Draft Minutes of Separate Meeting of Independent Directors under Companies Act, 2013

MINUTES OF THE SEPARATE MEETING OF THE INDEPENDENT DIRECTORS ON BOARD OF DIRECTORS OF THE COMPANY, HELD ON _____DAY, THE __TH DAY OF _______, 20__ AT ____ P.M. AT THE _____ OFFICE OF THE COMPANY AT _________________.

PRESENT:

Sr. No.	Name	Designation
	A
	B

At the outset, it was ascertained that there were only two independent directors on the Board of Directors of the Company and both of them were present. So, the agenda items were taken one by one as follows;

ITEM NO. 1

TO GRANT LEAVE OF ABSENCE

All Independent Directors were present.

ITEM NO.2

TO CONFIRM MINUTES OF LAST SEPARATE MEETING OF THE INDEPENDENT DIRECTORS ON BOARD OF DIRECTORS OF THE COMPANY.

Shri A informed that during the year 2014-15, this was first Separate Meeting of the independent directors on Board of Directors of the company. So there were no Minutes of any previous Meeting for confirmation.

ITEM NO.3

TO CONSIDER PURPOSE AND APPLICABLE PROVISIONS FOR MEETING.

Shri A informed that Section 149(8) of the Companies Act, 2013 requires independent Directors on the Board of Directors to abide by the provisions specified in SCHEDULE IV of the Companies Act which defines CODE FOR INDEPENDENT DIRECTORS. He further stated that the Code is a guide to professional conduct for independent directors. He further stated that Clause VII of Scehdule IV of the Companies Act, 2013 read with Clause 49 of the Listing Agreement requires that The independent directors of the company shall hold at least one meeting in a year, without the attendance of non-independent directors and members of management. He further informed that accordingly, the Meeting is being held inter-alia, with a view to review the performance of non-independent directors and the Board as a whole, review the performance of the Chairperson of the company, taking into account the views of executive directors and non-executive directors; and to assess the quality, quantity and timeliness of flow of information between the company management and the Board.

ITEM NO.4

TO REVIEW THE PERFORMANCE OF NON INDEPENDENT DIRECTORS AND THE BOARD AS A WHOLE

Thereafter, it was discussed that during the financial year, the Board delivers its responsibilities by following ways:

Strategy: Board effectively provides strategic directions to the company.

Performance of Management: Board provides effective directions on key decisions impacting the performance of the company, effectively reviews the financial performance of the company and suggests corrective actions.

Governance & Compliance: Board strives towards adapting best practices in governance while also fully complying with the laws of land.

Overall: The process for setting the board agenda is transparent, realistic to the current needs and meeting material is shared well in time. The frequency and duration of the board meetings are adequate to ensure a proper discharge of all the responsibilities. Over all board meeting is held in open and objective manner where there is adequate opportunity for members to share their views.

Thereafter, the performance of the Executive Directors vis-à-vis Board as a whole was taken up for discussion on following parameters:

Performance of Non-Independent Directors: the Non Independent directors on the Board have played a good role in better corporate governance. The Board received required disclosures from them. Based on formal and informal appraisals, the Non Independent directors have played role in good governance and handling of day to day affairs efficiently, cost cuttings, market strategies, expansion and growth of Company.

Technology up gradation: ID’s discussed and concluded that Company uses latest available technology in its manufacturing operations.

Marketing and Sales: The Company has a team of Experienced Marketing/ Sales Team who looks after their functions diligently and their performance can be adjudged by operational results.

Finance: The term finance and working capital have been availed from nationalized banks at reasonable/competitive rates/terms and conditions which are beneficial to the Company. The availed credit facilities are optimum for current operations.

Manpower Management: The Company has optimum manpower keeping in view the size of operations. The Employees attrition rate is negligible.

Statutory Compliances and dues: The Company has not defaulted in the payment of statutory dues. Compliances are made well in time.

Internal Audit: The Company has hired a well-organized team for Internal Audit headed by a qualified Chief Internal Auditor who directly reports to the Audit Committee.

Overall Performance: The Company has been able to keep itself well positioned in spite of very adverse market conditions. The Company’s performance is quite satisfactory vis-à-vis peers as well as the industry.

ITEM NO.5

TO REVIEW THE PERFORMANCE OF THE CHAIRPERSON OF THE COMPANY

Sh. A stated that  in terms of the provisions of Schedule IV read with Clause 49 of the Listing Agreement, the performance of Chairperson has to be reviewed.

