Managing a Business/CORPORATE LAWS

Advertisement


Question
1,How are the first directors of the company appointed?
2,Can a company appoint managing director and manager simultaneously?
3,Write note on –Prohibition of drawl of foreign exchange.
4,Can a company increase its maximum number of directors in its board?
5,How far are (a) title (b) preamble and (c) marginal notes in an enactment helpful in interpreting any of the parts of an enactment?
6,Why books of account are required to be maintained by a company? Who are the persons responsible for ensuring proper maintenance of books of account?

Answer
1.How are the first directors of the company appointed.
The first Directors are usually appointed by name in the Articles of Association of the Company or, in the manner, provided therein. Where the Articles do not provide for the appointment of first Directors, the subscribers to the memorandum, who are individuals, are deemed to be the first Directors of the company, subject to the regulations of the company's Articles. Thus, if the Articles of the company name the first Directors, the provisions of the Companies Act, deeming the subscribers as Directors, do not apply. The first Directors usually hold office until the Directors are duly appointed in General Meeting.
This section provides that where the articles do not appoint the first directors of the company, the subscriber to the memorandum, who are individuals, shall be deemed as directors of the company until the directors are duly appointed in general meeting. In case first directors are appointed by the articles of the company, then the provisions, contained in the articles, shall prevail and the subscribers to the memorandum will not be deemed the directors of the company.
The subscribers, who are individuals, can only be deemed to be first director. If all the subscribers to the memorandum are bodies corporate, then none of the bodies corporate can be deemed to be directors and the company will have no director until the directors are appointed in accordance with section 255.
If the articles provide for any share qualification, then, only those subscribers to the memorandum, who possess the necessary share qualification, will be deemed to be first director. Further, in case where the articles provide for the appointment of directors by the subscribers, then, until the directors are so appointed, subscriber are deemed to be directors and the subscribers, by majority, decide the number and names of the directors.
#########################################


######################################
6.write note on-Prohibition of drawl of foreign exchange.


Foreign Exchange transactions for residents are subject to prior approval of the Reserve Bank of India. However bankers are given general permission for transactions within prescribed limits. This would generally include foreign travel, medical treatment, overseas subscriptions for periodicals; computer services ; professional services and like.
These Rules shall not apply to payments made out of Resident Foreign Currency Account (RFC) or Exchange Earner's Foreign Currency Account.
Travel Abroad
Studies Abroad
Immigration
Maintenance of Close Relatives Abroad
Gift Remittance
Others
All the above topics are explained in simple language together with:
01
Copy of relevant Section / Regulation of the Act.
02
Copy of relevant Notification, Circular or Press Release.
03
An example in case of intricate provisions.
femaonline.com - is one of its only kind of website displaying most updated Foreign Exchange Management Regulations - updated - almost every day also has special corners for Non Resident Indians (NRIs), Returning NRIs and Bankers.
Although, the content of the website can be viewed by registered users only, we welcome you to a preview of detailed contents of " Travel Abroad ".
01
PRIVATE VISIT :
Eligible: any person resident in India. Amount: upto US$ 10,000/-. * Amount ceiling related to : one calendar year. No. of Visits: no restriction subject to the ceiling of amount. Restrictions: visit to all countries other than Nepal & Bhutan. Purpose: for personal reasons including touring or traveling.
* Limit Raised from US$ 5,000 to US$ 10,000 [A.P.(DIR Series) Circular No.51 dated November 18, 2002]1
* Application for Forex exceeding US$ 5000 to be cleared on same day.[In view of limits enhanced application exceeding US$ 10,000 should be presumed/read ] [A.P.(DIR Series) Circular No.31 dated October 18, 2002]2
02
BUSINESS VISIT:
Eligible: any person resident in India. Amount: upto US$ 25,000/-. Amount ceiling related to : per visit. No. of Visits: no limit. Restrictions: none. Purpose: for business travel - attending business conference, specialized training. 03
MEDICAL TREATMENT :
Eligible: any person resident in India. Amount: upto US$ 25,000 [ without any estimate of a doctor / hospital] or necessary amount, subject to approval . Amount ceiling related to : per visit. Restrictions: none. Purpose: for meeting expenses of medical treatment . 04
PATIENT'S ATTENDANT :
Eligible: any person resident in India. Amount: us $ 25,000/-. Amount ceiling related to : per visit. No. of Visits: no Limit. Restrictions: none. Purpose: accompanying as attendant to a patient going abroad for medical treatment / check-up.
[Regulation (3) of Foreign Exchange Management (Current Account Transactions) Rules, 2000 ] 3 r.t.w. [ SCHEDULE III ] 4

######################################
7.Can a company increase its maximum number of directors in its board.

