.Every company and its auditor(s)shall comply with the Accounting Standards in the manner specified in Annexure to these rules.

2.The Accounting Standards shall be applied in the preparation of General Purpose Financial Statements.

1. An existing company, which was previously not a Small and Medium Sized Company (SMC) and subsequently becomes an SMC, shall not be qualified for exemption or relaxation in respect of Accounting Standards available to an SMC until the company remains an SMC for two consecutive accounting periods.

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_1450947227.pdf

(PUBLI SHED I N THE GAZETTE OF I NDI A, EXTRAORDI NARY, PART-

I I , SECTI ON-3, SUB SECTI ON ( i) of dated the 14.12.2011)

GOVERNMENT OF I NDI A

MI NI STRY OF CORPORATE AFFAI RS

NOTI FI CATI ON

New Delhi; The 14 th December,2011

G.S.R. (E).- In exercise of the power conferred by sub-section (1A)

of section 81, read with section 642, of the Companies Act, 1956 (1 of

1956), the Central Government hereby makes the following rules to amend

the Unlisted Public Companies (Prefrential Allotment) Rules, 2003, namely:-

1. (1) These rules may be called the Unlisted Public Companies (Prefrential

Allotment) Amendment Rules, 2011.

(2) They shall come into force on the date of their publication in the

Official Gazette.

2. In the Unlisted Public Companies (Prefrential Allotment) Rules, 2003

(hereinafter referred to as the said rules), in rule 3, for clause (1), the

following shall be substituted, namely: -

(1) preferential allotment means allotment of shares or any other

instrument convertible into shares including hybrid instruments convertible

into shares on preferential basis made pursuant to the provisions of sub-

section (1A) of section 81 of the Companies Act, 1956;

Provided that the name, fathers name, address and occupation of

persons to whom such allotment is proposed to be made shall be mentioned

in the resolution passed by the members under that sub-section:

Provided further that persons to whom such offer is proposed, shall

not be more than forty-nine as per the first proviso to sub-section (3) of

section 67 of the Companies Act, 1956;.

3. For rule 4 of the said rules, the following shall be substituted, namely:-

4. Special Resolution.-

(1) No issue of Shares or any other instruments convertible into

shares including hybrids convertible into shares on a prefrential basis can be

made by a company unless authorised by its articles of association and

unless a special resolution passed by the member in a general meeting

authorising the Board of Directors to make such issue.

(2) The special resolution referred to in sub-rule (1) shall be acted

upon within a period of twelve months..

4. After rule 7 of the said rules, the following rule shall be inserted,

namely:-

8. I nvitation and allotment of securities.-

(1) No fresh offer or invitation shall be made unless the allotment with

respect to any offer or invitation made earlier have been completed in terms

of sub-section (9) of section 60B of the Companies Act, 1956.

(2) Any offer or invitation not in compliance with sub-section (1A) of

Section 81 read with sub-section (3) of section 67 of the said Act, shall be

treated as a public offer and the provisions of the Securities Contracts

(Regulation) Act, 1956 (42 of 1956) and the Securities and Exchange Board

of India Act, 1992 (15 of 1992) shall be complied with.

(3) All monies payable on subscription of securities shall be paid

through cheque or demand draft or other banking channels but not by cash.

(4) Any allotment of securities shall be completed within sixty days

from the receipt of application money and in case the company is not able to

allot the securities within the said period of sixty days, it shall repay the

application money within fifteen days thereafter, failing which it will be

required to be re-paid with interest at the rate of twelve percent per annum:

Provided that the monies received on such application shall be kept in a

separate bank account and shall not be utilised for any purpose other than

(i) for adjustment against allotment of securities; or

(ii) for the repayment of monies where the company is unable to

allot securities.

(5) No company offering securities shall release any public

advertisements or utilise any media, marketing or distribution channels or

agents to inform the public at large about such an offer.

[No. F. 2/21/2011-CL V]

Sd/ - Renuka Kumar

Joint Secretary to the Government of India

Note: - The principle rules were published in the Gazette of India,

Extraordinary, vide notification number G.S.R. 922(E), dated the 4th

December, 2003.

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