Mr. B pointed out that the performance of Chairperson can be very well drawn/ascertained from the fact that  inspite of adverse market conditions and other factors,  the performance of Company is satisfactory which is due to the leadership/guidance given by the Chairperson of the Company. Copies of Quarterly and yearly results and financial statements were placed before the Members and the Meeting took note of the same. Both indepdendent  also took note of the initiaves taken by Chairman of Company in making expansion in dyeing, boiler section and finishing of garments capcacities.  Shri A, based on formal and informal appraisal apprised the role played by Chairman in cost reduction, day to day affairs, strategic management, good corporate governance, tapping foreign and domestic markets and production management.

ITEM NO.6

TO ASSESS THE QUALITY, QUANTITY AND TIMELINESS OF FLOW OF INFORMATION

Mr. A started the discussion that in terms of the provisions of Schedule IV read with Clause 49 of the Listing Agreement, the Independent Directors are inter alia required to assess the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

Sh. B  said that the process for setting the board agenda is transparent, realistic to the current needs and meeting material is shared well in time. The frequency and duration of the board meetings are adequate to ensure a proper discharge of all the responsibilities. Over all board meeting is held in open and objective manner where there is adequate opportunity for members to share their views.

Sh. A stated  that all the information required by the Committees as well as Board is provided by the Management of the Company well in time especially the financial results, related party transactions and related matters, internal audit reports, overdue secured loans if any, contingent liabilities, observations if any of statutory auditors/cost auditors/secretarial auditors and other information as required to be provided under the law.

All the independent directors were quite satisfied with the flow of information.

VOTE OF THANKS

There being no other business, the meeting concluded with a vote of thanks to Members Present.

Kindy change and modify  minutes as per your organisation

Thanks & Regards

CS Nikhil Kalra

csnikhilkalra@gmail.com

Opinion on Section 74 of the Companies Act, 2013 (Regarding Deposits)

Different views on Loan taken before 31.03.2014  from directors, their relatives and members of a private company including  the amounts stated in (i) to(xii) of clause (b) of rule 2 of the Companies (Acceptance of Deposits) Rules,1975 on or before the commencement of companies Act,2013.

Dear Professional colleagues,

Have a serious look into what is stated herein with your skillful application of mind. Section 74 of the Companies Act, 2013, provides that any deposit accepted before the commencement of the Companies Act, 2013, needs to be repaid/refunded on or before 31st March, 2015. The said section also states that a return has to be filed with RoC in respect of existing deposits. Many professionals are posting on various websites saying that due dates for refund of deposits and filing of return with RoC are nearing hence they are advising for compliances within the due dates. They are also pointing the attention of the readers to the penalty in case of non-compliance with said Section 74. The penalty is minimum Rs.1crore and maximum Rs. 10 crore.

In the backdrop of above let us consider the following question:

Are all unsecured loans/amounts received on or before commencement of the companies Act,2013, by private companies from its directors, their relatives and its members, repayable on or before 31st March,2015 as stipulated by Section 74  particularly in view of the definition of Deposit in new Act? 

Applicable provisions are:

1. Section 2(31) of the Companies Act,2013 which defines “deposit” as “deposit includes any receipt of money by way of deposit or loan or in any other form by a company, but does not include such categories of amount as may be prescribed in consultation with the Reserve  Bank of India.” [It is pertinent to mention here that the Central Government in consultation with RBI has notified Companies (Acceptance of Deposits) Rules 2014 according to which now even amounts received from relatives of directors and members are deposit]

2. Section 74 of the companies Act, 2013 the relevant portion of which is as under:

“(1) Where in respect of any deposit accepted by a company before the commencement of this Act, the amount of such deposit or part thereof or any interest due thereon  remains unpaid on such commencement or becomes due at any time thereafter, the company shall-

(a)……………………………….

(b) repay within one year from such commencement or from the date on which such payments are due, whichever is earlier.”

3. Rule 2(b) of the Companies (Acceptance of Deposits) Rules,1975 the relevant provision of which is as under:

“ deposit” means any deposit of money with, and includes any amount borrowed by, a company, but does not include-

(ix) any amount received by a private companies from a person who, at the time of the receipt of the amount, was a director, relative of director or member:…………………”

Analysis of the above stated provisions:

(a) Section 74(1) of the Companies Act, 2013 is using the words “ any deposit accepted by a company before the commencement of this Act.” Thus before the Companies Act,2013 if a company has accepted  any deposit under the Companies Act,1956(which was in existence prior to 2013 Act), the same needs to be repaid as per the mandate of section 74(1)(b) on or before 31st March,2015.

