Author: Corporate Info
•1:16 am
PAN, a ten digit alpha numeric number is a unique identification number which is allotted by the Income Tax Department. It is necessary for every assessee or tax payer to have a PAN allotted, as it is required for furnishing return of income. A person can have only one Permanent Account Number. Holding more than one number is against law and may attract penalty upto Rs.10,000/-. An application should be made in Form 49A prescribed by the IT Department. This form is freely downloadable from the following websites.

http://www.incometaxindia.gov.in/
http://www.utiisl.co.in/
http://tin.nsdl.com/

The form can also be obtained at the TIN (Tax Information Network) Facilitation Centres.

How to obtain a new PAN card for the same PAN:

A new PAN card can be obtained, when PAN is available but the PAN card has been lost or some changes/corrections are required to be made. The form for making a request for new PAN card is downloadable from the link http://www.tin-nsdl.com/

An identity proof and address proof shall be submitted along with the application.
Following are some of the documents that can be submitted as ID proof and address proof:

Identity Proof
a. Passport
b. Voter ID Card
c. Driving Licence
d. Ration card
e. Electricity Bill
f. Telephone Bill
g. Rent receipt

Address Proof
a. Passport
b. Voter ID Card
c. Driving Licence
d. Ration card
e. Electricity Bill
f. Telephone Bill
g. Rent receipt

Apart from the above, there are also few other documents which can be submitted as proof along with the application (details are available in the above mentioned website).

The applicant shall also submit along with the application the PAN allotment letter which would have been issued by the Department. If there are any changes that are required to be made, the proof in support of such changes shall also be submitted along with the form. A nominal fee is chargeable for processing the application which costs around Rs.85/- plus service tax as applicable.

An online application can also be made by the applicant for which the cost is the same as in case of a physical application. The application form can also be submitted physically at the TIN facilitation centres maintained by NSDL.(National Securities Depository Limited).The contact details and address of these facilitation centres are available in
http://www.tin-nsdl.com/TINFacilicenter.asp

Similarly a request for new PAN card or changes/corrections in the data can be made for Companies, firms, AOPs, BOIs etc. The IT department has clearly categorized the documents which are required to be submitted for each identity. For eg: A Company has to submit a copy of the Certificate of Registration issued by the Registrar of Companies and the address proof as supporting documents.


Following are the images of the Form (Request for New PAN Card / and Changes or Correction PAN data) Please click on the image to view in a larger mode.







Author: Corporate Info
•2:50 am

The status of the Company can be changed from Private Limited into a Public Limited Company by fulfilling the following requirements.

  • Increase the paid up share capital of the Company to Rs.5 lakhs.
  • Increase the number of Directors to 3.
  • Increase the number of shareholders to 7.
  • Pass a resolution of the Board of Directors of a Company for alteration of the provisions of the Memorandum of Association and Articles of Association of the Company. The Memorandum and Articles shall be altered in such a way that restrictions imposed on a private Company are excluded.

      Eg : Restrictions of Transfer of shares

  • Convene an AGM/ EGM for getting the members approval through Special Resolution for

    • conversion of the Private Company into a Public Limited Company.
    • Change of name of the Company by deletion of the word "private".
  • After a resolution has been passed, the Company shall file the following documents with the Registrar of Companies.
    • File Form 23 –Special Resolutions within 30 days from the date

      Of passing of the resolution.

    • File Form 62 – Form for submission of documents with ROC

      - Statement in lieu of Prospectus in Schedule IV of

        Companies Act,1956,if applicable , which shall be signed by all the Directors of the Company.

- List of shareholders as on the date of conversion.

- List of Directors as on the date of conversion.

- Certificate from an Auditor that the Company has complied

with the provisions of Section 58A of the Companies Act 1956

- Altered MOA/AOA of the Company.

- Copy of Form-2 (Return of Allotment) if made by the Company

Author: Corporate Info
•2:41 am

A Company can be registered as a private Company or a public Company. When a Company is incorporated as a private Company, it enjoys certain privileges and exemptions when compared to a public Company.

Some of the privileges enjoyed by a Private Company are:

1. The minimum number of members required to form a private company is only 2, whereas it is 7 in case of a public Company.
2. A private company can start its business immediately after its incorporation. It need not obtain the Certificate of Commencement of business.

