Corporate Governance - Companies Act 2013 - Boardroom Battles Mr. Apurv Sardeshmukh Partner Legasis Partners April 16, 2017
Composition of the Board • Significant changes to the composition of the boards of directors : Resident Directors, Independent Directors, Women Directors. • Directors Training and Evaluation. • Constitution of a number of Committees. • Internal Audit. • Compliance Report. • Serious Fraud Investigation Office.
Composition of Board • Company to have a maximum of 15 Directors. More than 15 after passing Special Resolution. • Public companies to increase directors beyond limits prescribed by in Articles of Association (Above 12) by obtaining Central Government’s approval.
Classes of Director • Resident Director : (Section 149 (3) of Companies Act, 2016) Person who has stayed in India for a total period of not less than 182 days in the previous calendar year. • Independent Directors : • 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. • Women Director: (Section 149 (1) of Companies Act, 2016) Atleast 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.
C. Constitution of a number of Committees • Audit Committee • Nomination and Remuneration Committee • Stakeholder Relationship Committee • Corporate Social Responsibility Committee. Composition, Roles and Responsibilities, Functions of the Committees, etc are enumerated under the Act. Each of the committees would act as a “check and balance” on the powers of the board, by ensuring greater transparency and accountability in its functioning.
E. 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.
Issues • Any other business in the agenda-standard practice in notice-disruptive item. • Role of a chairman • Role of independent directors
Issues (Continued) • Role of Director • Shareholder Democracy. • Role of NCLT
Issues (Continued) • Disclosures • Communication between Promoters And Directors. • Independence of Management
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