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Holding-Subsidiary Company Relationship In this article, we will discuss the various criteria which create holding and subsidiary relationship between two companies. Understanding holding-subsidiary relationship important to know status of related parties between two companies and to consolidation of books of account. DEFINITION UNDER COMPANIES ACT, 2013 Section 2(46) defines, "holding company", in relation to one or more other companies, means a company of which  such companies are subsidiary companies; Explanation:- For the purpose of this clause, the expression  "company"  includes any body corporate;] To understand this definition, we need to look subsidiary definition as well which is given u/s 2(87) : " subsidiary company " or " subsidiary ", in relation to any other company (that is to say the holding company), means a company in which the holding company— (i) controls the composition of the Board of Directors; or (ii) exercises or contr

In this article I will discuss, when disclosure from a director is required under section 184 of the Companies Act, form MBP-1, and concept of interested director. CONCEPT Taking disclosure is quite logical because when the matter or any material contract is discussed at the board meeting then every director must be aware that who is interested in particular agenda item and must check the conflict of interest. PROVISIONS OF SECTION 184: Every director must disclose his interest in any contract or arrangement at the Board Meeting in which such contract/arrangement is being discussed. Such disclosure shall be given in Form MBP-1 .  If any director is interested in any such contract, then he shall be prohibited from participating in such meeting. [ Private limited company is exempted from this , Notification dated 5th June 2015 ] TRIGGER POINT TO DISCLOSE INTEREST? First meeting of board in which he participates as a director. Thereafter, at the first meeting of every financial year or if

Giving Loans and making Investment is quite common in big companies because there is always a tendency of routing of funds from one entity to another. Therefore, knowing proper compliances is inevitable, else your company can be caught up by the regulator. Here is a brief process you must follow while giving a loan or making the investment:

Though both private limited and public limited are registered as a company under the Companies Act, 2013, there are some subtle differences which distinguish one from another. You can notice the difference on the basis of followings points:

SPICe+ FORM provides the following services viz. 1. Incorporation 2. DIN allotment 3.Mandatory issue of PAN 4. Mandatory issue of TAN 5. Mandatory issue of EPFO registration 6. Mandatory issue of ESIC registration 7. Mandatory issue of Profession Tax registration(Maharashtra) 8. Mandatory Opening of Bank Account for the Company and  9. Allotment of GSTIN (if so applied for).

Section 464 of Companies Act, 2013 defines  that no association or partnership consisting of more than 50 persons  [fixed vide rule 10 of Misc Rules 2017] shall be formed to carry on any business for gains unless it is registered under the companies Act 2013.

Few Important points regarding stamp duty on share certificate: 1. Stamp duty is payable on issue price not on the value of the security. 2. In a case of a large number of shares, stamp duty can be payable in a lump sum and this fact should be mentioned on share certificate. 3.  STAMP DUTY ON SHARE IS STATE SUBJECT BUT STAMP DUTY ON DEBENTURE IS UNION SUBJECT . 4. The company should pay the stamp duty according to the state in which the registered office of the company is situated, not in the state where Board Meeting is held to consider an issue of shares. 5. One issue is whether the stamp duty is  payable on duplicate/split share certificate  or not. Section3 of the Indian Stamp Act states that every instrument mentioned in the schedule of the Indian stamp act which, not having been previously executed by any person is executed in India; shall be chargeable with stamp duty of the amount indicated in  schedule I . 6. Stamp duty is payable on a face value of shares

If there is an audit committee, then first the audit committee shall consider the appointment of the auditor and recommend the same to the Board.

MEANING: Private placement of securities is one of the modes to raise funds. The term 'private placement' means any offer of securities or invitation to subscribe (purchase) securities to a selected group of persons by a company. The offer or invitation to subscribe securities on a private placement basis can not be made to more than 200 persons (excluding QIB and employees) in a  financial year . It was decided in  Sahara India Real Estate Corpn. V .SEBI [2012]  that if an unlisted company made an offer of shares or debentures to more than the threshold limit of 200, it is mandatory for the company to follow 'public offer' norms and SEBI has proper jurisdiction over such issue. PRE-ISSUE COMPLIANCE : If it is an unlisted company, then make sure the entire holding of securities of its promoters, directors, KMP has been dematerialized. [ September 10, 2018 MCA Notification] Make sure proposed issue must be as per Article of Association ( AOA ) Authorized Capital

COMPANY INCORPORATION REGISTRATION OF PRIVATE LIMITED COMPANY CHANGE OF NAME OF COMPANY FUNDS RAISING/ISSUE OF SECURITIES PRIVATE PLACEMENT OF SECURITIES AUDITOR APPOINTMENT OF AUDITORS LOAN & INVESTMENT LOAN & INVESTMENT BY COMPANY REMUNERATION MANAGERIAL REMUNERATION IN CASE OF INADEQUATE PROFIT OR LOSS

1. Hold board meeting to consider a new name and pass a resolution to apply for reservation of new name. 2. File an application through "RUN" on MCA Portal for reservation of name. Once an application is approved, then the new name is available for a period of 60 days from the date of approval. 3. Hold Extra-Ordinary Meeting (EGM)to pass a special resolution subject to the approval of Central Government. 4. File an application in Form No. INC.24 for change in name. 5. File a copy of a special resolution together with explanatory statement and Central Government approval in Form MGT.14 6. The ROC issue a new certificate of incorporation in Form INC.25 Note: Such change in name shall be noted in every copy of MOA

Meaning : It is main or principal documents or charter document which Regulates the relationship with the outside world.  Purpose :  1. It lays down the power of the company.  2. It is public document and is open for inspection.  Clause :  1. The Name Clause: Should not be undesirable in the opinion of the CG  2. The Registered office clause:  3. Objects Clause: Main object | any matter considered necessary in furtherance thereof|  4. The Liability Clause.  5. The Capital Clause  6. The Subscription Clause: Signatories to the MOA.