Minimum number of directors
Every public company ( other than a deemed public company ) must have at least three directors. Every other company must have at least two directors.
The directors of a company collectively are referred to as the "Board of directors" or "Board". Only individuals can be appointed as directors. No body corporate, association or firm can be appointed director of a Company.
In case the first directors are not appointed by the promoters of a company, subscribers of the memorandum who are individuals, shall be deemed to be the directors of the company, until the directors are duly appointed.
Appointment of directors and proportion of those who are to be retire by rotation
Unless that articles provide for the retirement of all directors at every annual general meeting, at least two-thirds of the total number of directors of a public company, or of a private company which is subsidiary of a public company, must :-
(a) retire by rotation
(b) be appointed by the company in general meeting, except where otherwise provided by the Companies Act.
The remaining directors in the case of any such company, and the directors generally in the case of a private company which is not a subsidiary of a public company, must also be appointed by the company in general meeting, unless otherwise provided in any regulations in the articles of the company.
Ascertainment of directors retiring by rotation and filling of vacancies
At every annual general meeting of a public company, or a private company which is a subsidiary of a public company, one-third of the directors liable to retirement by rotation or if their number is not three or a multiple of three, then, the number nearest to one-third, shall retire from office.
The directors to retire by rotation at every annual general meeting shall be those who have been longest in office since their last appointment, but as between persons who became directors on the same day, those who will have to retire is to be determined by lot, unless otherwise agreed to among themselves.
At the annual general meeting at which a director retires as aforesaid the company may fill up the vacancy by appointing the retiring director or some other person thereto. In other words, a retiring director is eligible for re-appointment at the same meeting.
If the place of the retiring director is not so filled up and the meeting has not expressly resolved not to fill the vacancy, the meeting shall stand adjourned till the same day in the next week, at the same time and place, or if that day is a public holiday, till the next succeeding day which is not a public holiday, at the same time and place.
If at the adjourned meeting also, the place of the retiring director is not filled up and that meeting also has not expressly resolved not to fill the vacancy the retiring director shall be deemed to have been re-appointed at the adjourned meeting, unless
a resolution for the re-appointment of such director has been put to the meeting and lost
the retiring director, has by a notice in writing addressed to the company or its Board of directors, expressed his unwillingness to be so re-appointed
he is not qualified or is disqualified for appointment
a resolution, whether special or ordinary, is required for his appointment or re-appointment in virtue of any provisions of this Act.
Right of persons other than retiring directors to stand for directorship
A person who is not a retiring director shall, subject to the provisions of this Act, be eligible for appointment to the office of director at any general meeting, if he or some member intending to propose him has, given notice in writing to the company at its registered office of at least 14 days before the meeting, signifying his candidature for the office of director or the intention of such member to propose him as a candidate for that office along with a deposit of rupees five hundred ( refundable on successful election ).
The company must inform its members of such candidature by giving at least 7 days prior notice. Such notice may not be required if the company advertises such candidature at least 7 days before the meeting in at least 2 newspapers circulating in the place where the registered office of the company is situated, one of which must be in English and the other in the regional language.
This provision shall not apply to a private company, unless it is a subsidiary of a public company.
Right of company to increase or reduce the number of directors
A company, at a general meeting may, by ordinary resolution, increase or reduce the number of its directors within the limits fixed in that behalf by its articles.
Increase in number of directors to require Government sanction
In the case of a public company, or a private company which is a subsidiary of a public company, any increase in the number of its directors, beyond the maximum number of directors permitted by the Articles of the Company as first registered, shall not have any effect unless approved by the Central Government and shall become void if, and in so far as, it is disapproved by that Government.
However, where such permissible maximum is 12 or less, no approval of the Central Government is required provided the increase does not increase the number of directors beyond 12.
Additional directors
The Board of directors may appoint additional directors if such power is conferred on it by the articles of the company. Such additional directors shall hold office only up to the date of the next annual general meeting of the company.
Provided further that the number of the directors and additional directors together shall not exceed the maximum strength fixed for the Board by the articles.
Filling of casual vacancies among directors
In the case of a public company or a private company which is a subsidiary of a public company, if the office of any director appointed by the company in general meeting is vacated before his term of office will expire in the normal course, the resulting casual vacancy may, in default of and subject to any regulations in the articles of the company, be filled by the Board of directors at a meeting of the Board.
Any person so appointed shall hold office only up to the date up to which the director in whose place he is appointed would have held office if it had not been vacated as aforesaid.
Appointment and term of office of alternate director