‘Certificate of Commencement of Business is issued by the Registrar of Companies to public Companies. Once a Company has been registered or formed, it shall apply for the Certificate of commencement of business in the prescribed form to the ROC (Registrar of Companies). Only after this certificate has been obtained it can commence its business. This certificate has to be obtained within 6months from the date of incorporation of a Company.’

3. No Qualification shares and consent of the Director to act as a Director is required to be filed with the ROC at any time during the tenure of the Company, as in case of a public Company.
4. A private company is not required to issue or file a prospectus or statement in lieu of prospectus with the Registrar of Companies.

‘Prospectus is an important document for a public Company. It is nothing but an invitation to the public to subscribe for the shares of the Company. In case a public Company does not intend to invite the public to subscribe to the shares, it has to file a Statement in lieu of prospectus.’
5. It is not required to have an index of members, as in case of a public Company, the reason being the Companies Act limits the maximum number of members required for a private Company to 50.

6. It is not required to hold a statutory meeting or file a statutory report.

‘Statutory meeting is a general Meeting of the shareholders of the Company which has to be held within a period of not less than one month and not more than 6 months from the date from the date on which it is entitled to commence its business.”
7. It is not required to offer new shares to existing shareholders in proportion to their shareholdings.

In case of a public Company further issue of Capital shall be made the persons who at the date of the issue are holders of the equity shares of the Company in proportion to their holding.
8. A private company need to have a minimum of two directors only whereas a public Company needs to have a minimum of three directors.

9. All the directors may be appointed by a single resolution in case of a private Company.
10. The directors of a private company need not to retire by rotation i.e. they can be permanent directors.

In case of a Public Company, not less than 2/3rd of the total number of directors are liable to retire by rotation and shall be eligible for re appointment.
11. Directors of a private company can vote on a contract in which they are interested. But in case of public Companies, interested directors cannot vote on that matter.
12. Two persons personally present can constitute the quorum for the meeting of a private company.

13. If a private company refuses to register a transfer or transmission of shares, the aggrieved person cannot appeal to the Company Law Board for redressal.
14. Profit and Loss Account of an independent private company filed with the Registrar cannot be inspected by general public.
15. The appointment, re-appointment and remuneration of whole-time or managing director does not require permission of the Central Government

16. There are no restrictions on loan given by a Company to directors.

17. There are no restrictions on the remuneration payable to, nor it is required to
obtain sanction of the Central Government to increase the remuneration of directors.
18. There are no restrictions on the number of Directorships held by a person in case of a private Company.

Author: Corporate Info
•10:04 am

A Company being a separate legal entity has to live and achieve the objects as enshrined in the object clause of its Memorandum of Association through some agency. The Board of Directors of a Company work as such agency. Board of Directors of a Company are the supreme executive authority who control the affairs of a Company. The Companies Act defines a Director as any individual occupying the position of a Director by whatever name called.

There are mainly two types of Company Directors:

    1. Executive Directors or Whole Time Directors with their designation as Managing directors and Technical Directors.
    2. Non Executive Directors or Part time directors who are professional and do not depend upon the Company but serve on the Board of Directors of a number of Companies.

Apart from the above, there are different types of Directors depending upon the role played by them. This category includes a Managing Director, Whole Time Director, Technical Director, Executive Director etc.

All listed Companies need to comply with the Listing Agreement which mandates that the number of independent directors should be atleast 1/3rd of the strength of the Board where Chairman is a Non Executive Director or ½ where Chairman is an executive Director.

Independent Directors:

The Term ‘Independent Director’ has been defined in Clause 49 of the Listing Agreement of SEBI. Clause 49 of the Listing Agreement deals with Corporate Governance Practices.

Independent Director shall mean non-executive Director of the Company who

  1. apart from receiving director’s remuneration does not have any pecuniary relationships or transactions with the Company, its promoters ,its senior management or its holding Company, its subsidiaries and associates which may affect the independence of the Director.
  2. Is not related to the promoters or persons occupying the management positions at the board level or at one level below the Board;
  3. Has not been an executive of the Company in the immediately preceding 3 financial years;
  4. Is not a partner or an executive or was not a partner or an executive during the preceding three years of any of the following:

    The statutory audit firm or the internal audit firm that is associated with the Company and

    The legal firms and consulting firms that have a material association with the Company.

  1. Is not a supplier, service provider or customer or lessor-lessee of the Company which may affect independence of the Director.
  2. Is not a substantial shareholder of the Company ie owning 2% or more of the block of voting shares.
  3. Is not less than 21 years of age.