(b) The Companies Act, 1956 which is repealed now did not define “Deposit”. But the Companies (Acceptance of Deposits) Rules, 1975 which were under section 58A of the 1956 Act defined “Deposit”. As per the definition in the above rules the amounts received from directors, their relatives and the members of private companies were not deposits in view of the clear wording “but does not include…” Thus all  amounts which fall in (i) to (xii) of clause (b) of rule 2 of Companies (Acceptance of Deposits) Rules,1975 if accepted then were not deposit as they were specifically excluded from the definition of Deposit. A company is under an obligation to repay any deposit it accepted under the Companies Act, 1956 not all the amount which were not deposit then. In short the amount to be repaid on or before 31st March, 2015 has to be deposit when it was accepted in view of the provision that “any deposit accepted by a company before commencement of this Act.”  There can be a counter argument that the Deposit referred to in section 74 means the Deposit as per the new Act which includes loans from relatives of directors, their relatives and members but then that argument does not seem to be surviving as the definition of Deposit as in new Act shall take effect only after commencement of the new Act whereas the Section 74 of new Act is talking of deposit accepted before the commencement of new Act. So what was not deposit under the old Act cannot be covered by Section 74 of New Act.

Conclusion:- In view of the above, according to me, all the monies received from directors, their relatives and members of a private company including  the amounts stated in (i) to(xii) of clause (b) of rule 2 of the Companies (Acceptance of Deposits) Rules,1975 on or before the commencement of companies Act,2013 are not required to be repaid as they were not deposit when accepted. Crux of Section 74 lies in the fact that when the amount received whether the same was deposit or not.

The provisions of Section 74 of the Companies Act are applicable  only to deposits which were accepted in accordance with the provisions of section 58A of the Companies Act, 1956 read with Companies (Acceptance of Deposits) Rules,1975.

List of Compliances applicable on Companies under The Companies Act, 2013

The below list is not exhausted list and every Company needs to check the applicability of other provisions of the Companies Act, 2013 to the extent applicable to them also.