The Board of directors of a company may, if so authorised by its articles or by a resolution passed by the company in general meeting, appoint an alternate director to act for a director during his absence for a period of not less than three months from the State in which meetings of the Board are ordinarily held.
An alternate director so appointed shall not hold office for a period longer than the period for which the original director hold office and vacate office if and when the original director returns to the State in which meetings of the Board are ordinarily held.
Appointment of directors to be voted on individually
At a general meeting of public company or of a private company which is a subsidiary of a public company, each director has to be appointed separately by a separate resolution. However, appointment of more than one director through the same resolution will be valid if it has been passed unanimously. A resolution moved in contravention of the aforesaid provision shall be void, whether or not objection was taken at the time to its being so moved:
Consent of candidate for directorship to be filled with Registrar
A person shall not act as director of a company unless he has, by himself or by his agent authorised in writing, signed and filed with the Registrar, a consent in writing to act as such director within 30 days of his appointment. This provision shall not apply to a private company unless it is a subsidiary of a public company.
Option to company to adopt proportional representation for the appointment of directors
If the articles of a company provide for the appointment of not less than two-thirds of the total number of the directors of a public company or of a private company which is a subsidiary of a public company, according to the principle of proportional, representation, whether by the single transferable vote or by a system of cumulative voting or otherwise. Such appointments may be made once in every three years and interim casual vacancies being filled by the Board of Directors as Casual Vacancies. This may enable minority shareholders to have a proportional representation on the Board of Directors of the company.
Restrictions on appointment or advertisement of director
A person shall not be capable of being appointed director of a company by the articles, unless before the registration of the articles, the publication of the prospectus, or the filing of the statement in lieu of prospectus, as the case may be , he has, by himself or by his agent authorised in writing
(a) signed and filed with the Registrar a consent in writing to act as such director; and
(b) either ;-
signed the memorandum for shares not being less in number or value than that of his qualification shares, if any, or
taken his qualification shares, if any, from the company and paid or agreed to pay for them; or
signed and filed with the Registrar and undertaking in writing to take from the company his qualification shares, if any, and pay for them; or
made and filed with the Registrar an affidavit to the effect that shares, not being less in number or value than that of his qualification shares, if any, are registered in his name.
Qualification shares are the minimum number of shares a person must own, as provided in the articles of the company, in order to qualify to become a director of the company. Qualification shares must be acquired by a director within 2 months of his appointment. The articles cannot require a director to acquire qualification shares within a shorter period. The face value of the qualification shares cannot exceed five thousand rupees, or if the face value of one share is more than five thousand rupees, then the qualification share will be one qualification share.
Every director, not being a technical director of a director appointed, by the Central or a State Government, shall within two months after his appointment file with the company a declaration specifying the qualification shares held by him. If, after the expiry of the said period of two months, any person acts as a director of the company when he does not hold the qualification shares, he shall be punishable with the fine which may extend to fifty rupees for every day between such expiry and the last day on which he acted as a director.
The above provisions do not apply to-
a company not having a share capital;
a private company;
a company which was a private company before becoming a public company; or
a prospectus issued by or on behalf of a company after the expiry of one year from the date on which the company was entitled to commence business.
Managing Directors
Managing Director means a person who, by virtue of an agreement with the company or of a resolution passed by the company in a general meeting or by its Board of directors or by virtue of its memorandum or articles of association, is entrusted with substantial powers of management which could not otherwise be exercisable by him and includes a director occupying the position of a managing director, by whatever name called. The power merely to do administrative acts of a routine nature, when so authorised by the Board such as the power to affix the common seal of the company on any document or to draw and endorse any cheque on the account of the company in any bank or to draw and endorse any negotiable instrument or to sign any share certificate or to direct registration of share transfers will not be deemed to be included within substantial powers of management. The managing director must exercise his powers subject to the superintendence, control and direction of the Board.
Certain persons not to be appointed managing directors
No company can, appoint or employ, or continue the appointment or employment of, any person as its managing or whole time director who-
is an undischarged insolvent, or has at any time been adjudged an insolvent
suspends, or has at any time suspended, payment to his creditors or makes, or has at any time made, a composition with them
is, or has at any time been, convicted by a Court in India of an offence involving moral turpitude.
Every public company or a private company which is a subsidiary of a public company, having a paid up share capital of Rs. 5 crores or more must have a managing director or wholetime director or manager.
