Companies act 2013.

AN OVERVIEW

OF THE COMPANIES ACT, 2013

BEGINNING OF NEW ERA FOR CORPORATES

BY: A.K.RASTOGICOMPANT SECRETARY & EXECUTIVE DIRECTOR (LAW)

NTPC LIMITEDNEW DELHI

BACKGROUND

A substantial portion of the Act, will be by way of Rules. In more than 330 areas, the Rules will clarify the requirements.

The draft rules has also been notified, comments of the public were invited and after consulting Ministry of Law these rules shall be made applicable.

It hallmarks the transition of ‘Government regulated’ regime to a new regime of self regulation

It lays significant emphasis on e-governance and corporate governance measures.

Background (contd)…

This Act shall come into force on such dates as the Central Governemnt may, by notification in the Official Gazette, appoint and different dates may be appointed for different provisions of the Act. It is not mandated to enforce the entire Act in totality at one point

MCA notification 12.09.2013MCA has issued a notification bringing into force 98 sections of the Companies Act, 2013 from 23.09.2013

MCA Circular on 23.09.2013The circular provided clarification on the application of existing Accounting Standards until the standards are prescribed by the Central Government. It also clarified that if the notice was issued prior to 23.09.2013, the resolutions (special or ordinary as may be required) may be passed in accordance with the Companies Act, 1956.

MCA Circular on 18.09.2013MCA has clarified that the relevant provisions of the 1956 Act corresponding to provisions of 98 sections of 2013 Act brought into force, will cease to have effect from 12.09.2013.

Focus Areas in New Act

• Higher Auditors Accountability

• Easy Restructuring

• Emphasis on Investors Protection

• Increased reporting frame work

CSRNCLT

High penalty

for defaultWider

Directors & Mgt.

Responsibility

Some new Concepts under Co. Act, 2013

Rotation of

AuditorsKMP Women

DirectorDormant Company

Related Party

Transaction

Secretarial Audit

Class action Suit

NCLT & NFRA

WHAT IS NEW IN COMPANIES ACT,2013

COMPANIES ACT, 1956 COMPANIES ACT, 2013

658 Sections 470 Clauses

13 Parts 29 Chapters

15 Schedules 7 schedules

Introduction of new class of Co. i.e. One Person Company & Dormant Company

Requirement to constitute Remuneration and Nomination Committee and Stakeholders Grievances Committee

The New Cos Act subjects private companies to a greater control and compliances and withdraws most of the exemptions available to private companies under the Companies Act, 1956

Granting of More powers to Audit Committee Specific clause pertaining to duties of directors Mode of appointment of Independent Directors and their tenure Code of Conduct for Independent Directors Rotation of Auditors and restriction on Auditor's for providing non-audit

services Enhancement of liability of Auditors

Some of Key Provisions in new Companies Act-2013

Disclosure and approval of Related Party Transaction Appointment of “Key Managerial Person” by certain Company New concept of class action suits with a view of making shareholders and

other stakeholders, more informed about their rights. Constitution of National Financial Reporting Authority, an independent

body to take action against the Auditors in case of professional mis-conduct.

Mandatory expenditure on CSR activities. Introduced Concept of Registered Value. Simplification of Merger of Holding Company & Subsidiary Company Permits cross border mergers, both ways; a foreign company merging with

an India Company and vice versa but with prior permission of RBI. Enabling Shareholders Associations/Group of Shareholders for taking class

action suits and reimbursement of the expenses out of Investor Education and Protection Fund.

Some of Key Provisions in new Companies Act-2013

Definitions

Section 2 (6) Definition of Associate Company (New Definition)

The term Associate Company has been defined in the Act. Associate Company means a company, in which that other company has a significant influence , but which is not a subsidiary Co. of the Co. having such influence and includes a joint venture company.

“Significant influence” means control of atleast 20% of total share capital or of business decision under an agreement.

Section 2(12) Book and Paper The term book and paper includes books of account, deeds, vouchers, writings, documents, minutes and registers maintained on paper or in electronic form.

Definitions

Section 2 (40) Definition of Financial Statement(New Definition)

financial statement” in relation to a company, includes— (i) a balance sheet as at the end of the financial year; (ii) a profit and loss account, or in the case of a company carrying on any activity not for profit, an income and expenditure account for the financial year; (iii) cash flow statement for the financial year; (iv) a statement of changes in equity, if applicable; and (v) any explanatory note annexed to, or forming part of, any document referred to in sub-clause (i) to sub-clause (iv): Provided that the financial statement, with respect to One Person Company, small company and dormant company, may not include the cash flow statement;

Definitions

Section 2 (41) Financial Year: (New Definition)

F/Y”, in relation to any company or body corporate, means the period ending on the 31st March every year, and where it has been incorporated on or after the 1st day of January of a year, the period ending on the 31st day of March of the following year, in respect whereof financial statement of the company or body corporate is made up.If company has holding/ subsidiary incorporated outside India having different F/Y, then on application of the Company, Tribunal may allow any period as F/Y, whether or not that period is a year.Existing Company having different F/Y shall have to change their F/Y within 2 years.

Definitions

Section 2 (43) “free reserves”

means such reserves which, as per the latest audited balance sheet of a company, are available for distribution as dividend, except—(i) any amount representing unrealised gains, notional gains or revaluation of assets, whether shown as a reserve or otherwise, or(ii) any change in carrying amount of an asset or of a liability recognised in equity, including surplus in profit and loss account on measurement of the asset or the liability at fair value,

Section 2 (45) Government Company (No change)

Company in which not less than 51% per cent of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company

DefinitionsSection 2(49) Definition of Interested Director

The Definition of Interested Director is very exhaustive now. “interested director” means a director who is in any way, whether by himself or through any of his relatives or firm, body corporate or other association of individuals in which he or any of his relatives is a partner, director or a member, interested in a contract or arrangement, or proposed contract or arrangement, entered into or to be entered into by or on behalf of a company

Section 2 (51) Key managerial personnel(New Definition)

The term key managerial personnel in relation to a company means:i) the Chief Executive Officer or the Managing

Director or the Managerii) the Company Secretary;iii) the whole-time Director;iv) the Chief Financial Officerv) such other officer as may be prescribed

Definitions

Section 2 (57) Net Worth means the aggregate value of the paid-up share capital and all reserves created out of the profits and securities premium account, after deducting theaggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the audited balance sheet, but does not include reserves created out of revaluation of assets, write-back of depreciation and amalgamation;

DefinitionsSection 2(60) Officer who is in default (Modified definition)

For the purpose of any provision in this Act which enacts that an officer of the company who is in default shall be liable to any penalty or punishment by way of imprisonment, fine or otherwise, means any of the following officers of a company, namely:—(i) whole-time director;(ii) key managerial personnel;(iii) where there is no key managerial personnel, such director or directors as specified by the Board in this behalf and who has or have given his or their consent in writing to the Board to such specification, or all the directors, if nodirector is so specified;(iv) any person who, under the immediate authority of the Board or any key managerial personnel, is charged with any responsibility including maintenance, filing or distribution of accounts or records, authorises, actively participates in, knowingly permits, or knowingly fails to take active steps to prevent, any default

Contd…

Definitions

(v) any person in accordance with whose advice, directions or instructions the Board of Directors of the company is accustomed to act, other than a person who gives advice to the Board in a professional capacity;(vi) every director, in respect of a contravention of any of the provisions of this Act, who is aware of such contravention by virtue of the receipt by him of any proceedings of the Board or participation in such proceedings without objecting to the same, or where such contravention had taken place with his consent or connivance;(vii) in respect of the issue or transfer of any shares of a company, the share transfer agents, registrars and merchant bankers to the issue or transfer

Definitions

Section 2(68) Private Company

limit of maximum number of members has been increased from 50 to 200.

