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    On Corporate Governance Under Companies Act

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    Pawan Kmuar Yadav
    The document summarizes key provisions around corporate governance under the Companies Act 2013 in India. It discusses requirements around board composition, including having independent directors and at least one woman director. It also outlines mandatory committees that must be formed like the audit committee and nomination and remuneration committee. The document notes other governance aspects like the need for an internal audit function and compliance reporting for certain large companies. It concludes with information on the role of the Serious Fraud Investigation Office.

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    On Corporate Governance Under Companies Act

    Uploaded by

    Pawan Kmuar Yadav
    825 views14 pages
    The document summarizes key provisions around corporate governance under the Companies Act 2013 in India. It discusses requirements around board composition, including having independent directors and at least one woman director. It also outlines mandatory committees that must be formed like the audit committee and nomination and remuneration committee. The document notes other governance aspects like the need for an internal audit function and compliance reporting for certain large companies. It concludes with information on the role of the Serious Fraud Investigation Office.

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    The document summarizes key provisions around corporate governance under the Companies Act 2013 in India. It discusses requirements around board composition, including having independent directors and at least one woman director. It also outlines mandatory committees that must be formed like the audit committee and nomination and remuneration committee. The document notes other governance aspects like the need for an internal audit function and compliance reporting for certain large companies. It concludes with information on the role of the Serious Fraud Investigation Office.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    825 views14 pages

    On Corporate Governance Under Companies Act

    Uploaded by

    Pawan Kmuar Yadav
    The document summarizes key provisions around corporate governance under the Companies Act 2013 in India. It discusses requirements around board composition, including having independent directors and at least one woman director. It also outlines mandatory committees that must be formed like the audit committee and nomination and remuneration committee. The document notes other governance aspects like the need for an internal audit function and compliance reporting for certain large companies. It concludes with information on the role of the Serious Fraud Investigation Office.

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    © All Rights Reserved
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    Download as ppt, pdf, or txt
    of 14

    Recognition of Corporate Governance

    Under Companies Act 2013

    Pawan Kumar Yadav


    LLM (2YR) First Year
    Faculty of Law
    University of Delhi
    Corporate Governance Under Companies Act 2013
    RELEVANT PROVISIONS OF
    CORPORATE GOVERNANCE

    1. Composition of Board: Significant changes to the


    composition of the boards of directors : Resident
    Directors, Independent Directors, Women Directors.

    2. Constitution of a number of Committees.

    3. Internal Audit.

    4. Compliance Report.

    5. Serious Fraud Investigation Office.


    1. Composition of Board
     Company to have a minimum three for public company, two
    for private company and one for OPC ; maximum of 15
    Directors.

     More than 15 after passing Special Resolution.

     At least one women director.


    Classes of Directors
    Classes of Directors

     Resident Director : (Section 149 (3) ) Person who has stayed in India for a
    total period of not less than 182 days in the previous calendar year.
     Independent Directors : (Section 149(4) of CA-2013 & (6) and R.4 of the
    Companies (Appointment and Qualification of Directors) Rules, 2014.)
     Public listed company: At least one third of the board to be comprised of
    independent directors.
     At least 2 (two) independent directors for public companies which have paid
    up share capital of Rupees one hundred million, a turnover of Rupees one
    billion, having in the aggregate, outstanding loans, debentures and deposits
    exceeding Rupees five hundred million. (R.4)
     An independent director shall possess appropriate skills, experience and
    knowledge in one or more fields of finance, law, management, sales,
    marketing, administration, research, corporate governance, technical
    operations or other disciplines related to the company’s business. (R.5)
     Women Director: (Section 149 (1) & R.3) At least One Women Director for
    all Listed Companies and Non-listed public companies having paid up share
    capital of Rs.100 crores or more or having turnover of Rs.300 crores or
    more.
    2. Constitution of a number of Committees
    Audit Committee
    Both private and public company have to constitute audit
    Committee. With minimum with three independent directors on
    the board along with the chairperson who should be able to read
    and understand the financial statement. (Section 177 of the
    Companies Act,2013)
    All listed and following class of companies should have Audit
    Committee (Rule 6 of Companies (Meetings of Board and its
    powers) Rules,2014).
     All public companies with a paid-up capital of Rs.10 Crores or
    more;
     All public companies having turnover of Rs.100 Crores or more;
    Nomination and Remuneration Committee:
    (S.178(1) of CA-2013 and R.6 of the Companies (Meetings of
    Board and its Powers) Rules, 2014 Companies (Meetings of Board
    and its Powers) Rules, 2014)

    Every listed Company and following class of the companies shall


    have NRC:
    The Public company-
    1. Having Paid up capital of Rs.100 crores or more; or
    2. Which have, in aggregate, outstanding loans or borrowings or
    debentures or deposits exceeding Rs.50 Crores.
    The NRC shall
    • identify persons who are qualified to become directors and who
    may be appointed in senior management in accordance with the
    criteria laid down, recommend to the Board their appointment and
    removal
    • and shall carry out evaluation of every director’s performance.
    Stakeholder Relationship Committee:
    (S.178(5) & (6) of CA-2013)

     The Board of Directors of a company which consists of more


    than one thousand shareholders, debenture-holders, deposit-
    holders and any other security holders at any time during a
    financial year shall constitute a SRC consisting of a chairperson
    who shall be a non-executive director and such other members as
    may be decided by the Board.

     The Stakeholders Relationship Committee shall consider and


    resolve the grievances of security holders of the company.
    Corporate Social Responsibility Committee:
    (S.135(1) of the CA-2013)

    Every company having


     Net worth of rupees five hundred crore or more, or
     Turnover of rupees one thousand crore or more or
     A net profit of rupees five crore or more
    during any financial year shall constitute a CSR Committee of the
    Board consisting of three or more directors, out of which at least
    one director shall be an independent director.
    The Committee shall:
    (a) formulate and recommend to the Board, a CSR Policy which
    shall indicate the activities to be undertaken by the company as
    specified in Schedule VII;
    (b) recommend the amount of expenditure to be incurred on the
    activities referred to in clause (a); and
    (c) monitor the CSR Policy of the company from time to time.
    3. Internal Audit

    (Section 138 of CA-2013 and R.13 of the Companies (Accounts)


    Rules, 2014)

    Internal audit is mandatory for certain classes of companies under


    Section 138.

    These companies includes:


    • All the listed companies,
    •All the non-listed companies having paid up share capital of
    Rs.50 crores or more, turnover of Rs.200 crores or more in the
    preceding financial year, outstanding loans or borrowings from
    the banks or public financial institutions of Rs.100 crores or more.
    4. Compliance Report
     The 2013 Act has made the requirement of compliance by
    stipulating a mandatory requirement of positive affirmation from
    the Directors as part of the Directors responsibility statement
    under section 134. The Report should state that directors have
    devised proper system to ensure compliance with the applicable
    laws and that such systems are operating effectively.

     Section 205 of the Act requires the Company Secretary to provide


    a report to the board about compliance with the provisions of this
    Act, the rules made there under and other laws applicable to the
    company.
    5. Serious Fraud Investigation Office (SFIO)

    Section 211 (1) of the Companies Act, 2013, the Central


    Government shall establish an office called the Serious Fraud
    Investigation office to investigate fraud relating to Company.

    SFIO can investigate the affairs of the company (S.212):


     On receipt of a report of the Registrar or inspector under
    section 208 where further investigation into the affairs of
    the company is necessary;
     On intimation of a special resolution passed by a company
    that its affairs are required to be investigated;
     In the public interest; or
     On request from any Department of the Central Government
    or a State Government.

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