Appointment of managing director or wholetime director or manager of a public company or a private company which is a subsidiary of a public company requires the approval of the Central Government unless the appointment is in accordance with the conditions specified in Schedule XIII of the Companies Act, 1956 and a returm in Form 25 C is filed within 30 days of appointment.
Application for approval must be made to the Central Government if Form 25 A within 90 days of appointment. The Central Government shall grant its approval if it is satisfied that :-
the managing director or wholetime director or manager is in its opinion, a fit and proper person
such appointment is not against public interest
the terms and conditions of the appointment are fair and reasonable.
The Central Government may grant approval for a period less that the period for which approval is sought.
In case the approval of the Central Government is refused, the appointed person shall vacate his office on the date of communication of the decision of the Central Government to the company and if he omits to do so, he shall be liable to a fine of Rs. 500/- for each day of default.
The Central Government, on information received by it or suo moto, is of the opinion that such appointment made without approval of the Central Government contravenes the conditions given in Schedule XIII, it may refer the matter to the Company Law Board for decision.
On receipt of the order of the Company Law Board against the company,:-
The company shall be liable to fine of upto Rs. 5000/-
Every officer of the company in default shall be liable to a fine of Rs. 10000/-
The appointment shall be deemed to have come to an end and the appointed person shall in addition to being liable to pay a fine of Rs. 10000/-, refund to the company the entire amount of remuneration received by him from such appointment.
Number of companies of which one person may be appointed managing director
No public company or private company which is a subsidiary of a public company can, appoint or employ any person as managing director, of he is either the managing director or the manager of any other company, except as provided below.
A public company or a private company which is the subsidiary of a public company may appoint or employ a person as its managing director, if he is the managing director or manager of one, and of not more than one, other company provided that such appointment or employment is made or approved by a unanimous resolution passed at a meeting of the Board and of which meeting, and of the resolution to be moved thereat, specific notice has been given to all the directors then in India.
In addition to the above provision, the Central Government may, by order, permit any person to be appointed as a managing direct of more than two companies if the Central Government is satisfied that it is necessary that the companies should, for their proper working, function as a single unit and have a common managing director.
Managing director not to be appointed for more than five years at a time
No company can, appoint or employ any individual as its managing director for a term exceeding five years at a time.
However, a person may be re-appointed, re-employed, or his term of office extended by further periods not exceeding five years on each occasion. Such re-appointment, re-employment or extension cannot be sanctioned earlier than two years from the date on which it is to come into force.
This provision does not apply to a private company unless it is a subsidiary of a public company.
Disqualifications of directors
A person shall not be capable of being appointed director of a company, if,
he has been found to be of unsound mind by a Court of competent jurisdiction and the finding is in force
he is an undischarged insolvent
he has applied to be adjudicated as an insolvent and his application is pending
he has been convicted by a Court of any offence involving moral turpitude and sentenced in respect thereof to imprisonment for not less than six months, and a period of five years has not elapsed from the date of expiry of the sentence
he has not paid any call in respect of shares of the company held by him, whether alone or jointly with others, and six months have elapsed from the last day fixed for the payment of the call
an order disqualifying him for appointment as director has been passed by a court and is in force unless the leave of the court has been obtained for his appointment in pursuance of that section.
The Central Government may, by notification in the Official Gazette, remove :-
the disqualification incurred by any person in virtue of clause (d) either generally or in relation to any company or companies specified in the notification; or
the disqualification incurred by any person in virtue of clause (e)
A private company which is not a subsidiary of a public company may, by its articles, provide that a person shall be disqualified for appointment as a director on any grounds in addition to those specified above.
No person to be a director of more than twenty companies
No person shall, hold office at the same time as director in more than twenty companies.
Where a person already holding the office of director in twenty companies is appointed, as a director of any other company, the appointment :-
shall not take effect unless such person has, within fifteen days thereof, effectively vacated his office as director in any of the companies in which he was already a director; and
shall become void immediately on the expiry of the fifteen days if he has not, before such expiry effectively vacated his office as director in any of the other companies aforesaid.
Where a person already holding the office of director in nineteen companies or less is appointed, as a director of other companies, making the total number of his directorships more than twenty, he shall choose the directorships which he wishes to continue to hold or to accept so however that the total number of the directorships, old and new, held by him shall not exceed twenty.
None of the new appointments of director shall take effect until such choice, is made; and all the new appointments shall become void if the choice is not made within fifteen days of the day on which the last of them was made.
In calculating the number of companies of which a person may be a director, the following companies shall be excluded :-
a private company which is neither a subsidiary nor a holding company of a public company
an unlimited company
an association not carrying on business for profit or which prohibits the payment of dividend