Related Party Sec 2(76)

The term related party has been defined in the Act as under, Related Party Means:-(i) a director or his relative; (ii) a key managerial personnel or his relative; (iii) a firm, in which a director, manager or his relative is a partner; (iv) a private company in which a director or manager is a member or director; (v) a public company in which a director or manager is a director or holds along with his relatives, more than two per cent. of its paid-up share capital;

Contd…

Definitions

(vi) any body corporate whose Board of Directors, managing director or manager is accustomed to act in accordance with the advice, directions or instructions of a director or manager;

(vii) any person on whose advice, directions or instructions a director or manager is accustomed to act:

Provided that nothing in sub-clauses (vi) and (vii) shall apply to the advice, directions or instructions given in a professional capacity;

(viii) any company which is— (A) a holding, subsidiary or an associate company of such company; or (B) a subsidiary of a holding company to which it is also a subsidiary;

(ix) such other person as may be prescribed;

Definitions

Section 2(85) Small Company

‘‘small company’’ means a company, other than a public company,(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than five crore rupees; or (ii) turnover of which as per its last profit and loss account does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than twenty crore rupees: Provided that nothing in this clause shall apply to— (A) a holding company or a subsidiary company; (B) a company registered under section 8; or (C) a company or body corporate governed by any special Act;

Section 2(91)Turnover

means the aggregate value of the realization of amount made from the sale, supply or distribution of goods or on account of services rendered, or both, by the company during a financial year.

Publication of Name of the Company

Section 12 : Publication of Name of the Company with Corporate Identification Number in the Letter Head (New requirement)

•The Company shall get its name, address of its registered office and the Corporate Identity Number alongwith telephone number, fax number, if any, e-mail and website addresses, if any, printed in all its business letters, billheads, letter papers and in all its notices and other official publications.

• If the characters employed therefore are not those of the language or of one of the languages in general use in that locality, also in the characters of that language or of one of those languages;

• In case of one person Company words ‘‘One Person Company’’ shall be mentioned in brackets below the name of such company, wherever its name is printed, affixed or engraved.

Incorporation of Company

One Person Company (OPC) –

the intent is apparently to permit entrepreneurship of a single individual to obtain the benefit of a corporate form of organizationFeatures:-1. formed as a private limited company.2. only one person as a member3. minimum of 1 director 4. An OPC is not required to hold an annual general meeting5. Meeting of Board of Directors of OPC to be conducted in each half of a calendar year and the gap between the two meetings is not less than ninety days

Memorandum of Association: Bifurcation of the objects clause into main, ancillary and other objects is

not required. Only objects for which company is incorporated along with matters considered necessary for its furtherance shall be mentioned.

Dormant Company: Section 455

Any existing Active Company, Where a company is formed and registered for a future project or

to hold an asset or intellectual property

and has no significant accounting transaction, such a company or an

inactive company In that case, Company may apply in prescribed form to RoC

for giving status of Dormant Company. Dormant Company is subject to lesser compliances than

Active Company Dormant Company can also be converted back to Active

Company

Share Capital:

Commencement of Business : No need to obtain certificate of commencement of business, a declaration and verification is required by the Public Company.

Prospectus : The content to be prescribed in the Prospectus has now been made more detailed.

Global Depository Receipt (Section 41): A company may, after passing a special resolution in its general meeting, issue depository receipts in any foreign country in such manner, and subject to such conditions, as may be prescribed.

Return of Allotment is required for all kinds of Securities including debentures. Time Period for Allotment: within 60 days of receipt of application money, in

case of Private Placement - Intimation of Change in Promoters Shareholding: (Section 93): Every listed

company shall file a return in the prescribed form with the Registrar with respect to change in the number of shares held by promoters and top ten shareholders of such company, within 15 days of such change.

Acceptance of Deposits by Companies

Prohibition on Acceptance of Deposits from Public Only the following companies may invite deposits from the public

(i) Banking companies(ii) Non Banking Financial Companies (NBFC), subject to RBI guidelines(iii) Notified companies(iv) Public company having such net worth or turnover as may be prescribed as per audited balance sheet of the immediately preceding financial year

A company other than those specified above:- Invite, accept or renew deposits only from its members

• All charges on the company’s property, assets or

undertaking require registration.

• Earlier registration was required only for following:

Registration of Charges :Sec. 77 to 87

• Securing debenture issue • Uncalled share capital

• Immovable property • Book debts

• Movable property not being pledge • Floating charge on undertaking

• Calls made but not paid • Ship or share in a ship

• Goodwill, patent, licence under a patent, trademark or copyright or licence under a copyright

Maintenance & Inspection of documents

Maintenance & Inspection of documents in electronic form : (Section 120) any document, record, register, minutes, etc., can be maintained by the Company in electronic form.

Its inspection or copies of the same can also be given in electronic form.

Report on AGM :(Section 121): Every listed public company shall prepare in the prescribed manner a report on each AGM including the confirmation to the effect that the meeting was convened, held and conducted as per the provisions of this Act and the rules made there under.

Report is to be filed with ROC with in 30 days of AGM.

ACCOUNTS & AUDIT

ACT 2013Defined “Financial Statement” (i) Balance sheet (ii) Profit and loss account (iii) cash flow statement; (iv) a statement of changes in equity,

Consolidation of Accounts mandatory with subsidiaries/ JVs/ Associates

Financial year can end only on 31st March – no extension permitted at present

Books of Accounts can be maintained in electronic form also.

To include Cash Flow Statement and statement of changes in equity

Highlights

Highlights•Additional disclosures like extract of annual return, detail of loan, related party transaction etc. needs to be given of the compliances made during the year

Re-open or re-cast of accounts will be possible subject to the prescribed conditions

Facility to revise the financials after taking an approval of the tribunal

Rotation of Auditors

Auditors not to rendered certain services

ACCOUNTS & AUDIT

Preparation of Financial Statement: Section 129 Maintenance of books of accounts and other books and papers in electronic

mode is now permitted Every Financial statement:

shall comply with Accounting Standards notified u/s133 shall be in the format prescribed under Schedule III.

Exceptions: Insurance Companies, Banking Co., Power Generating Co., Electricity supply co. etc. may prepare their financial statement as per the Act governing such class of companies.

Consolidated Financial Statement :- If Company has one or more subsidiaries then along with financial statement, consolidated financial statement of the company and all its subsidiaries, in same form & manner at its own, shall also be laid before the Annual General Meeting.

Subsidiary shall for the purpose of this requirement include associate company and joint venture.

ACCOUNTS & AUDIT

All Provision relating to preparation of Fin. statement of Holding Co. shall mutatis mutandis apply on consolidated Fin. Statement

In case of contravention of provisions relating to Books of Accounts (Section 128), MD, WTD (Fin.), CFO and any other person of a company charged by the Board with the duty of complying with the provisions of this section is liable to imprisonment which may extend to one year or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees or with both.