Related Party definition is codified in Accounting Standard and Companies Act, 2013 but both definitions have different purposes because, under the Companies Act, Board or Shareholder approval when the respective provisions are triggered and reporting of the same in AOC-2 whereas there is no such approval required under the Accounting Standard. Definition under section 2(76) of the Companies Act, 2013 : "Related party" with reference to a company means:- (i) a director or his wife; (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 [or his relative] is a member or director; (v) a public company in which a director or manager is a director [and holds] along with his relative, more than 2% of its paid-up share capital (vi) any body corporate whose Board of directors, managing director, or manager is accustomed to act in accordance

MCA has notified the amended rules which may be called the Companies (Issue of Global Depository Receipts) Amendment Rules, 2020 and shall come into force on the date of their publication in the Official Gazette i.e 13-02-2020 . Amendments are carried out to insert a new proviso in Rule 7 has been inserted which states that the proceeds of the issue of depositories receipts maybe remitted in an IFSC banking unit and utilized in accordance with the instructions issued by the RBI on time to time. Further, the depository receipts can be issued by way of a public offering or private placement or in any other manner prevalent in the concerned jurisdiction and may be listed or traded on the listing or trading platform in the concerned jurisdiction.

The government has sanctioned prosecution proceedings against 284 companies and sent 5,382 notices to companies that have not fulfilled the mandatory corporate social responsibility (CSR) expenditure norms, minister of state for corporate affairs P P Chaudhary has said. Link Dated 19-12-2018. [1]The Notices issued in respect of Non-compliance pertains to the FY 2015-16. The MCA recently set up a Centralized Scrutiny and Prosecution Mechanism (CSPM) to keep a tab on the firms and also to examine the records of the companies obliged to spend on CSR activities. These actions are taken on the basis of Baijal Committee Report: Link . Some of the recommendations and issues which may arise in near future are as follows: 1. It seems that a one-off event shall not be counted as CSR activities such as charitable contribution [except Contributions mentioned in Schedule VII]. There have to be some projects which is run on continuous basis. 2. As per Report of 2015 on the impleme

Recently Ministry of Corporate Affairs (“ MCA ”) issued notification dated 6 th January 2020 to amend the rule 8A of Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014 which changed the Criteria to appoint Company Secretary (“ CS ”) in private limited companies and Public Limited Companies. The amended rule 8A is as follows: 8A. Appointment of Company secretary in Companies Not covered under Rule 8 Every private company which has a paid-up share capital of ten crore rupees or more shall have a whole-time company secretary. Earlier this limit of ten crores was five crores. The way MCA amended the rule it seems that MCA did not consider the other criteria to appoint the CS. Earlier raising equity share capital in a company could be the only source of getting funds, and paid-up share capital was considered as criteria to appoint CS as a whole time employee in the company. But, now the scenario is completely changed; company going for other aven

This is an expression you must have seen in many laws. Section 188 of the Companies Act, 2013 uses this expression. Ordinary course of business means what the company normally does or its core business activity. According to the Black's Law Dictionary, it means the normal routine in managing trade or business.  Usually, few professionals are of the view that whatever mentioned in Object clause of the Memorandum of Association ( MOA ) is company's ordinary course of business  but this is not the correct view because a company usually mentions all sort of activities but that does not mean that company shall resort to all such activities.

1. Is there any connection between section 89(Declaration in Respect of Beneficial Interest in any Share) and 90 of the Companies Act, 2013? First of all, we have to understand the purpose of sections 89 and 90. Section 89 : Section 89 comes into picture when Legal owner and Beneficial owner are different.  For example, XYZ Ltd wants to incorporate ABC Ltd, a wholly-owned subsidiary ( WOS ) company. In this case, to incorporate ABC Ltd. we need 7 members ( to incorporate a public company in India, at least 7 members are required ). Since ABC Ltd going to be WOS, then total shareholdings must be with XYZ Ltd. To solve this situation, XYZ Ltd. may nominate 6 individuals who shall be just legal owners (whose name just recorded in the register of members) to comply with the requirement to have 7 members (including XYZ Ltd) whereas beneficial owners shall be XYZ Ltd. Compliance : In the above case to fulfill the compliance part, 6 individuals so nominated above will file a de

FAQs issued by MCA:  Link Date of filing for the FY 2018-19 has been extended from 31.08.2018 to 15.09.2018.

NOTICE There have to be 7 days advance notice. Proof of Notice must be kept safe. There shall be a number system and must be assigned to each meeting. MINUTES Minutes have to be numbered consecutively. Minutes must be recorded within one month of the meeting.