a company in which such person is only an alternate director, that is to say, a director who is only qualified to act as such during the absence or incapacity of some other director.
Any person who holds office, or acts, as a director of more than twenty companies in contravention of the foregoing provisions shall be punishable with fine which may extend to five thousand rupees in respect of each of those companies after the first twenty.
Vacation of office by directors
The office of a director shall become vacant if :-
he fails to obtain within the time specified ( 2 months ) or at any time thereafter ceases to hold, the share qualification, if any, required of him by the articles of the company
he is found to be of unsound mind by a Court of competent jurisdiction
he applies to be adjudicated an insolvent
he is adjudged an insolvent
he is convicted by a Court of any offence involving moral turpitude and is sentenced in respect thereof to imprisonment for not less than six months
he fails to pay any call in respect of shares of the company held by him, whether alone or jointly with others, with in six months from the last date fixed for the payment of the call unless the Central Government has, by notification in the Official Gazette removed such disqualification.
he absents himself from three consecutive meetings of the Board of directors, or from all meetings of the Board, for a continuous period of three months, whichever is longer, without obtaining leave of absence from the Board
he, whether by himself or by any person for his benefit or on his account or any firm in which he is a partner or any private company of which he is a director, accepts a loan, or any guarantee or security for a loan, from the company in contravention of section 295 ( without due authorization of the Central Government )
he acts in contravention of section 299 ( failure to disclose interest in any transaction with the company )
he becomes disqualified by an order of Court under section 203
he is removed by the members by- resolution at a general meeting
having been appointed a director by virtue of his holding any office or other employment in the company, he ceases to hold such office or other employment in the company.
The disqualification referred to in clauses (d). (e) and (j) shall not take effect,-
for thirty days from the date of the adjudication sentence or order
where any appeal or petition is preferred within the thirty days aforesaid against the adjudication, sentence or conviction resulting in the sentence, or order until the expiry of seven days from the date on which such appeal or petition is disposed of
where within the seven days aforesaid, any further appeal or petition is preferred in respect of the adjudication, sentence, conviction, or order, and the appeal or petition, if allowed, would result in the removal of the disqualification, until such further appeal or petition is disposed of.
If a person functions as a director, knowing that his office has vacated on account of the above provisions, shall be liable to a fine upto Rs. 500/- per day of default.
A private company which is not a subsidiary of a public company may, by its articles, provide, that the office of director shall be vacated on any grounds in addition to those specified in above
Removal of directors
A company may, by ordinary resolution, remove a director (not being a director appointed by the Central Government in pursuance of section 408) before the expiry of his period of office. This provision shall not apply where the company has availed itself of the option given to it of proportional representation on the Board of Directors to appoint not less than two-thirds of the total number of directors according to the principle of proportional representation.
Special notice shall be required of any resolution to remove a director, or to appoint somebody instead of a director so removed at the meeting at which he is removed.
On receipt of notice of a resolution to remove a director under this section, the company shall forthwith send a copy thereof to the director concerned, and the director (whether or not he is a member of the company) shall be entitled to be heard on the resolution at the meeting.
Where notice is given of a resolution to remove a director and the director concerned makes representations in writing to the company (not exceeding a reasonable length) and requests their notification to members of the company, the company shall, unless the representations are received by it too late for it to do so :-
in any notice of the resolution given to members of the company state the fact of the representations having been made; and
send a copy of the representations to every member of the company to whom notice of the meeting is sent
If a copy of the representations is not sent as aforesaid because they were received too late or because of the company's default, the director may (without prejudice to his right to be heard orally) require that the representations shall be read out at the meeting.
However, copies of the representations need not be sent out and the representations need not be read out at the meeting if, on the application either of the company or of any other person who claims to be aggrieved, the Company Law Board is satisfied that the rights conferred by this provision are being abused to secure needless publicity for defamatory matter and the Company Law Board may order the company's costs on the application to be paid in whole or in part by the director.
A vacancy created by the removal of a director if he had been appointed by the company in general meeting or by the board in on a casual vacancy, be filled by the appointment of another director in his stead by the meeting at which he is removed, provided special notice of the intended appointment has been given.
A director so appointed shall hold office until the date up to which his predecessor would have held office if he had not been removed as aforesaid.
If the vacancy is not filled, it may be filled as a causal vacancy in accordance with the provisions.
The above provisions of removal of a director shall not affect :-
any compensation or damages payable to him in respect of the termination of his appointment as director or of any appointment terminating with that as director
any other power to remove a director which may exist apart from this provision