ACCOUNTS & AUDIT

Revision of Financial statement or Board’s Report Mandatory reopening or recasting: (Section 130)

A company can reopen its books of accounts and recast its financial statements if: The relevant accounts were prepared in fraudulent manner or

Affairs of the company were mismanaged during the relevant period casting a doubt on the reliability of the financial statements.

On an application by Central Government, IT authorities SEBI or any regulatory body and an order being made by Court of Tribunal.

Voluntary Revision: (Section 131) The company may, if it appears to the directors that the Financial

Statements or Board’s Report are not in compliance with the provisions of the Act, may prepare revised financial statement or a revised Board’s Report in respect of any of the three preceding financial year with the approval of Tribunal.

ACCOUNTS & AUDIT

Appointment of Auditors:- (Section 139) Appointment of Statutory Auditors for 5 years term .

However, the company shall place the matter relating to such appointment for ratification by members at every annual general meeting.

If change before 5 year then Special Resolution + Approval of Central Government Notice of Appointment of Auditors to be filed with ROC in 15 days of appointment. In case of Government Company, Auditors are to be appointed by C&AG within a

period of 180 days from the commencement of the F/Y. First Auditors of Govt. Company: to be appointed by the C&AG within 60 days from

the date of registration of the company and in case the Comptroller and Auditor-General of India does not appoint such auditor within the said period, the Board of Directors of the company shall appoint such auditor within the next 30 days; and in the case of failure of the Board to appoint such auditor within next thirty days, it shall inform the members of the company who shall appoint such auditor within sixty days at an extraordinary general meeting

ACCOUNTS & AUDIT

Prohibition on Reappointment of Auditor : Listed company or class of Companies as may be prescribed, shall not appoint or re-appoint-

(a) an INDIVIDUAL as auditor for more than one term of five consecutive years(b) an AUDIT FIRM as auditor for more than two terms of five consecutive years.

Automatic reappointment of existing auditor (without passing any resolution) at AGM where no auditor is appointed/ reappointed at AGM.

Limited Liability Partnerships may be appointed as Auditors Auditing Standards to be made mandatory.Auditor not to render certain services: Auditor shall provide to the company only such other

services as are as are approved by the Board of Directors or the audit committee, as the case may be, but which shall not include any of the following services (whether such services are rendered directly or indirectly to the company or its holding company or subsidiary company or associate company), namely:—(a) accounting and book keeping services; (b) internal audit; (c) design and implementation of any financial information system; (d) actuarial services; (e) investment advisory services; (f) investment banking services; (g) rendering of outsourced financial services; (h) management services; and (i) other services as may be prescribed.

ACCOUNTS & AUDIT

Matters to be stated in Auditor’s Report interalia include: Whether, in his opinion, the financial statements

comply with the accounting standards. The observations or comments of the auditors on

financial transactions or matters which have any adverse effect on the functioning of the company.

Whether the directors is disqualified from being appointed as a director under sub-section (2) of section 164.

ACCOUNTS & AUDIT

Matters to be stated in Auditor’s Report interalia include: Any qualification, reservation or adverse remark relating to the

maintenance of accounts and other matters connected therewith. Whether the company has adequate internal financial controls system in

place and the operating effectiveness of such controls. such other matters ad may be prescribed. The Auditors shall also report on: Whether the company has disclosed the effect, if any, of pending

litigations on its financial position in its financial statement. Whether the company has made provision for foreseeable losses, if any

on long term contracts including derivative contracts. Whether there has been delay in depositing money into the Investor

Education and Protection Fund by the company.

ACCOUNTS & AUDIT

Signing of Financial Statement: Financial Statement including Consolidated

financial Statement shall be approved by the Board and to be signed by, 1. two directors of which one shall be MD or CEO 2. CFO and Company Secretary

Dividend

DECLARATION AND PAYMENT OF DIVIDEND No Compulsory Transfer of Profits to Reserves. A Company MAY, if

consider appropriate, before the declaration of any dividend in any financial year, transfer such percentage of its profits for that financial year to the reserves of the company

Unpaid dividend can be claimed any time:-Time limit of seven years will not apply.

Interim Dividend: In case company has suffered loss during the current F/Y upto the end of the quarter immediately preceding the date of declaration of dividend, in that case, rate of interim dividend shall not be higher than the average dividend declared during last 3 F/Y.

Management & Administration Register for holders of all type of securities issued by the Company has to be maintained. Annual Return:

Annual Return of the Company shall now to contain more information than required under the Co. Act 1956. including particulars of holding, subsidiary and associate companies, details of meeting of Board/Committee with attendance of Directors, remuneration of directors and key managerial personnel, penalty or punishment imposed on the company, its directors or officers.

Place of keeping registers and returns : Co. Act 2013 allows registers of members, debenture-holders, any other security

holders or copies of return, to be kept at any other place in India in which more than one-tenth of members reside [section 94(1)]. In Co. Act 1956, it was limited to a place within the city, town or village in which the registered office is situated.

Listed companies will be required to file a return with the ROC with respect to the change in the number of shares held by promoters and top ten shareholders within 15 days of such a change[section 93].

Every Company shall have observe secretarial standards specified by the Institute of Company Secretaries of India with respect to general and board meetings [section 118 (10) ]

Meeting of Shareholders

General meetings : Now first annual general meeting should be held within nine

months from the date of closing of the first financial year of the company [section 96(1) of 2013 Act], whereas the 1956 Act requires the first annual general meeting to be held within 18 months from the date of incorporation

Voting through electronic means by members at meetings is permitted.

Quorum : Previously 5 members personally present in case of a public

company constituted a quorum. Now, U/s 103, if No. of Members is upto 1000 then 5 members No. of Members is more than 1000 but upto 5000 then 15 members No. of member exceeding 5000 then 30 members , will constitute quorum.

DIRECTORS

Directors

Women Directors:[Section 149(1) of 2013 Act] : Following Co. Shall have at least of one woman director :

(i) Every listed company, within one year from the commencement of second proviso to sub-section (1) of section 149.

(ii) Every other public company that has paid–up share capital of Rs. 100 crore or more, or a turnover of Rs. 300 crore or more within three years from the commencement of second proviso to sub-section (1) of section 149.

Number of Directorship :The 2013 Act increases the limit for number of directorships that can be held by an individual from 12 to 15.

Resident Director: One director to be resident in India. At least one director must have stayed in India for at least 182 days in the previous calendar year [Section 149(3) ]

Number of directors• Minimum : Public company -3 Private -2 , One Person Co.-1.• Maximum : limit increased to 15 from 12 .More directors can be added by passing of special resolution without getting the approval of Central Government.

Board Meetings & Companies Act 2013

Section 173: Meeting of Board First Board Meeting- with in 30 days of incorporation Mini. - 4 meetings to be held every year. Max. 120 days gap between two meetings. Directors may participate either

In Person; or through Video Conference; or Other Audio visual means, as may be prescribed which are capable

of recording, recognition of Participation by directors , recording and storing the proceeding with date & time.

As per draft rules, Directors should attend at least one meeting in financial year in person.

Board meetings & Companies Act 2013

Section 173: Meeting of Board Central Government may prescribe items which cannot be dealt in a

meeting through video conferencing. As per draft rules: Following items can't be dealt through video

conferencing: Approval of Annual Financial Statement Board Report

Notice : Min. 7 days notice required for calling Board Meeting Meeting on Shorter Notice : for transacting urgent matter, but

presence of one independent Director, if any, is must. However, if one Independent Director was not present, then decisions shall

be circulated to all directors and shall be final only when it is ratified by one independent director, if any.

