A.
Clarification with regard to section
185 and 186 of the Companies Act 2013 (loans and advances to employees)
Clarification with regard to section
185 and 186 of the Companies Act 2013 (loans and advances to employees)
General Circular No. 04/2015 dated March
10, 2015
10, 2015
It has been clarified that loans and/or
advances made by the companies to their employees, other than the managing or
whole time directors (which is governed by section 185 of the Companies Act,
2013) are not to be governed by the requirements of section 186 of the
Companies Act, 2013. Hence, companies can provide loans and advances to
employees without restrictions and procedural requirements mandated under section
186 of the Companies Act, 2013, if they are doing this in accordance with the
conditions of service applicable to such employees and the remuneration policy,
if any.
advances made by the companies to their employees, other than the managing or
whole time directors (which is governed by section 185 of the Companies Act,
2013) are not to be governed by the requirements of section 186 of the
Companies Act, 2013. Hence, companies can provide loans and advances to
employees without restrictions and procedural requirements mandated under section
186 of the Companies Act, 2013, if they are doing this in accordance with the
conditions of service applicable to such employees and the remuneration policy,
if any.
B.
Companies (Meetings of Board) Amendment
Rules, 2015
Companies (Meetings of Board) Amendment
Rules, 2015
F. No. 1/32/2013-CL-V-Part
March 18, 2015
Section 179 (3) of the Companies Act,
2013 specifies that ‘The Board of Directors of a company shall exercise the specified
powers on behalf of the company by means of resolutions passed at meetings of
the Board’.
2013 specifies that ‘The Board of Directors of a company shall exercise the specified
powers on behalf of the company by means of resolutions passed at meetings of
the Board’.
Rule 8 of the Companies (Meetings of
Board) Rules, 2014 specifies heads which were required to be passed only by way
of a resolution at the Board Meeting, which has now undergone an amendment by
way of Companies (Meetings of Board) Amendment Rules, 2015. This amendment has
excluded the following items from the list: –
Board) Rules, 2014 specifies heads which were required to be passed only by way
of a resolution at the Board Meeting, which has now undergone an amendment by
way of Companies (Meetings of Board) Amendment Rules, 2015. This amendment has
excluded the following items from the list: –
i)
Rule
8 (3) to take note of appointment(s) or removal(s) of one level below the Key
Managerial Personnel – The specific post to which this refers is not clear but
it seems to indicate to any person who holds a post which in hierarchy falls
just below the Key Managerial Personnel.
Rule
8 (3) to take note of appointment(s) or removal(s) of one level below the Key
Managerial Personnel – The specific post to which this refers is not clear but
it seems to indicate to any person who holds a post which in hierarchy falls
just below the Key Managerial Personnel.
ii) Rule
8 (5) to take note of the disclosures of the director’s interest and
shareholding.
8 (5) to take note of the disclosures of the director’s interest and
shareholding.
iii) Rule
8 (6) to buy, sell investments held by the company (other than trade
investments) constituting 5 % or more of the paid up share capital and free
reserves of the investee company – All investments constituting any percentage
of the paid up share capital can now be bought or sold without passing a
resolution in the board meeting.
8 (6) to buy, sell investments held by the company (other than trade
investments) constituting 5 % or more of the paid up share capital and free
reserves of the investee company – All investments constituting any percentage
of the paid up share capital can now be bought or sold without passing a
resolution in the board meeting.
iv) Rule
8 (7) for inviting or accepting or renewing public deposits and related matters.
8 (7) for inviting or accepting or renewing public deposits and related matters.
v) Rule
8 (8) for reviewing or changing the terms and conditions of public deposits.
8 (8) for reviewing or changing the terms and conditions of public deposits.
vi) Rule
8 (9) for approving quarterly, half yearly and annual financial statements or
financial results as the case may be – This has been taken out of the purview
of being passed by a resolution and has an express bar in Rule 4 (1) (i) of the
Companies (Meetings of Board) Rules, 2014 to not to be passed by video
conferencing either.
8 (9) for approving quarterly, half yearly and annual financial statements or
financial results as the case may be – This has been taken out of the purview
of being passed by a resolution and has an express bar in Rule 4 (1) (i) of the
Companies (Meetings of Board) Rules, 2014 to not to be passed by video
conferencing either.
Hence,
according to section 117 read with Rule 24 of the Companies (Management and
Administration) Rules, 2014, every resolution passed in terms of section 179
(3) of the Companies Act, 2013 is required to be filed to the Registrar of
Companies in Form MGT – 14. Now, there would be no requirement of filing Form MGT-14
in respect of the above 6 heads.
according to section 117 read with Rule 24 of the Companies (Management and
Administration) Rules, 2014, every resolution passed in terms of section 179
(3) of the Companies Act, 2013 is required to be filed to the Registrar of
Companies in Form MGT – 14. Now, there would be no requirement of filing Form MGT-14
in respect of the above 6 heads.
C.
Companies (Share Capital and
Debentures) Amendment Rules, 2015
Companies (Share Capital and
Debentures) Amendment Rules, 2015
F. No. 1/4/2013-CL-V(Pt I)
March 18, 2015
Several
changes have been made to the Companies (Share Capital and Debentures) Rules,
2014 as: –
changes have been made to the Companies (Share Capital and Debentures) Rules,
2014 as: –
i) Rule
3 wherein the provisions of this rule are to apply to a listed company only to
the extent that they do not contradict or conflict with any other provisions
framed in this regard by SEBI– This is though obvious but has been still
clarified.