######################################


9.How far are (a) title (b) preamble (c) margial notes in an enactment helpful in interpretating any of the parts of an enactment.



[ sorry, I cannot  help you  with this  Q.
######################################

10.How can a vacancy caused by registration of directors of a public company? Expalin what is meant by disintrested quorum. Is this term significant for a general meting also.

Vacation of office by directors
The office of a director shall become vacant if :-
he fails to obtain within the time specified ( 2 months ) or at any time thereafter ceases to hold, the share qualification, if any, required of him by the articles of the company
he is found to be of unsound mind by a Court of competent jurisdiction
he applies to be adjudicated an insolvent
he is adjudged an insolvent
he is convicted by a Court of any offence involving moral turpitude and is sentenced in respect thereof to imprisonment for not less than six months
he fails to pay any call in respect of shares of the company held by him, whether alone or jointly with others, with in six months from the last date fixed for the payment of the call unless the Central Government has, by notification in the Official Gazette removed such disqualification.
he absents himself from three consecutive meetings of the Board of directors, or from all meetings of the Board, for a continuous period of three months, whichever is longer, without obtaining leave of absence from the Board
he, whether by himself or by any person for his benefit or on his account or any firm in which he is a partner or any private company of which he is a director, accepts a loan, or any guarantee or security for a loan, from the company in contravention of section 295 ( without due authorization of the Central Government )
he acts in contravention of section 299 ( failure to disclose interest in any transaction with the company )
he becomes disqualified by an order of Court under section 203
he is removed by the members by- resolution at a general meeting
having been appointed a director by virtue of his holding any office or other employment in the company, he ceases to hold such office or other employment in the company.
The disqualification referred to in clauses (d). (e) and (j) shall not take effect,-
for thirty days from the date of the adjudication sentence or order
where any appeal or petition is preferred within the thirty days aforesaid against the adjudication, sentence or conviction resulting in the sentence, or order until the expiry of seven days from the date on which such appeal or petition is disposed of
where within the seven days aforesaid, any further appeal or petition is preferred in respect of the adjudication, sentence, conviction, or order, and the appeal or petition, if allowed, would result in the removal of the disqualification, until such further appeal or petition is disposed of.
If a person functions as a director, knowing that his office has vacated on account of the above provisions, shall be liable to a fine upto Rs. 500/- per day of default.
A private company which is not a subsidiary of a public company may, by its articles, provide, that the office of director shall be vacated on any grounds in addition to those specified in above
Removal of directors
A company may, by ordinary resolution, remove a director (not being a director appointed by the Central Government in pursuance of section 408) before the expiry of his period of office. This provision shall not apply where the company has availed itself of the option given to it of proportional representation on the Board of Directors to appoint not less than two-thirds of the total number of directors according to the principle of proportional representation.
Special notice shall be required of any resolution to remove a director, or to appoint somebody instead of a director so removed at the meeting at which he is removed.
On receipt of notice of a resolution to remove a director under this section, the company shall forthwith send a copy thereof to the director concerned, and the director (whether or not he is a member of the company) shall be entitled to be heard on the resolution at the meeting.
Where notice is given of a resolution to remove a director and the director concerned makes representations in writing to the company (not exceeding a reasonable length) and requests their notification to members of the company, the company shall, unless the representations are received by it too late for it to do so :-
in any notice of the resolution given to members of the company state the fact of the representations having been made; and
send a copy of the representations to every member of the company to whom notice of the meeting is sent
If a copy of the representations is not sent as aforesaid because they were received too late or because of the company's default, the director may (without prejudice to his right to be heard orally) require that the representations shall be read out at the meeting.
However, copies of the representations need not be sent out and the representations need not be read out at the meeting if, on the application either of the company or of any other person who claims to be aggrieved, the Company Law Board is satisfied that the rights conferred by this provision are being abused to secure needless publicity for defamatory matter and the Company Law Board may order the company's costs on the application to be paid in whole or in part by the director.
A vacancy created by the removal of a director if he had been appointed by the company in general meeting or by the board in on a casual vacancy, be filled by the appointment of another director in his stead by the meeting at which he is removed, provided special notice of the intended appointment has been given.
A director so appointed shall hold office until the date up to which his predecessor would have held office if he had not been removed as aforesaid.
If the vacancy is not filled, it may be filled as a causal vacancy in accordance with the provisions.
The above provisions of removal of a director shall not affect :-
any compensation or damages payable to him in respect of the termination of his appointment as director or of any appointment terminating with that as director
any other power to remove a director which may exist apart from this provision