S. No.	Section	Subject Matter	Remarks
1.	168	Vacation of Office	Check Whether every Director attended in physical at least one Board Meeting with in period of 12 Month. If any director fails to attend A Board Meeting within period of 12 Month then he will be considered as vacant.
			Check Whether the director himself has attended at least one Board Meeting on his own, even though Alternate Director is appointed in his place.
2.	173	No. of Meetings	Check Whether every Non- Small Company held 4 Board Meeting every year. No need to hold Board Meeting in every Quarter.
3.	173	Gap Between Two BM	Check Whether the gap Between Two Board meeting should not be more than 120 days.
4.	74	Repayment of Deposit	Check Whether Company have filed DPT-4 and refunded amount of Deposits. If Company have accepted deposit before commencement of this act then required to be repay within one year from such commencement or from the date on which such payments are due.
5.	12(3)(c)	CIN No.	Check Whether Company has mentioned CIN no. along with Telephone No. on all Letters, billheads, and letter papers and in all notices and other publications.
6.	Rule- 7 Chapter XXIV	DIN & Address of Director	Every document shall contain name, designation, address and Director Identification Number of person signing such document.
7.	2(16)	Creation of Charge on Vehicle Loan	Check Whether, if Company has taken Loan on vehicle then charge has been created on same by filing of e-form- CHG-1. Creation of Charge on Vehicle Loan is required under Companies Act, 2013.
8.	179(3)	Loan from Director	Check Whether company has taken loan from director any time after 01.04.2014. If yes then check Board Resolution or Special Resolution filed of not. Check form MGT-14 has been filed within 30 days of allotment or not.
9.	92	Record of Minutes	Check Whether proper record of Meetings maintained or not. Because Dates of Board Meetings and other information relating to Meeting required to mention into Annual Return.
10.	185	Loan to Director	Loan to Director and any person interested in Director is not allowed under companies Act 2013.
11.	186	Loan to Person or Company	Check Whether interest charge on loans given at the minimum prescribed rate as given u/s 186(7) (Except loan given to Staff)
12.	188	Related Party Transaction	Check Whether all the Related Party transaction made in the Ordinary course of business are made on ‘Arm Length Price’ and transactions not in the ordinary course of Business has been approved by the Board. Further proper documents (e.g. quotation) are maintained to support that transactions are made at Arm Length Price.
13.	139	Appointment of Auditor	Check whether auditor has been appointed for 5 years or not. As per 2013 act auditor should be appoint for 5 year otherwise consequences will be on Company.
14.	12 * 13	Adoption of AOA & MOA	Check whether AOA & MOA has been adopted as per Companies Act, 2013. It is advisable to adopt AOA & MOA as per Companies Act, 2013 before 31st March, 2015.
15.	203	Company Secretary	Check Whether there was Company Secretary in Company before June, 2014. Then designate such Company Secretary as Key Managerial Personnel and file respective forms for the same.
16.		Statutory Register	Check Whether Statutory register has been update as per Companies Act, 2013.
17.	128	Address at which Books of Account are to be maintained	Check Whether if Books of Accounts are not maintained as Registered office then e-form AOC-5 should be filed within 7 days of decision taken by Board of Director.
18.	12	Adopt object mention in other Objects	Check whether Main objects is amended to cover other objects, If any carried on by the Company.
19.	184	Director Designated for MPB-1 Safe Custody	Check Whether Company have designated any director of to keep safe custody of MBP-1
20.	101	Notice of General Meeting	Notice of Every General Meeting is required to give Auditors and Directors of Company.
21.	146	Exemption to Auditor from attendance of General Meeting	Check Whether auditor has attended the General Meeting. If not then exemption to the auditor is required to give in General Meeting by passing of Ordinary Resolution.
22.	160	Cheque of Rs. 100,000/-	Check Where any director appointed or Designation is Changed in General Meeting. If yes then Company should received cheque of Rs. 100,000 from the person or Member of Company.
23.		Change in Status of Small Company to Non Small Co.	Check Whether Status of your company changed from Small Company to Non- Small company in the light of MCA- circular dated _________ Relief available to a Small Company is discontinued.
24.	179(3)	Board Resolution Passed	Check Whether Board Resolutions passed for all the matters covered u/s 179(3).
25.	180,186	Special Resolution	Check Whether Approval of Shareholders for exceeding the limits of Borrowing, Investments, Loan Granted and form MGT-14 filed before 300 days.
26.		Financial year	Check Whether Financial year is from April to March.
27.	92	Signing of Annual Return by PCS	Ensuring filling of relevant e-forms with ROC and Compliances of provisions of Companies Act 2013 as Annual return needs to be signed and certified by Practicing Company Secretary.
28.	Rule-7 Chapter XXIV	Membership No. and Address of Professional	Every document which required to be sign by Professional shall contain name, designation, address and Membership No of person signing such document.
29.	184	MBP-1 & MGT-14 in Every Board Meeting	If director of a company deals in shares and there is frequent change in Shareholding of Companies then there will be change in disclosure of interest of director in every Meeting. Director will give MBP-1 before every meeting.
30.	101	General Meeting – Checks	General Meeting should be held: →Time: AGM shall be called during ‘Business Hour’. →Day: AGM should not be held on ‘National Holiday’. → Place: AGM shall be held at either -   Registered office of company or At some other place within the city, town or village in which registered office of the Company is situates

Thanks & Regards

CS Nikhil Kalra

csnikhilkalra@gmail.com

DOs and DON'Ts for Companies while submitting quarterly / yearly Financial Results under clause 41 of the Listing Agreement

Given below are some general DOs and DON'Ts for Companies to be borne in mind while submitting quarterly / yearly Financial Results under clause 41 of the Listing Agreement.:

Do’s:

1.  Seven (7) clear calendar days’ notice of the Board meeting is required to be given to the Exchange. Hence, the date of notice to the Exchange and date of the meeting should be excluded while calculating the notice period. For eg. The notice to the Exchange given on November 1 shall be for the Board meeting to be held on November 9 or thereafter.

2. Financial Results are to be sent in the Format specified under clause 41 of listing Agreement i.e. Annexure I or II or III and IV appended thereto; along with the Limited Review i.e. Annexure V / VI, Audit Report i.e. Annexure VII / VIII.

3. Statement of Assets and Liabilities to be sent in the Format specified under clause 41(I)(ea) of listing Agreement i.e. Annexure IX appended thereto.

4. Denomination in which items in financial statement are expressed is to be clearly stated i.e. Rupees in Lacs. If company changes the stated denomination in any subsequent quarter, then it shall state the items of previous quarter / year in the new denomination provided it mentions in notes to account that it has changed its denomination.

5.       Financial Results are to be sent within 15 minutes from conclusion of Board Meeting through Fax / email followed by Hard copy.