Penalty for default: Rs.25,000/- to every officer whose duty is to give notice.

•As per section 118 of Companies Act 2013, all companies are required to follow Secretarial Standards.•Secretarial Standard- I is about Meetings of the Board Of Directors.

Board meetings & Companies Act 2013

Quorum: (Section 174) 1/3 of total strength or 2 Directors, which ever is higher Directors attending through video conferencing shall be included in

quorum. Where a meeting of the Board could not be held for want of quorum, then,

unless the articles of the company otherwise provide, the meeting shall automatically stand adjourned to the same day at the same time and place in the next week or if that day is a national holiday, till the next succeeding day, which is not a national holiday, at the same time and place.

Exceptions: If number of interested directors ≥ 2/3 of total strengths, then remaining

Directors will constitute the quorum. If number of directors reduced below the quorum fixed by the Act, remaining

directors can meet to increase number of Directors or for calling General Meeting.

Passing of resolution by Circulation: Section 175

Should be only for those items which are not statutorily required to be transacted in the Board Meeting.

Resolution in draft Should be sent to all Directors at their address registered with the Company in India, either by post or hand or electronic mean and shall be approved by majority.

Where not less than 1/3rd of the total number of Directors of the company for the time being require that any resolution under circulation must be decided at a meeting, the chairperson shall put the resolution to be decided at a meeting of the Board.

Resolution passed by circulation shall be noted in subsequent meeting & made part of the minutes.

Powers of the Board of Directors: Section 179

Following Powers to be exercised at the Board meeting only: (a) to make calls on shareholders in respect of money unpaid on their shares;(b) to authorise buy-back of securities under section 68;(c) to issue securities, including debentures, whether in or outside India;(d) to borrow monies;(e) to invest the funds of the company;(f) to grant loans or give guarantee or provide security in respect of loans;(g) to approve financial statement and the Board’s report;(h) to diversify the business of the company;(i) to approve amalgamation, merger or reconstruction;(j) to take over a company or acquire a controlling or substantial stake in

another company;(k) any other matter which may be prescribed.

....Contd.

Powers of the Board of Directors: Section 179

Further, in addition to Section 179, as per rules, following items are required to be transacted at the Board meeting:

(1) to make political contributions;

(2) to fill a casual vacancy in the Board;

(3) to enter into a joint venture or technical or financial collaboration or any collaboration agreement;

(4) to commence a new business;

(5) to shift the location of a plant or factory or the registered office;

(6) to appoint or remove key managerial personnel (KMP) and senior management personnel one level below the KMP;

....Contd.

COMMITTEE OF DIRECTORS

2 new Committees of Directors has been introduced: STAKEHOLDERS RELATIONSHIP COMMITTEE :- 1) Every company having more than 1000 shareholders, debenture-holders, deposit-

holders and any other security holders at any time during a financial year 2) consist of a chairperson who shall be a non-executive director and such other members

as may be decided by the Board.

NOMINATION AND REMUNERATION COMMITTEE –

1) Every listed company and prescribed class of companies, shall constitute the Nomination and Remuneration Committee. 2) consist of three or more non-executive directors out of which not less than one half shall be independent directors.

Audit Committee

Required for : All listed company Public Company paid up capital of Rs.100 cr. or more Borrowings or debentures exceeding Rs.200 cr. or more

Constitutions: Mini. 3 directors but majority of Independent Director Scope: Every Audit Committee shall act in accordance with the terms

of reference specified in writing by the Board which shall inter alia, include,—

(i) the recommendation for appointment, remuneration and terms of appointment of auditors of the company;

(ii) review and monitor the auditor’s independence and performance and effectiveness of audit process;

(iii) examination of the financial statement and the auditors’ report thereon; (iv) approval of transactions of the company with related parties; (v) scrutiny of inter-corporate loans and investments; (vi) valuation of undertakings or assets of the company, wherever it is necessary; (vii) evaluation of internal financial controls and risk management systems; (viii) monitoring the end use of funds raised through public offers and related matters.

Audit Committee

Audit Committee is empowered to investigate into matters referred by the Board or Act.

All Listed Companies & prescribed categories of Company are required to establish vigil mechanism for reporting of genuine concern.

Mechanism should provide for director access to Chairman of Audit Committee

Requirement of attending the AGM by the Chairman of Audit Committee is not required now.

CSR COMMITTEE :

Following co. need to have a CSR Committee Net worth ≥ Rs.500 Crore; or Turn over ≥ Rs. 1,000 Crore; or Net Profit ≥ Rs. 5 Crore

Committee to consist of at least 3 directors out of which at least 1 director shall be independent director.

At least 2% of average net profits of the three immediately previous financial years to be spent on CSR activities specified in Schedule VII

Company shall disclose in Director’s Report about the policy adopted, giving reasons on failure of implementation

BOARD’S REPORT

The requirements for disclosure in the Board’s report interalia include: Extract of Annual Return Number of meetings of Board of Directors For listed and prescribed class of companies – policy on directors

reappointment, remuneration and annual evaluation of the performance of the Board of Directors.

Related party contracts Development and implementation of a Risk Management Policy. Corporate Social Responsibility.

Contd…

BOARD’S REPORT

Listed company shall disclose in the Board’s report, the ratio of the remuneration of each director to the median employee’s remuneration and such other details.

The report shall contain a separate section wherein a report on the performance and financial position of each of the subsidiaries, associates and joint venture companies included in the CFS.

Director’s responsibility statement shall state about: In the preparation of annual accounts, the applicable accounting

standards had been followed alongwith proper explanation relating to material departures.

Selection and application of accounting policies, judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the4 end of the financial year and of the profit and loss of the company for that period.

BOARD’S REPORT

Director’s responsibility statement shall also state about: Proper and sufficient care being taken for the maintenance of

adequate accounting records- in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

Preparation of the annual accounts on a going concern basis. For listed companies, whether internal controls have been laid

down and such internal controls are adequate and were operating effectively.

Devising of proper systems to ensure compliance- with the provisions of all applicable laws and that such systems were adequate and operating effectively.

No Company shall directly or indirectly advance any loan including book debt or give guarantee or provide security to its directors or to any other person in whom the director is interested.

‘any other person in whom the Directors is interested’:

1. any director of the lending Company or its holding co or any partner or relative of any such director

2. any firm in which such director or relative is a partner 3. Any private co of which any such director is a director or member4. Any body corporate at a GM of which not less than 25% of total voting power is

exercised/controlled by any such director, or by two or more5. Any body corporate, the Board, MD or manager, whereof is accustomed to act in

accordance with the directions or instruction of the Board, or of any director or directors, of the lending company.

Loan to Directors – Section 185

Exception:

The said section does not apply to:-

a. Loan to MD/WTD

•As a part of contract of services extended to all its employees; or

•Pursuant to scheme approved by members by special resolution

b. A Company which in the ordinary course of its business provides loans

or gives guarantees or securities for the due repayment of any loan and in

respect of such loans an interest is charged at a rate not less than the

bank rate declared by RBI

Loan to Directors – Section 185

RELATED PARTY TRANSACTION

Related Party Transaction

Except with the consent of the Board of Directors given by a resolution at a meeting of the Board and subject to such conditions as may be prescribed, no company shall enter into any contract or arrangement with a related party with respect to-

(a) sale, purchase or supply of any goods or materials; (b) selling or otherwise disposing of, or buying, property of any kind; (c) leasing of property of any kind; (d) availing or rendering of any services; (e) appointment of any agent for purchase or sale of goods, materials,

services or property; (f) such related party's appointment to any office or place of profit in the

company, its subsidiary company or associate company; and (g) underwriting the subscription of any securities or derivatives thereof, of

the company.