In other words, the independent directors must not only be independent according to the legislative and stock exchange listing standards but also independent in thoughts and action (ie) qualitatively independent. Such qualitative independence will ensure that the Directors think and act independently without regard to management’s influence.

The concept of independent director has been defined by the Securities and Exchange Board of India through its Listing Agreement to ensure that the affairs of the Company are carried out with the objectives of enhancing shareholders value. In simple terms, independent Directors play an important role in effective Corporate Governance of a Company, which is essentially about

Leadership for efficiency

Leadership with responsibility

Leadership which is transparent and which is accountable.

The issue of Corporate Governance and Independent Directors are closely inter linked (ie) the presence of independent directors on the Board of Companies in adequate numbers would help in improving Corporate Governance.

Role and Responsibilities of an Independent Director:

The role of an Independent Director exists in providing strategic Guidance to the Company by making an objective judgement, independent of the management. The Directors of a Company in general are the individuals who direct, control, manage or superintend the affairs of a Company collectively. They can exercise all the powers of a Company, except those which are prescribed by the Act to be specifically exercised by the Company in the General Meeting.

In general, the responsibility of an Independent Director lies in direction and Control, which involves

  • Formulation and review of Company’s policies. Eg: Risk Management policies, HR policies etc.
  • Monitoring the performance.
  • Ensuring Legal compliances by timely and transparent reporting.
  • Reviewing the performance and to
  • Ensure that the objectives of the Company are achieved through proper control systems and procedures.

Apart from the value addition that they may bring to the Board, Independent Directors of a Company are also entrusted with the responsibility of ensuring that the financial interest of the stakeholders are protected. Further, it is also an annual requirement for every director to inform the Company about the Committee position and Directorship that he holds in other Companies.

From the above it is clear that the concept of independent directors is brought into the legislations in order to ensure proper compliance, due diligence, transparency and protect the interest of the various stakeholders. The requirements stipulated by the appropriate authorities are expected to be implemented in letter and spirit so as to reap the benefits that would accrue due to the effective role played by the independent Directors.

Author: Corporate Info
•4:31 pm
Resolutions are generally passed
  • at a meeting, whether it be, meeting of the Board of Directors or meeting of the members of the Company, which is generally known as the Shareholders Meeting.
  • Through Circular Resolution (Board Meeting Resolutions)
  • Through Postal Ballot (Shareholders Resolutions)

What is meant by Postal Ballot?

Postal Ballot means voting by the shareholders by postal or electronic mode, instead of voting by personally present at the general meeting of the Company.

The resolutions to be passed through Postal Ballot applies to a listed public Company.

The Companies (Passing of Resolutions through Postal Ballot) Rules,2001 stipulates the businesses for which the resolutions shall be passed through Postal Ballot :

  • Alteration in the object clause of Memorandum of the Company.
  • Alteration of Articles of Association of the Company in relation to insertion of provisions which define it is a private Company.
  • Buy back of shares u/s 77A(i) of the CA,1956
  • Issue of shares with differential voting rights as to voting or dividend or otherwise under sub clause (ii) of clause (a) of Section 86.
  • Change in the Registered office of the Company outside the local limits of any city, town or village.
  • Sale of whole or substantially the whole of the undertaking of the Company.
  • Giving loans or guarantee or providing security in excess of the limits prescribed u/s 372A(1) of the CA,1956.
  • Election of a Director u/s 252 (1) of the CA,1956.

Procedure for passing of resolution through Postal ballot:

Where a Company decides to pass a resolution through Postal ballot, it shall send a

notice to the shareholders which shall contain the draft resolution and an

explanatory statement, which briefs about the business to be transacted.

The Company shall issue the notice either through Registered Post acknowledgement due or through Certificate of Posting. It shall also give an advertisement in a leading English newspaper and in one vernacular newspaper, circulated in the State in which the Registered office of the Company is situated, about having dispatched the ballot papers.

The shareholders assent or dissent shall be given within a period of 30 days from the date of posting of the letter. Any consent or otherwise received after a period of 30 days from the date of issue of notice shall be treated as if no reply has been received from the member.

The Company shall appoint a scrutinizer , who is not an employee of the Company to conduct the postal ballot voting process and submit a report to the Board containing full details of the assent /dissent, given, name and address of the shareholder, folio No., number of shares held, the voting rights etc.