6.       A clear Black & White print out of the Financial Results should be faxed at the Designated Fax Numbers without any shading or highlighted in colours that render the Financial Results illegible.

7. If the Company is sending REVISED Financial Results, the covering letter should mention specifically the items / figures that have been revised alongwith the reasons for the same.

8. Companies should Check on BSE website: www.bseindia.com under heading Corporate Announcements, as to whether Financial Results of company have been disseminated, if Financial Results uploaded on BSE website are not clear/visible then company should email .pdf file and excel sheet of Financial Results on the Exchange designated email id.: corp.relations@bseindia.com. Or contact BSE officials on the Telephone Numbers enumerated at the end of this note.

9. Financial Results are to be published within 48 hours, if there is a holiday, then the same may be published on the immediate preceding working day.

10.   The company should specify in the Title of the Financial Results and in relevant column, whether the Financial Results and items stated therein are Audited or Unaudited.

11.   Notes should specify any deviation from format or reason for non-submission of previous quarter / year comparable figures.

12.   The Company should email an excel sheet alongwith .pdf file of the Financial Results. This will enable early and speedy updation of Financial Results on bse website and any chance of figure mismatch would be reduced.

13.   In case of change in accounting year, the company should clearly specify the quarter / year end in the relevant columns. The notes of the Financial Results should specify that company has changed its accounting year and reason for non – comparable Financial Results.

14.   It is mandatory for companies to provide Pledge details in the format specified under clause 41 for submission of Financial Results.

15.   Where there are qualifications in the limited review report or the audit report, the company shall by way of note state how the same has been resolved, and if not resolved reasons therefor and the steps that they intend to take in the matter.

16.   Financial Results will be treated as incomplete if Company does not provide details such as EPS, public shareholding, face value, pledge shares/percentage and / or there is Totalling Mismatch i.e. the Internal Totals like Expenditure Total, Taxes Total are not tallying. Also if the same is not accompanied with the limited review report or the audit report as required, it will be considered as incomplete.

17.   Where segment reporting is applicable, the company shall submit the segment report alongwith the financial results.

18.   Financial Results should be authenticated / signed as specified in clause 41 (II) and sent vide a signed covering letter. Details of persons signing i.e. name and designation should be mentioned.

19.   The date of Board meeting in which the Financial Results have been approved should be mentioned at the beginning of the notes to the Financial Results.

20.   The company has to submit Audited Quarterly and Yearly Financial Results for the last quarter within 60 days from the end of the financial year. However, Audit Report need not be submitted in respect of audited final quarter and year-end financial results.

21.   The company should indicate in the first quarter of the financial year - whether it intends to publish standalone results or consolidated results and the same shall not be changed.

22.   Submission of standalone results is mandatory. Where the company also submits the consolidated results, it is mandatory to publish the consolidated results.

23.   The company also has to publish its Statement of Assets & Liabilities.

24.   The company re-submitting Financial Results due to amalgamation / scheme of arrangement should clearly specify in notes details regarding amalgamation, non-comparable Financial Results, deviations etc.

25.   Where dividend is also proposed while considering the financial results, the company should, if possible, also intimate the book closure/ record date alongwith the said Dividend, financial results.

Don’ts:

1. The Columns/Cells should not be dark shaded or colored. Figures will not be visible when the Company sends such Financial Results by FAX.

2. Check EPS figure: The Company incurs (Loss) and still the EPS is shown as a Positive figure. A Suitable note should be appended in such cases

3. Do not send unsigned Financial Results. As a good corporate governance practice, the name alongwith designation of Directors/ Officers signing the financial results should be mentioned.

4. Avoid using cut – paste method of giving Financial Results. Mistakes are made when previous quarter formats are used to prepare current quarter Financial Results. A thorough check of columns / rows and items should be done so as to avoid sending incorrect data.

5. Do not re-fax/email Financial Results after correcting clerical / typographical / totallying errors / omissions without mentioning in covering letter that Financial Results are being rectified and resent. Specify the items revised and reasons for revising Financial Results.

6. Hand Delivery of Financial Results should not be adopted as the only mode of submitting Financial Results.

7. Companies should not hold Board Meeting for financial results after the limitation period provided for in clause 41 (i.e. 45 days from end of each quarter/60 days from end of last quarter). Condonation of delay cannot be permitted by BSE under any circumstances.

Thanks & Regards

CS Nikhil Kalra

csnikhilkalra@gmail.com