Special Resolution: If paid up capital exceeds prescribed limit (presently Rs. 1 crore or more) or

transactions exceeds prescribed limit ( presently, 5% of annual turn over or 20% of net worth etc.) then prior approval of shareholders by way of Special Resolution required .

Justification of transaction: Details of Contract / arrangement shall be disclosed in Boards’ Report with

justification of transaction

Consequence: If consent not received by Board/ Shareholders or not ratified within 3

months : transaction shall be voidable at the option of the Board (+) Interested Director to indemnify the Company for losses

Related Party Transaction: Section 188

Except with the consent of the Board of Directors given by a resolution at a meeting of the Board and subject to such conditions as may be prescribed, no company shall enter into any contract or arrangement with a related party with respect to-

(a) sale, purchase or supply of any goods or materials; (b) selling or otherwise disposing of, or buying, property of any kind; (c) leasing of property of any kind; (d) availing or rendering of any services; (e) appointment of any agent for purchase or sale of goods, materials,

services or property; (f) such related party's appointment to any office or place of profit in the

company, its subsidiary company or associate company; and (g) underwriting the subscription of any securities or derivatives thereof,

of the company.

Related Party Transaction: Section 188

Special Resolution: If paid up capital exceeds prescribed limit (presently Rs. 1 crore or

more) or transactions exceeds prescribed limit ( presently, 5% of annual turn over or 20% of net worth etc.) then prior approval of shareholders by way of Special Resolution required .

Justification of transaction: Details of Contract / arrangement shall be disclosed in Boards’ Report

with justification of transaction

Consequence: If consent not received by Board/ Shareholders or not ratified within 3

months : transaction shall be voidable at the option of the Board (+) Interested Director to indemnify the Company for losses

Draft Rules: Requirement in case of Related Party transaction :

Stringent penalty : In case of default by the listed Companies - imprisonment upto 1 year or fine min. Rs. 25000,

max. Rs.5 lakh or both For others Companies: fine min. Rs. 25000, max. Rs.5 lakh

Exemption: transactions in ordinary course of business at arms length.

Conditions: The notice of the Board/ Explanatory statement of the meeting shall disclose (a) name of the related party and nature of relationship; (b) nature, particulars of the contract or arrangement; (c) material terms of the contract or arrangement(e) any other information relevant or important for the Board to take a decision on the proposed

transaction.

Required to maintain Register of Contract : Open for inspection at AGM by member / proxy


Related Party [Section 2(76)]: means —1. a director or his relative;

2. a key managerial personnel or his relative;

3. a firm, in which a director, manager or his relative is a partner;

4. a private company in which a director or manager is a member or director;

5. a public company in which a director or manager is a director or holds along with his relatives, more than two per cent. of its paid-up share capital;

6. anybody corporate whose Board of Directors, managing director or manager is accustomed to act in accordance with the advice, directions or instructions of a director or manager;


7. any person on whose advice, directions or instructions a director or manager is accustomed to act ( not in a professional capacity)

8. any company which is—a. a holding, subsidiary or an associate company of

such company; orb. a subsidiary of a holding company to which it is

also a subsidiary;9. such other person as may be prescribed.

Related Party Transaction: Draft Company Rule:

Meaning of “Related Party” further widened by rules. Following shall be deemed to be a related party-

(1) a director or key managerial personnel of the holding, subsidiary or associate company of such company or his relative;

(2) any person appointed in senior management in the company or its holding, subsidiary or associate company i.e. personnel of the company or its holding, subsidiary or associate company who are members of core management team excluding Board of directors comprising all members of management one level below the executive directors, including the functional heads.


Earlier definition of Related Party was only in AS-18, under new act Related Party has been defined in widest possible manner.

Requirement of approval of Central Govt. has been dispensed for entering into contract or for appointment of related party at the place of profit .

key managerial personnel including Company Secretary or his relative is included in definition of related party.

Like Directors Company Secretary, CFO is also required to make disclosure of interest in any contract or arrangement

Key Managerial Personnel

Appointment of Key Managerial Personnel [Clause 203(1)] • Every company belonging to such class or classes of companies as may be prescribed shall have the wholetime key managerial personnel.• an individual shall not be the chairperson of the company as well as the managing director or Chief Executive Officer of the company at the same time Exception:-(i) Articles of a company provide otherwise

(ii) Company does not carry multiple businesses

TIME PERIOD FOR FILLING VACANCY INOFFICE OF KMP:-Board of Directors at Board Meeting shall appoint within 6 months.

INDEPENDENT DIRECTORS

Independent Director

Under Companies Act, 1956 :• Not applicable to unlisted companies (whether public or private)• Applicable only to listed companies under Listing Agreement:

1/3 rd to ½ of total directors to be independent directors (depending upon executive/non-executive nature of chairman)

Under new Companies Act, 2013:• Requirement: 1/3rd of total directors to be independent directors.• Applicability:1. All Listed Companies2. Companies notified by Central Govt i.e. as per draft rules:

(a) Public Cos with paid up share capital in excess of Rs. 100 crores, or(b) Public Cos with outstanding loans/borrowings/ debentures/ deposits in excess of Rs.200 crores.

Definition of Independent Director

An independent director in relation to a company, means a director other than a managing director or a whole-time director or a nominee director:

(a) who, in the opinion of the Board, is a person of integrity and possesses relevant expertise and experience;

(b) (i) who is or was not a promoter of the company or its holding, subsidiary or associate company;(ii) who is not related to promoters or directors in the company, its holding, subsidiary or associate company;


(c) who has or had no pecuniary relationship with the company, its holding, subsidiary or associate company, or their promoters, or directors, during the two immediately preceding financial years or during the current financial year

(d) none of whose relatives has or had pecuniary relationship or transaction with the company, its holding, subsidiary or associate company, or their promoters, or directors, amounting to two per cent. or more of its gross turnover or total income or fifty lakh rupees or such higher amount as may be prescribed, whichever is lower, during the two immediately preceding financial years or during the current financial year


(e) who, neither himself nor any of his relatives—(i) holds or has held the position of a key managerial personnel or is or has been

employee of the company or its holding, subsidiary or associate company in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed;

(ii) is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed, of— (A) a firm of auditors or company secretaries in practice or cost auditors of the

company or its holding, subsidiary or associate company; or(B) any legal or a consulting firm that has or had any transaction with the company, its

holding, subsidiary or associate company amounting to ten per cent. or more of the gross turnover of such firm;

(iii) holds together with his relatives two per cent. or more of the total voting power of the company; or

(iv) is a Chief Executive or director, by whatever name called, of any nonprofit organisation that receives twenty-five per cent. or more of its receipts from the company, any of its promoters, directors or its holding, subsidiary or associate company or that holds two per cent. or more of the total voting power of the company; or


(f) who possesses such other qualifications as prescribed :

An independent director shall possess appropriate balance of 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.