3 wherein the provisions of this rule are to apply to a listed company only to
the extent that they do not contradict or conflict with any other provisions
framed in this regard by SEBI– This is though obvious but has been still
clarified.
ii) In
Rule 5 (3) (b) the first proviso stating ‘Provided that, in companies wherein a
Company Secretary is required to be appointed under the provisions of the Act,
he shall deemed to be authorised for the purpose of this rule’ has been omitted.
This is to remove confusion as to whether a company secretary will be an
authorised signatory in companies which are not compulsorily required to have a
company secretary.
Rule 5 (3) (b) the first proviso stating ‘Provided that, in companies wherein a
Company Secretary is required to be appointed under the provisions of the Act,
he shall deemed to be authorised for the purpose of this rule’ has been omitted.
This is to remove confusion as to whether a company secretary will be an
authorised signatory in companies which are not compulsorily required to have a
company secretary.
iii) In
Rule 6 (2) (c), a listed company can now issue duplicate share certificates
within 45 days from the date of submission of complete documents instead of the
previous 15 days timeline.
Rule 6 (2) (c), a listed company can now issue duplicate share certificates
within 45 days from the date of submission of complete documents instead of the
previous 15 days timeline.
iv)
In
Rule 12 (1) explanation (c) the words ‘or of an associate company’ have been
omitted, hence, the provisions related to ESOPS shall not apply in case of an
employee of an associate company.
In
Rule 12 (1) explanation (c) the words ‘or of an associate company’ have been
omitted, hence, the provisions related to ESOPS shall not apply in case of an
employee of an associate company.
v)
In
Rule 13 (1) another proviso has been added stating that, ‘Provided that in case
of any preferential offer made by a company to one or more existing members
only, the provisions of Rule 14 (3) (1) of Companies (Prospectus and Allotment
of Securities) Rules, 2014 shall not apply’. This clarification removes the
flaw in the earlier provisions wherein a private placement procedure was
required to do even in case of a preferential allotment.
In
Rule 13 (1) another proviso has been added stating that, ‘Provided that in case
of any preferential offer made by a company to one or more existing members
only, the provisions of Rule 14 (3) (1) of Companies (Prospectus and Allotment
of Securities) Rules, 2014 shall not apply’. This clarification removes the
flaw in the earlier provisions wherein a private placement procedure was
required to do even in case of a preferential allotment.
vi)
In
Rule 18 (1) (d) (i), any specific movable property of the company which may
even be in the nature of pledge, can be used to create a security for the
debentures by way of charge or mortgage in favour of the debenture trustee. In
case of a Non Banking Financial Company (NBFC), a charge or mortgage may be
created on a moveable property.
In
Rule 18 (1) (d) (i), any specific movable property of the company which may
even be in the nature of pledge, can be used to create a security for the
debentures by way of charge or mortgage in favour of the debenture trustee. In
case of a Non Banking Financial Company (NBFC), a charge or mortgage may be
created on a moveable property.
vii)
Two
proviso’s have been added after Rule 18 (1) (d) (ii) to state that: –
Two
proviso’s have been added after Rule 18 (1) (d) (ii) to state that: –
a. In case of issue of debentures by a
government company which are fully secured by the guarantee given by the
Central Government or one or more State Governments or by both, the requirement
of creating a charge under this rule would not apply.
government company which are fully secured by the guarantee given by the
Central Government or one or more State Governments or by both, the requirement
of creating a charge under this rule would not apply.
b. in case of a loan taken by a subsidiary
company from any bank or financial institution only, the charge or mortgage may
be created on the property of the holding company.
company from any bank or financial institution only, the charge or mortgage may
be created on the property of the holding company.
viii)
In
Rule 18 (5), the trust deed to be executed by the company issuing debentures in
favour of the debenture trustees can now be executed within three months of
closure of the issue or offer instead of the previous timeline of 60 days from
allotment of debentures.
In
Rule 18 (5), the trust deed to be executed by the company issuing debentures in
favour of the debenture trustees can now be executed within three months of
closure of the issue or offer instead of the previous timeline of 60 days from
allotment of debentures.
ix)
After
Rule 18 (8), two new sub-rules have been inserted stating that: –
After
Rule 18 (8), two new sub-rules have been inserted stating that: –
a. Nothing stated in this rule would apply
to any amount received by a company against the issue of commercial paper or
any other similar instrument which is issued under the guidelines/regulations/notifications
issued by the Reserve Bank of India (RBI).
to any amount received by a company against the issue of commercial paper or
any other similar instrument which is issued under the guidelines/regulations/notifications
issued by the Reserve Bank of India (RBI).
b. These rules would also not apply to the
offering of a foreign currency convertible bond issued in accordance to the
Foreign Currency Convertible Bonds and Ordinary Shares (through depository
receipt) scheme, 1993 or its regulations etc. issued by RBI unless it is so
stated in such scheme, regulations or directions.
offering of a foreign currency convertible bond issued in accordance to the
Foreign Currency Convertible Bonds and Ordinary Shares (through depository
receipt) scheme, 1993 or its regulations etc. issued by RBI unless it is so
stated in such scheme, regulations or directions.
x) In Rule 14, for Form SH-14, the Form SH-13 is to be
substituted.
