Table Of Content

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Public dealing timings Without financial transactions 9.30 A.M. to 5.00 P.M. With financial transactions 9.30 A.M. to 4.00 P.M. Phones: 41504444, 45341000 Grams: COMPSEC Fax: 011-24626727 Website: www.icsi.edu E-mail: [email protected] Laser Typesetting by Delhi Computer Services, Dwarka, New Delhi, and Printed at M.P. Printers, NOIDA/ PROFESSIONAL PROGRAMME COMPANY SECRETARIAL PRACTICE This study material has been published to aid the students in preparing for the Company Secretarial Practice paper of the CS Professional Programme. Company Law has undergone radical changes over the past few years, so the procedural requirements relating to compliance under various provisions of the Company Law. As the company secretary plays an important role in ensuring compliance of various provisions of the company law thereby avoiding penal consequences, this study material has been prepared with a view to provide an expert knowledge and understanding of the various procedural requirements of Company Law. With this objective in mind, a number of specimen notices, minutes, resolutions and forms have been included at relevant places. However, the students are advised to study the various procedures relevant for the purpose of this paper, in the light of the provisions of the Company Law and Rules made thereunder. Company Secretaryship being a professional course, the examination standards are set very high, with emphasis on knowledge of concepts, applications, procedures and case laws, for which sole reliance on the contents of the study material may not be enough. Besides, Company Secretaries Regulations, 1982 requires the students to be conversant with the amendments to the laws made upto six months preceding the date of examination. This study material may therefore be regarded as basic material and must be read alongwith the Bare Act, Rules, Regulations, Case Law, as well as suggested readings. The various changes made upto 15th July, 2011 have been included in this study material. However, it may happen that some developments might have taken place during the printing of the study material and its supply to the students. The students are therefore advised to refer to the ‘Student Company Secretary’, Chartered Secretary and other publications for updation of study material. In the event of any doubt, students may contact the Directorate of Academics and Professional Development of the Institute for clarifications. Although care has been taken in publishing this study material, yet the possibility of errors, omissions and/or discrepancies cannot be ruled out. This publication is released with an understanding that the Institute shall not be responsible for any errors, omission and/or discrepancies or any action taken in that behalf. Should there be any discrepancy, error or omission noted in the study material, the Institute shall be obliged if the same are brought to its notice for issue of corrigendum in the Student Company Secretary. (v) PROFESSIONAL PROGRAMME SYLLABUS FOR COMPANY SECRETARIAL PRACTICE (MODULE I - PAPER 1) Level of knowledge: Expert knowledge. Objective: To provide an in-depth understanding of the procedures under the Companies Act, Rules and Regulations made thereunder including understanding of international dimensions of company law. Detailed contents : 1. E-governance (MCA – 21) Important Features of MCA-21 – CIN, DIN, DSC, CFC, SRN, etc; E-forms and on-line filing and inspection of documents. 2. Company Formation and Conversion Choice of form of business entity; conversion/re-conversion of one form of business entity into another. Procedure for incorporation of private/public companies, companies limited by guarantee and unlimited companies and their conversions/re-conversion/re- registration; obtaining certificate of commencement of business; obtaining certification of re-registration; commencement of new business and certification; filing of agreements with managerial personnel; Formation of associations not for profit and non profit companies; procedure relating to foreign companies carrying on business in India. 3. Alteration of Memorandum and Articles Procedure for alteration of various clauses of memorandum: name clause, situation of registered office clause, objects clause, capital clause and liability clause; procedure for alteration of articles; effect of alteration. 4. Issue and Allotment of Securities Procedure for public issue, rights issue and bonus shares; procedure for issue of securities at par/premium/discount; procedure for calls on shares; Issue of sweat equity shares, employees stock option scheme, shares with differential voting rights; issue and redemption of preference shares; issue of shares on preferential basis/private placement. Return of allotment and effect of irregular allotment; issue of certificates; alteration of share capital; procedure for forfeiture of shares and re-issue of forfeited shares; cancellation of shares; surrender of shares; conversion and re- conversion of shares into stock. (vi) Procedure for issue of debentures including creation of security and debenture redemption reserve; drafting of debenture trust deed; conversion of and redemption of debentures. 5. Membership and Transfer/Transmission Procedure for induction of members; nomination of shares; variation of shareholders’ rights; cessation of membership including dispute resolution. Transfer/transmission/transposition; dematerialization/rematerialisation of securities. 6. Directors and Managerial Personnel Procedure for appointment, reappointment, resignation, removal and varying terms of appointment/re-appointment of directors and managerial personnel. Procedure for payment of remuneration to directors and managerial personnel and disclosures thereof; compensation for loss of office; waiver of recovery of remuneration; directors and officers liability insurance. Procedure for making loans to directors, disclosure of interest by a director, holding of office or place of profit by a director/relative, etc. of a director. Company Secretary – Appointment, resignation and removal of Company Secretary; role of the Company Secretary; functions and duties; relationship with chairman and directors; secretary as advisor to the chairman and the board. Company Secretary in Practice – Functions; procedure for appointment, resignation and removal of company secretary in practice. Auditors Procedure for appointment/reappointment, resignation and removal of statutory auditors and branch auditors; appointment of cost auditors; special auditors; CAG audit. 