Definition of independent director under Companies Act, 2013 wider in scope than listing agreement/SEBI ESOP guidelines. The criteria is based on:

Independence from Management Independence from Promoter Group No substantial shareholding Other significant relationship which may cause a conflict of interest Tenure of Independent Director 5 (original term) + 5 years (additional term subject to a special

resolution). After expiry of term - ineligible for re appointment for 3 years.

Code of conduct for Independent Director

Section 149 (7) provides that Company & Independent Directors shall abide by Schedule IV

Schedule IV provides for following:1. Guidelines for professional conduct2. Role & functions of independent Director3. Duties of independent Director4. Manner of Appointment 5. Re-appointment6.Resignation / removal7.Separate Meeting8. Evaluation Mechanism

Guidelines of professional conduct for Independent Director

An independent director shall:(1) uphold ethical standards of integrity and probity;(2) act objectively and constructively;(3) act in a bona fide manner in the interest of the company;(4) devote sufficient time and attention for informed and balanced

decision making;(5) not abuse his position to gaining direct or indirect personal

advantage or advantage;(6) refrain from any action that would lead to loss of his independence;(7) where circumstances arise which make an independent director lose

his independence, the independent director must immediately inform the Board accordingly;

(8) assist the company in implementing the best corporate governance practices

Role & Functions of Independent Director

The independent directors shall:1) bring independent judgment on the Board’s deliberations(2) bring an objective view in the evaluation of the performance of board and

management;(3) scrutinise the performance of management(4) satisfy themselves on the integrity of financial information and that financial

controls and the systems of risk management(5) safeguard the interests of all stakeholders, particularly the minority shareholders;(6) balance the conflicting interest of the stakeholders;(7) determine appropriate levels of remuneration of executive directors, key

managerial personnel and senior management and have a prime role in appointing and where necessary recommend removal of executive directors, key managerial personnel and senior management;

(8) moderate and arbitrate in the interest of the company as a whole, in situations of conflict between management and shareholder’s interest.

Duties of Independent Director

Some of duties are: undertake appropriate induction and regularly update and refresh

their skills, knowledge strive to attend all meetings participate constructively and actively in the committees of the Board strive to attend the general meetings not to unfairly obstruct the functioning ensure that adequate deliberations are held before approving related

party transactions and are in interest of the Company assist in protecting the legitimate interests of the company,

shareholders and its employees not to disclose confidential information

Manner of appointment of Independent Director

Appointment process shall be independent of the company management, balance should be between skills, experience and knowledge in the Board

Appointment shall be approved at the meeting of the shareholders.

Explanatory statement to the notice shall include a statement that in the opinion of the Board, the independent director proposed fulfils the conditions specified in the Act and the rules

Process shall be formalised through a letter of appointment defining tenure, expectations by the Board, duties & liabilities etc.

Term & condition of appointment shall be open for inspection at the registered office & posted on website

Other provisions Related to Independent Director

Re-appointment: Re-appointment only on the basis of performance appraisal

Resignation or Removal In case of resignation/removal, should be replaced by a new independent

director within a period of not more than one hundred and eighty days

Separate Meeting: At least one meeting in a year without presence of non independent directors &

management to review performance of non independent directors, Board, Chairman and to access quality, quantity etc. of flow of information to Board.

Evaluation Mechanism: Performance appraisal of independent directors to be done by entire board

excluding directors being evaluated

Directors: Resignation

Resignation of director:-• A director may resign from his office by giving notice in writing.• The Board shall on receipt of such notice, intimate the Registrar and also place such resignation in the subsequent General Meeting of the Company.• The director shall also forward a copy of resignation along with detailed reasons for the resignation to the Registrar.• The notice shall become effective from the date on which the notice is received by the company or the date.

Merger : Simplified

Currently all compromise / arrangements including reconstruction / mergers have to go through court route.

Court process delays the corporate restructuring. Section 233 provides for mergers/ amalgamations outside the

Tribunal process & this facility is available to: Merger / amalgamation of small companies. Merger / amalgamation between holding company and WOS. Such other class of companies as Central Government may

prescribed.

83

Investor Protection Measures

Issue and Transfer of Securities and Non Payment of Dividend by Listed Companies shall be administered by SEBI

Fraudulent Inducement of Persons to Invest Money is punishable with Imprisonment for a Term which may extend to Ten Years and with Fine which shall not be less than Three Times the Amount involved

Suit may be filed by a person who is affected by any Misleading Statement in the Prospectus or who has invested money by fraudulent inducement

Other Imp. Provisions

Class Action Suits

Specified No. of Members, Depositors or any Class of them may file an application before the Tribunal

Where the Members or Depositors seek any Damages or or demand any other suitable action from or against an audit firm, the liability shall be of the firm as well as of each partner who was involved in making any improper statement of particulars in the audit report or who acted in a fraudulent, unlawful or wrongful manner

The order passed by the Tribunal shall be binding on the company and all its Members, Depositors and Auditors

Section No.

Section Compliance to be made Status of Compliance Remark

CHAPTER -II- INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO

5 Articles 5(6) The Articles of the Company shall be in such forms, as specified in Schedule I, Table F. ‐

5(9) Nothing in this Section shall apply to the Articles of a Company registered under any previous company law unless amended under this Act.

to be Complied The notification for exemption to Govt. companies are yet to be issued by the MCA. After grant of exemptions to Govt. companies and notification of remaining sections, the Articles shall be amended.

12 Registered office of company.

12(3)(a) Every Company shall paint or affix the name and address of registered office and keep the same painted/affixed, outside every office or place in which its business is carried on, in conspicuous position and legible letters.

Complied Circular in this regard has been sent to all Projects & offices and necessary compliance has been made.

12(3)(c) Every Company shall get its name, address of registered office, CIN, telephone/fax no. (if any) and email/website address (if any) printed on all business letters, billheads, letter papers, Notices and other official publications

Complied Circular in this regard has been sent to all Projects and offices and necessary compliance has been made. Letter heads as per the new requirement has been printed.

Section No. Section Compliance to be made Status of

Compliance

Remark Section No.

CHPTER – III : PROSPECTUS AND ALLOTMENT OF SECURITIES

23 to 41 Public offer of securities by the company

Contains provisions regarding public issue of securities, content of prospectus, red herring prospectus, self prospectus, liability for mis-statement in prospectus etc.

to be Complied Necessary Compliance shall be made as per the requirement of Act & rules in case of Public offer of securities.

42 Offer or invitation for subscription of securities on private placement

In case of issue of NCDs on private placement, company shall pass Special Resolution in General Meeting once in a year.

Being complied The company has taken approval of shareholder by special resolution at AGM held on 27.08.2014 for issue of bonds upto Rs.13000 crore in next one year or till the date of next AGM on placement basis.

CHAPTER – IV : SHARE CAPITAL AND DEBENTURE

46 Certificate of shares. In case of the Composition of Board permits, share certificate shall be signed by one non-executive Director out of two Director and by Company Secretary. Share Certificate has to be in new format and is required to be signed by one non-executive Director

Being complied Share Certificate in new format as prescribed under SH1 are being issued with signature of one Independent Director and one Functional Director.

71 Debentures. Issue of Debentures, appointment of debenture- trustee, creation of debenture- redemption reserves and security and redemption.

Being complied In case of issue of bonds by the Company, Compliance as prescribed under the rules are being made.

Section No. Section Compliance to be made Status of Compliance

Remark Section No.