Author: Corporate Info
•4:27 pm
The Ministry of Corporate Affairs, Government of India initiated the Electronic Filing of documents [E-Filing process] which is known as the MCA-21 program, which means ‘Ministry of Corporate Affairs in the 21st Century.

The Ministry of Corporate affairs is a three tier organizational set up having its headquarters at New Delhi, Regional Directors at 4 regions and Registrar of Companies in the States and Union Territories. Every artificial person registered as a Company is obliged to file forms, applications and returns as stipulated in the Companies Act,1956. The MCA-21 program has enabled such E-Filing process, which provides the Corporate world with a lot of advantages like:

    1. Registering a new Company and filing the documents from the place of business.

    1. Easily accessing the public documents of a Company.

    1. Filing the periodic returns of a Company and making online payments.

Earlier the important documents of a Company like the Memorandum of Association of a Company, Articles of Association of a Company, charge documents etc were maintained by the ROC (Registrar of Companies) offices in paper form, which have now been converted into electronic format.

The MCA-21 project offers various services such as:

  • Registration of Companies
  • Filing of forms , returns and Balance Sheet
  • Registration of charges
  • Inspection of documents
  • Investor grievance redressal

Some of the terminologies which gained importance in the E-Governance project are:

CIN

DIN

Digital Signature

SRN

CIN –Corporate Identification Number

CIN is nothing but a 21 digit unique identification number allotted to a Company.

Eg : U72200TN2004PLC052490

The first alphabet denotes whether a Company is Listed or Unlisted. It is L for Listed and U for Unlisted.

The next 5 digits indicate the state Code

Next 2 digits represent the State

Next 4 numeric –Year of incorporation of the Company

Next 3 digits- to state whether it is a private or a public company

And the last 6 digits denote the registration number of the Company.

DIN-Director Identification Number

Din denote a number which is allotted to every director or proposed director of a Company. It is like a PAN number. But DIN has its importance that only Directors of a Company hold this number. DIN is a pre-requisite for filing of certain documents by the Company. No other number can be used as an alternative for DIN. This number is allotted by the MCA DIN Cell of NOIDA on an application being made.

Hence any individual who is a director or is proposed to be a director of a Company shall have a DIN. This number is a mandatory requirement for all Directors of Indian Companies whether they be citizens of India or not. But this number is not required for directors of foreign Company having branch offices in India.

DIGITAL SIGNATURE:

As physical documents are signed manually, the e-forms also needs to be signed. Thus the electronic form of signing a document is known as Digital Signature. A Digital Signature Certificate is a certificate which is used to prove the identity of a person electronically. These certificates are issued by the licenced CA(Certifying Authorities). There are different classes of DSC available namely-Class 1, Class 2 and Class 3, depending upon the security and other criteria. Each DSC has a validity period after which it has to be renewed. The Digital Signatures are legally admissible in the Court of law.

SRN-SERVICE REQUEST NUMBER

As, mentioned earlier, when there is filing of the documents electronically, it is also needless to mention that we also need to keep a track of the documents filed, the status of the documents filed etc. The SRN helps us in this. Service Request Number is nothing but the number which is generated specifically corresponding to the particular form which has been filed. In general parlance it is also known as the Challan Number.

Eg:A51216483

When a payment has been made or form has been filed, the transaction status can be traced easily in the MCA website using this Service Request Number.






Author: Corporate Info
•4:26 pm
Employee Stock Option Plan means a plan under which the Company offers shares to the employees. It is only a right but not an obligation to the employee to apply for and be allotted shares of the Company at a predetermined price. The employee is given a time period within which the option shall be exercised. The price payable by the employee for the shares shall be determined by the Compensation Committee of the Board of the Company. The Compensation Committee shall also formulate the detailed terms and conditions of the option. The ESOP shall be approved by the shareholders by a special resolution passed by the members of the Company.

There shall be a minimum period of one year and a maximum period of eight years between the grant of options by the Company and vesting of the same by the employee. Here vesting means the process by which the employee gets the right to apply for the shares.

Once the employee gets the right to exercise his option, it shall be exercised within a maximum period of 5 years from the date of vesting.

An employee who is a promoter or a part of the promoter group shall not be eligible to participate in the ESOP. A director who either by himself or through his family or through any investment company, directly or indirectly holds more than 10% of the outstanding equity shares of the Company shall not be eligible to participate in the ESOP.

Where a stock option has been granted to an employee, it shall be exercised only by the employee and shall not be transferable.