########################################
12. Why books of account are required to be maintained by a comapny? Who are the person responsible for ensuring proper maintaice of books of account?

Sl. Provisions of the Companies Act,1956 The inconsistency
1 209(4A) Preservation of Books of accounts:
The books of Accounts need to be preserved for a period of eight years as per Section 209(4A) of the Companies Act, 1956 ( the Act). In the case of a Section 25 Company, Central Government has granted exemption in this regard and that such a Company ( Section 25 Company) is required to preserve Books of Accounts for a period four years instead of eight years (S.O. no. 1578).

As per the requirements Section 8(3) of RTI Act, documents pertaining to a period of 20 years back, may be asked for inspection. Companies that have already destroyed the books of accounts in terms of present provisions of the Companies Act,1956 would not be in a position to avail those records for inspection in terms of RTI Act.
2 Companies (Preservation and Disposal of Records) Rules,1966
The Rule allows for destroying records of the Company at an earlier date than twenty years. Companies that have already destroyed the records in terms of this Rule; may not be in a position to show the old records pursuant to provisions of RTI Act.
Some of the instances are as under;
Register / document Time Period
1. Register of Debenture Holders- 15 years after redemption of
Debentures
2. Index of Debenture Holders- 15 years after redemption of
Debentures
3. Copies of Annual Return filed - Eight Years from
with Registrar of Companies the date of filing with the Registrar .
3 ®Section 209(4), 209(A) of the Act.

® Part IX of Memorandum of Association
® Article 72 of Articles of Association
Inspection of Books of Accounts
Companies Act, 1956 does not envisage inspection of books of accounts of the Company by general public, though provisions are there for inspection by Directors, Registrar of Companies and officers authorised in this respect by the Central Government.

Part IX of the Memorandum of Association also allows inspection of books of accounts by the Directors of the Company.

Hence, these provisions of the Companies Act and that of Memorandum & Articles of Association of the Company are inconsistent with the provisions of the Right to Information Act, 2005.
4 Section 196 of the Act and views of Department of Company Affairs. Inspection of Minutes of General Meetings and that of Board Meetings:

In respect of Minutes of General Meetings; the Companies Act, 1956 allows the same to be inspected by members of the Company and that extracts of such minutes may be provided. The fee provided for providing extracts of such minutes is Re 1/- for every one hundred word. However, this is subject to changes and modifications from time to time.

In respect of minutes of Board Meetings, Department of Company affairs is of the following view-

“The Companies Act,1956 contains no provision either specifically permitting or prohibiting inspection by/or supply of copies to the shareholders of a Company of the minutes of the meetings of the Board. This Department is of the view that unless the Articles of Association provide to the contrary, a shareholder has no right of inspection or obtaining copies of minutes of its Board meetings. [Letter no. 8/15(169)/63-P.R., dated 11-12-1963].”