CHAPTER V: ACCEPTANCE OF DEPOSITS BY COMPANIES

73 Prohibition on acceptanceof deposits from public.

73 (1) On and after the commencement of the Companies Act, 2013, no Company shall invite, accept or renew deposit under this Act from the public except in a manner provided under Section 73.

Complied NTPC has stopped accepting/ renewing deposits w.e.f. 11.05.2013 under NTPC Public Deposits Scheme.

73 Prohibition on acceptance ofdeposits from public.

Any money paid towards subscription to any security, including share application money pending allotment, if not allotted within 60 days or not refunded within 15 days after 60 days time, shall be treated as deposits.

Being Complied Already being communicated to Subs/ JVs to allot shares within a period of 60 days from receiving subscription amount from NTPC

74 Repayment of deposits, etc., accepted beforecommencement of this Act.

Companies having deposit on the date of 1/4/2014 are to (a) file return in prescribed form with in 3 months and (b) Repay within one year

Complied Necessary returns has already been filed with ROC and the leftover deposit will be paid on or before 31.03.2015.

CHAPTER VI REGISTRATION OF CHARGES

77 Duty to Register Charge

Duty of every Company to register charge within 30 days

Being Complied

CHAPTER VII MANAGEMENT AND ADMINISTRATION

93 Return to be filed withRegistrar in case promoters’stake changes.

Intimation to ROC for any change (increase/decrease) of 2% or more, in shareholding position (value/volume) of promoters and top ten shareholders

Being complied Necessary Return will be filed if there is any change in Promoters' Shareholding.

101 Notice of Annual General Meeting

(1) General meeting can be convened by providing clear 21 days notice, either in writing or in electronic mode

Being complied Notice of the 38th AGM was sent as per the new provisions to shareholders thorough registered post, who did not have registered email and through email to all other shareholders having registered email ids .

Notice of Annual General Meeting

(3) Notice shall be given to every member, legal representatives, auditors and directors of the Company

Being complied Notice of the 38th AGM eas sent to all auditors, directors & shareholders.

Notice of Annual General Meeting

The notice of the meeting shall be given by speed post or registered post or through electronic mode .

Being complied Notice of the 38th AGM & Postal Ballot was sent as per the new provisions to shareholders thorough registered post.

103 Quorum for the meeting

Quorum is based on the number of the members of the Company

Being complied Quorum for the 38th AGM was as per the requirement of New Act.

105 Proxies Proxy shall have no right to speak or vote except on poll and one person not to be proxy for members exceeding 50 in numbers or holding not more than 10% of shareholding of the Company

Being complied Necessary instruction in this regard was the printed in the notice of the AGM.

107 Voting by show of hands

At any general meeting, a resolution put to the vote of the meeting shall, unless a poll is demanded under section 109 or the voting is carried out electronically, be decided on a show of hands.

Being complied No decision by show of hands at AGM , in view of circular 20/2014 dated 17.06.2014 as the Company has opted e-voting for AGM resolutions

Section No.

Section Compliance to be made Status of Compliance

Remark

108 Voting through electronicmeans.

The Central Government may prescribe the class or classes of companies andmanner in which a member may exercise his right to vote by the electronic means.

Being complied The company is providing e-voting facility to its members. In respect of 38th AGM & postal ballots necessary e-voting platform was made available to all shareholders.

110 Postal ballot Certain items should be transacted only by means of Postal Ballot.

Being complied In order to increase the borrowing powers of the Company from 100000 crore to Rs. 150000 Crore and to create charge on property approval of shareholders were taken through postal ballot.

118 Minutes of proceedings of general meeting, meeting of Board of Directors and other meeting and resolutions passed by postal ballot

Every company shall cause minutes of the proceedings of every general meeting of any class of shareholders or creditors, and every resolution passed by postal ballot and every meeting of its Board of Directors or of every committee of the Board, to be prepared and signed in such manner as may be prescribed and kept within thirty days of the conclusion of every such meeting concerned, or passing of resolution by postal ballot in books kept for that purpose with their pages consecutively numbered.

to be complied Existing Secretarial Standard has not been notified by the Central Government. In absence of notification regarding Secretarial Standard, Minutes are made as per the Companies Act, 2013.

120 Maintenance and inspectionof documents in electronicform.

Document, record, register, minutes, etc.,required to be kept by a company are required to be maintained in electronic form.

to be complied As per the Clarification issued by MCA, maintenance of documents in electronic form is not mandatory no. However, feasibility of maintenance of documents in electronic form is being prepared


Remark

CHAPTER IX ACCOUNTS OF COMPANIES

129 Financial statement Financial Statement to be in form as prescribed under Schedule- II

Being complied In view of circular 08/2014 dated 04.04.2014, Financial Statements and Auditors Report for the year 2013-14 were prepared in the formats as prescribed in the Companies Act, 1956.

134 Financial statement, Board's report etc.

In director responsibility statement two additional statements are required to be given : (i) adequacy of internal financial control system and (ii) compliance of all laws

Being complied In view of circular 08/2014 dated 04.04.2014, Directors Report and its Annexure for the year 2013-14 were prepared as per the Companies Act, 1956.

135 Corporate Social Responsibility

As per Section 135 (1) 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 constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director.Further the Board of every company referred to in sub-section (1), shall ensure that the company spends, in every financial year, at least two percent of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy.

Being complied CSR and SD committee has been reconstituted inline with New Companies Act and 2% of profit every year is proposed to be spent on CSR.


Remark

138 Internal audit 1) Such class or classes of companies as may be prescribed shall appoint chartered accountant or a cost accountant, or such other professional as may be decided by the Board to conduct internal audit of the functions and activities of the company.2) The Central Government may, by rules, prescribe the manner and intervals in which the internal audit shall be conducted and reported to the Board.

Being complied The Company has separate Internal Audit Department which comprises Chartered Accountants as well as Cost Accountants to conduct Internal Audit at Corporate. For NTPC Projects / Stations, as per the revised procedure approved in 407th Board Meeting, NTPC has empanelled Chartered / Cost Accountants for internsl Audit.

CHAPTER X AUDIT AND AUDITOR

144 Auditors not to render certain services

Certain services shall not be rendered whether directly or indirectly by the Auditors to the company or its holding company or subsidiary company,

Being complied

146 Auditor to attend general meeting

Auditors/ Authorised Representatives to attend the AGM unless exempted by the Company

Being complied AGM held on 27.08.2014 was attended by the Auditors

148 Central Government to specify audit of items of cost in respect of certain companies

The remuneration recommended by the Audit Committee under (i) shall be considered and approved by the Board of Directors and ratified subsequently by the shareholders

Being complied Approval of Shareholders was taken for remuneration payable to the Cost Auditors for the 2014-15 at the AGM held on 27/8/2014.


Remark

CHAPTER XI : APPOINTMENT AND QUALIFICATION OF DIRECTORS

149 Company to have Board of Directors

(1) Following class of companies shall have woman director: every listed company;‐ Other public company having paid up share capital ‐ ‐

of Rs. 100 Crore or more; Other public company having turnover of Rs. 300 ‐

Crore or more

Being complied

Ms Daruwalla is Woman Director on the Board of NTPC. Further, for all JVs and Subsidiaries, covered under specified ceiling, NTPC has nominated Woman Director

(3) Every company shall have at least 1 director resident of India for a total period of not less than 182 days in previous calendar year.

Being complied

All Directors are resident of India.