7. Decision-making Forums and Meetings Collective decision making forums: authority, accountability, delegation and responsibility. Board Meetings: Convening and management of Board and Committee Meetings. General Meetings: convening and management of statutory meeting, annual and extra-ordinary general meetings, class meetings; preparation of notices and agenda papers. Procedure for passing of resolutions by postal ballot, conducting a poll and adjournment of a meeting. Post-meeting formalities including preparation of minutes and dissemination of information and decisions including filing thereof. (vii) 8. Preparation & Presentation of Reports Preparation of financial statements, auditors’ report, directors’ report and report on corporate governance. 9. Distribution of Profit Procedure for ascertainment of divisible profits and declaration of dividend; payment of dividend; claiming of unclaimed/unpaid dividend; transfer of unpaid/unclaimed dividend to Investor Education and Protection Fund. 10. Charges Procedure for creation/modification/satisfaction of charges and registration thereof; register of charges; inspection of charges. 11. Inter-corporate Loans, Investments, Guarantees and Security Procedure for making inter-corporate loans, investments, giving of guarantees and providing of security. 12. Filling and Filing of Returns and Documents, etc. Procedure for filling and filing of returns and documents : (a) Annual filing, i.e., annual accounts, compliance certificate, annual return, etc. (b) Event based filing. 13. Striking off Names of Companies – Law and Procedure 14. Best Practices - Secretarial Standards Concept, scope and advantages; Secretarial Standards issued by the ICSI; Compliance of secretarial standards for good governance. 15. Insider Trading Concept and rationale behind prohibition of insider trading; SEBI’s Insider Trading Regulations; major actions taken by SEBI so far; Role of Company Secretary in compliance requirements. 16. Global Developments in Company Law Contemporary developments, distinguishing and evolving features of company law in other jurisdictions. (viii) LIST OF RECOMMENDED BOOKS COMPANY SECRETARIAL PRACTICE Readings: 1. M.C. Bhandari : Guide to Company Law Procedure; Wadhwa & Company, Agra & Nagpur 2. K.V. Shanbhogue : Company Law Procedure; Bharat Law House, New Delhi-34 3. M.L. Sharma : Company Procedures and Registrar of Companies, Tax Publishers, Delhi. 4. A.M. Chakraborti, : Company Notices, Meetings and B.P. Bhargava Resolutions, Taxmann, New Delhi 5. A. Ramaiya : Guide to the Companies Act, Wadhwa & Company, Nagpur 6. R. Suryanarayanan : Company Notices, Meetings and Resolutions, Kamal Law House, Kolkata 7. D.K. Jain : E-filing of Forms & Returns 8. Taxmann : E-Company forms 9. V.K. Gaba : Depository Participants (Law & Practice) 10. Dr. K.R. Chandratre : Guide to Company directors 11. ICSI Publication : Meetings 12. B.K. Sengupta : Company Law 13. D.K. Jain : Company Law Procedures References: 1. M.C. Bhandari : Guide to Memorandum, Articles and R.D. Makheeja Incorporation of Companies; Wadhwa & Company, Agra & Nagpur 2. Taxman : Company Law, Digest (ix) Journals: 1. Chartered Secretary : ICSI Publication 2. Student Company Secretary : ICSI Publication 3. Corporate Law Adviser : Corporate Law Advisers, Post Bag No. 3, Vasant Vihar, New Delhi. 4. Company Law Journal : L.M. Sharma, Post Box No. 2693, New Delhi - 110005 Note: The latest edition of all the books referred to above should be read. (x) C O N T E N T S Study Lesson Topic No. 1. E-Governance of Company Law (MCA-21) 2. Company formation and conversion 3. Alterations in the Memorandum and Articles of Association 4. Issue of Securities 5. Allotment of Securities 6. Issue and redemption of Debentures 7. Membership and Transfer / Transmission of Shares 8. Directors and Managers 9. Company Secretary 10. Auditors 11. Decision making forums and Meetings 12. Preparation & Presentation of Reports 13. Distribution of Profit 14. Charges 15. Inter-Corporate Loans, Investments, Guarantees and Security 16. Filling and Filing of Returns and Documents 17. Striking off Names of Companies 18. Best Practices 19. Insider Trading 20. Global Developments in Company Law TEST PAPERS (xi) PROFESSIONAL PROGRAMME COMPANY SECRETARIAL PRACTICE DETAILED - C O N T E N T S STUDY I E-GOVERNANCE OF COMPANY LAW (MCA-21) Page Learning Objectives … 1 Introduction … 1 E-Governance and MCA-21 … 1 Scope … 2 Operational aspects of MCA-21 … 2 Launch of MCA-21 … 2 Notification of e-forms … 3 E-forms … 3 Companies (electronic filing and authentication of documents) Rules, 2006 … 3 Director Identification Number (DIN) … 3 Corporate Identification Number (CIN) … 4 Digital Signature Certificate … 4 Pre-certification by professionals in whole time practice … 5 Role Check … 6 Front Office … 6 Back Office … 7 Hardware and Software requirements under e-filing … 7 Mode of payment … 7 Service Request Number (SRN) … 7 Re-Submission … 8 Rectification of Mistakes apparent on record … 8 Payment of Stamp Duty … 9 STP Forms … 10 Regulation 17 of Companies Regulation, 1956 … 10 Online Inspection of documents … 11 Annual filing … 11 General structure of an e-form and e-filing process … 12 Flow chart of e-filing … 13 Clarifications issued by MCA from time to time … 14 Frequently Asked Questions … 15 Substantial Benefits of MCA-21 … 15 National Award for e-governance … 17 This Study Paper is the property of the Institute of Company Secretaries of India. Permission of the Council of the Institute is essential for reproduction of any portion of the Paper.