It may be noted that in view of the above; the general public don’t have a right to inspect the minutes of General Meetings or Board Meetings of the Company. However, this would be inconsistent with the provisions contained in the Right to Information Act, 2005.
5 Statutory Registers There are various registers maintained with the Company pursuant to the requirements of Statutes and so, referred to as Statutory Registers.

Provisions have been made regarding the inspection and obtaining extracts of such registers by such persons as authorised in that regard by provisions of the Companies Act, 1956.

Some of these registers are as under;
Section 163 of the Act Annual Returns filed with Registrar of Companies along with certificates enclosed thereto No fee is charged from members of the Company for inspection of these documents.

Others are charged fee as per Rule 21A of Companies (Central Government’s) General Rules and Forms,1956.
Section 150, 151, 152 of the Act ®Register of Members
®Index of Members
®Register of Debenture
Holders No fee is charged from members of the Company / Debenture holders for inspection of these documents.

Others are charged fee as per Rule 21A of Companies (Central Government’s) General Rules and Forms,1956.
Section 301,


Section 304, and


Section 307 of the Act ®Register of Contracts in which Directors are interested
®Inspection of Register of Directors, Managing Directors, Manager and Secretary
®Register of Directors’ Shareholding ® same as the register u/s 163


® may be inspected without fee by members. Re 1/- for each inspection by others.

®Inspection by members and Debenture holders Only.


LIST OF INFORMATION WHICH ARE PROPOSED TO BE WITHHELD FROM THE PUBLIC

1. Minutes of Board meeting of the company.

2. Part of a document where law or regulation prohibits the company from providing the part or portion of a document.

3. Books of Account and vouchers

4. Noting side of the file

5. Personnel/medical details and officers or employees submitted as part of documents for medical reimbursement.

6. Annual Confidential Report (ACRs) of officers and employees.

7. Records, Correspondence, Proceeding etc during the decision making process (disclosing such information may influence or affect the decision).

8. All information related to recruitment and appointment of personnel during the process of selection and finalization of appointment.

9. Minutes of selection committee/interview committee.

10. Disciplinary proceeding and vigilance cases initiated against an officer or employee during the process of investigation and decision.

11. Personal files of officers and employees.

12. The credential verification report received from the inspecting officers in respect of Non Government Organisations during the process of finalizing the decision for sanction/release of loan.

13. Confidential reports received from other Government/Non Government Departments for processing sanction of loan of NGOs (disclosing such report to public may constitute breach of trust).
@@@@@@@@@@@@@@@@@@@@@@@@@@

Responsibility of Maintenance of Books
Person responsible u/s 209(6)
MD or Manager
Every Director, if the company has neither employed MD nor Manager.
All Officers and Employees of the company.
Section-209(7) empowers a MD, Manager or BOD to make any person other than the persons referred above responsible that the requirements of this Section are complied with.
Effect – Defence of persons responsible u/s 209(6)
The person responsible u/s 209 may put a defence that the person charged with the duty of maintenance of books of account was competent, reliable and was in a position to discharge such duty.
1   The person so charged with responsibility of compliance with provisions of Section 209 is punishable with imprisonment upto 6 months or fine upto Rs.10,000/- or both
  Proper Books of Accounts – Section 541(2) provides that proper books of accounts constitute such books of accounts as are necessary to exhibit and explain the transactions and financial position of the business of the company, including books containing sufficient detail entries daily cash receipts and payments.
  Also where the business of the company has involved dealings in goods,
2   Statements of the annual stock takings.
3   All Purchase and Sale of Goods (excluding retail sale)
4   The particulars of Buyers and Sellers, except where goods are sold by way of ordinary retail trade.
Right of Shareholder/Member to inspect Books of Account
1   No right
2   He can make inspection if the Articles so provide.





####################################

Managing a Business

All Answers


Answers by Expert:


Ask Experts

Volunteer


Leo Lingham

Expertise

In Managing a business, I can cover all aspects of running a business--business planning, business development, business auditing, business communication, operation management, human resources management , training, etc.

Experience

18 years of working management experience covering such areas
as business planning, business development, strategic planning,
marketing, management services, personnel administration.

PLUS

24 years of management consulting which includes business planning, strategic planning, marketing, product management, training, business coaching etc.

Organizations
BESTBUSICON   Pty Ltd--PRINCIPAL

Education/Credentials
MASTERS IN SCIENCE

MASTERS IN BUSINESS ADMINSTRATION

©2016 About.com. All rights reserved.