(4) Every listed public company shall have at least one-third of the total number of directors as independent directors and the Central Government may prescribe the minimum number of independent directors in case of any class or classes of public companies.

to be complied

Presently, position of two independent Director is vacant. As Independent Directors are to be appointed by the Central Government, Company is following up the matter with the Central Government.

(8) Company and Independent Director shall abide by Schedule IV (Code for Independent Directors)

Being complied

Code of Conduct is being modified.

(10) An Independent Director shall hold office for a term up to five consecutive years.

Being complied

All Directors are appointed by Central Govt for a fixed tenure / terms. Presently none Independent Director has term for 5 years or more

160 Right of persons other than retiring directors to stand for directorship.

A non retiring director shall be eligible for ‐appointment as director, provided a member nominates him at least 14 days before the meeting and deposits Rs. 1 Lacs (refundable on successful appointment)

Being complied Three Directors has been appointed in AGM and in respect of their appointment deposit of Rs.1 Lakh each was made by three members.

165 Number of directorships

‐ No person shall be a director in more than 20 companies Maximum number of public companies can be ‐

10

Being complied

CHAPTER XII MEETINGS OF BOARD AND ITS POWERS

173 Meetings of Board (1) Minimum number of four Board Meetings every year with not more than 120 days gap between two meetings

Being complied

(2) Board Meeting through Video Conferencing to be Complied Holding meeting through video conference is optional. It will be complied as and when required.

(3) At least 7 days' Notice for the Board Meeting. Notice to be delivered by hand/post/electronic mode

Being complied NTPC , as a good Governance Practices under which it always send Notice 7 days in advance to its Directors

(3) P1 & P2 Meeting can be convened on a ‐shorter notice for urgent matters, with presence of at least one independent director, if any In case of absence of independent director, ‐

decision taken shall be circulated to all the directors and shall be final only on ratification by at least one independent director, if any

Being complied Shall be complied as and when required.

177 Audit committee

(1) Following class of companies shall have Audit Committee: every listed company;‐ all public companies having paid up share capital of Rs. 10 ‐ ‐

Crore or more; all public companies having turnover of Rs. 100 Crore or ‐

more; all public companies having outstanding loan/debt/deposits ‐

exceeding Rs. 50 Crore

Complied NTPC already have Audit Committee.

177 Audit committee

‐ Audit Committee shall have minimum three directors with independent director forming majority Majority of Audit ‐Committee members, including Chairman, shall have ability to read and understand financial statements

Complied Constitution of Audit Committee is as per the requirement of the Act.

(4) Every Audit Committee shall have specified terms of reference

Complied The terms of reference of Audit Committee have been modified in accordance with the section 177.

(8) Composition of Audit Committee to be disclosed in the Board Report along with recommendation of Committee, not accepted by Board, if any

Being complied

(9) Following class of companies shall have Vigil Mechanism for directors and employees: every listed company;‐ all public companies which accepts deposits from public‐ all public/private companies having borrowing from banks/FI ‐

exceeding Rs. 50 Crore

Complied NTPC has formulated Whistle Blower Policy & Fraud Prevention Policy.

178 Nomination and Remuneration committee and Stakeholders relationship Committee

(1) Following class of companies shall have Nomination and Remuneration Committee: every listed company;‐ all public companies having paid up share ‐ ‐

capital of Rs. 10 Crore or more; all public companies having turnover of Rs. 100 ‐

Crore or more; all public companies having outstanding ‐

loan/debt/deposits exceeding Rs. 50 Crore

Complied NTPC has already constituted a Remuneration Committee. However, since Directors of the Company are appointed by the Central Govt, the Company along with other PSUs have approached DPE for exemption. A notification in this regard is awaited.

Nomination and Remuneration Committee shall consists of three or more non executive ‐directors, with not less than one half shall be ‐independent Chairperson (ED/NED) of the Company may join ‐

as member but not as Chairman of the Committee

Complied As above

(5) Every Company having more than 1000 shareholders/security holders shall constitute a Stakeholder Relationship Committee, with a Non‐Executive Director as Chairman and such other member as decided by Board

Complied Shareholder Grievance Committee has been renamed as Stakeholders Relationship Committee and also its terms of reference have been amended as per Section 178 (5).

179 Powers of the Board

Board to exercise certain powers by a resolution at its meeting only

Being Complied List of items appearing in Section 179 which requires approval in the Board meeting are strictly observed by the Company.

180 Restriction on powers of the Board

Board to exercise following powers only with prior approval of shareholders by Special Resolution: Sell, Lease or dispose off Undertaking ‐ ‐

or substantial the whole of Undertaking; To invest otherwise in trust securities;‐ To borrow money in excess of paid up ‐ ‐

capital and free reserves; To give time to director for re‐ ‐

payment of debt

Being Complied Approval of Shareholders for borrowing in excess of paid up share capital & free reserve up to 1.5 lakh crore was taken through postal ballot .

185 Loan to directors, etc (1) Unless specifically provided, no Company shall, directly or indirectly, advance any loan/guarantee or security in connection with loan, to any director or any other person in which such director is interested

Being complied

188 Related party transactions

No company shall enter into any contract or arrangement with any Related Party without prior approval of the Board of Directors and shareholders.Exception: Ordinary Course of Business; and‐ Arms' Length‐

to be complied Policy regarding Related party transaction with Subsidiary & joint ventures & director, if any, is being prepared. Necessary guidelines has already been issued to all projects, station, Jvs & Subsidiarries in this regard. A policy for dealing with Related Party Transactions are being prepared.

197 Overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy

(5) Sitting Fees can be paid to any Director for attending meeting of Board or Committee thereof or for any other purpose as may be decided by the Board Sitting Fees shall not exceed Rs. 1 Lac per meeting‐

Being complied Sitting fee of Rs. 20000/- is paid for attending meeting to Independent Director. As per provisions of AOA any increase in Sitting fee requires approval of MOP. DPE is expected to issue a clarification in this regard.

(12) Every Listed Company to disclose the ratio of remuneration of directors to median salary of employee Disclosures shall also include particulars mentioned ‐

in Rules

to be complied Necessary disclosure shall be made in the Directors' Report for the F/Y 2014-15.

203 Appointment of key managerial personnel

(1) Every Listed Company and Public Companies having paid up share capital of Rs. 10 Crore or more ‐shall have following whole time KMP:‐ MD or CEO or Manager or in their absence WTD;‐ CS;‐ CFO‐

Complied

(2) Every KMP shall be appointed by Board Resolution containing terms and conditions of the appointment, including remuneration

Being Complied

204 Secretarial audit read with section 179- Every Listed Company and Public Companies having: Paid up capital of Rs. 50 Crore or ‐ ‐

more; Turnover of Rs. 250 Crore or more‐

shall have Secretarial Report from PCS in Form MR 3, annexed to ‐Board Report. Secretarial Auditor shall be appointed by Board.

to be complied

CHAPTER XIV TO CHAPTER XXII

Not applicable as of now

CHAPTER XXIII : GOVERNMENT COMPANIES

394 Annual reports on Government companies

Where the Central Government is a member of a Govt. company the annual report of such company shall be placed in the Parliament together with copy of the Audit report and C&AG comment.

Being complied Annual Report of the Company are laid before the Parliament.

THANK YOU

Companies act 2013.

Documents

new companies act

entire act

new concepts

introduction of new

beginning of new era

mca circular

new regime of self regulation

key provisions