Shareholders RightsVigil Mechanism &Corporate Social Responsibility…
Companies Act, 2013 – Everthing you need to know.
Shareholders Right
Shareholders Right
Minority Shareholders Right
Class Action Suit
Who can sue
Members
If Co. having share Capital
Not less than 100 Members
Such % of Total Members
If Co. not having Share Capital
Not less than 20% of Total Members
Any class of Members or Depositors
Depositors
Not less than 100 Depositors
Such % of Total Depositors
Minority Shareholders Right
Application to Tribunal
To Restrain
Co. from doing ultra
vires act
Co. from breaching MoA or AoA
To declare resolution altering
MoA or AoA as void
Directors on acting on such resolutio
n.
co. from breaching any
law
co. for taking action contrary to
the resolution
passed
To claim
damages
Minority Shareholders Right
Oppression & Mis - Management
Affairs of the Co. conducted in a manner pre-judicial to public, Co. or members
Material change in the Co. not being in the interest of Creditors, investors, debenture holders, shareholders
Minority Shareholders Right
Who can apply
Members
If Co. having share Capital
Not less than 100 Members
10% of Total Members
Holding 10% of Issued Capital
If Co. not having Share Capital
Not less than 20% of Total Members
Minority Shareholders Right
Small Shareholder Director
Every Listed Co. may have one Director elected by Small shareholders
Request made by 1000 Small Shareholders Or 10% of the total shareholders
Whichever is lower
The Company can also appoint a Small Shareholder Director on Suo motu.
Small shareholder for this purpose mean shareholder holding nominal value of Shares of Rs. 20,000/- or less.
Shareholders Right
Shareholder’s Right
Right to receive Notices of General Meetings, Financial Statements etc.,
Right to Inspect Statutory Registers and Returns
Right to attend and Vote at Meetings
Right to receive Share Certificates
Right to Transfer his Shares
Right to receive Dividend when Declared
Right to have Right Shares
Right to Appoint Directors
Right to dissent and safegaurd his interest on increase in liability.
Right to share surplus of the assets
Reporting to Members
Reporting to Members
Extract of the Annual Return
Disclosure of Non-acceptance of
recommendations given by Audit Committee
Number of Meetings of the Board.
Statement of declaration given by
independent Directors
Criteria framed by nomination & remuneration
committee
comments on qualifications made in Audit and Secretarial
audit report.
Particulars of loans, guarantees and
investments made under Sec. 186
Particulars of contracts and
arrangements made under Sec. 188
Statement indicating Annual Performance
evaluation of its Board.
Disclosing of Composition of CSR committee
Details of material orders passed by the Regulators or Courts
or Tribunals
Many other Details…
Reporting to Members
Signing of..
Board’s Report• By Chairperson (if authorised by the Board) [or]• By 2 Directors (if there is MD, he shall sign).
Financial Statements• By Chief Executive Officer (If he is a Director) [and]• BY Chief Financial Officer [and]• By Company Secretary [and]• By Chairperson (if authorised by the Board) [or]• By 2 Directors (if there is MD, he shall sign).
Vigil Mechanism
Vigil Mechanism
Whistle Blower Mechanism
Vigil Mechanism
Introduction
A Vigil Mechanism is a policy developed by the
Board of Directors to detect and avoid, fraud or
misconduct by the company.
Vigil Mechanism
Who shall frame
Listed Companies
Company having
Borrowed money of 50 Cr or
more from
Banks & FI.
Companies which
accepted Public
Deposits
Every Company, falls under any of the Category mentioned beside shall establish a Vigil Mechanism for its Directors & Employees to report Genuine Concerns.
Vigil Mechanism
Motive of Vigil Mechanism
To Detect and Prevent Fraud or Misconduct in the Organisation.
To protect the Interests of Whistle Blower against Victimisation.
To establish Standard Operating Procedures for reporting of unethical events through established mechanism.
To give Direct access to the Chairman of the Audit Committee in appropriate or exceptional cases.
Vigil Mechanism
Disclosure of Vigil Mechanism
Disclosure
Companies Website
Board’s Report
Vigil Mechanism
ResponsibilitiesAudit Com
mittee
•Audit Committee shall look after Vigil Mechanism•In case of conflict of interest of any member of the Committee, he has to recuse himself.
Where no
Audit Com
mittee is
required
•The Board shall appoint a director to play the role of Audit Committee.•In case of frivolous complaints the committee or the Director may take necessary action.
Independen
t Direct
ors
•Ascertain & ensure that the Company has an adequate and functional Vigil Mechanism•Report concerns of unethical behaviour or suspected fraud or violation on Company Code.
Corporate Social Responsibility.
Corporate Social Responsibility
Corporate Social Responsibility.
Need for Mandatory Provision.
The contribution to CSR made by top 25 listed
companies (in terms of sales) is Rs. 1,310 Crore
out of the average preceding 3 years profits of Rs.
1,53,490 Crore which is amounting to 0.85% of
the total profits.
Corporate Social Responsibility.
Benefits
Strengthened Brand Positioning
Enhanced Corporate Image
Increased Sales and Market Share
Increased Appeal to Investors
Ability to attract, motivate and retain employees.
Corporate Social Responsibility.
Triggering Point
Net worth of Rs. 500 Crore
or more
Turnover of Rs. 1000 Crore or
more
Net Profit of Rs. 5 Crore or
more
Every Company, during any Financial Year, falls under any of the Category mentioned beside shall constitute a Corporate Social Responsibility Committee.
Corporate Social Responsibility.
Constitution of Committee
For Companies where appointment of Independent Director is mandatory.
For Companies where appointment of Independent Director is not mandatory.
In a Private Company with 2 Directors.
Corporate Social Responsibility.
CSR Budget
The Board of the Company shall ensure that the Company spends, in every Financial Year at atleast 2% of the average Net Profits of the Company during immediately preceding 3 Financial Years.
Net Profits for this purposes of this Section shall be calculated as per the Provisions of Section 381 for Foreign Companies and Section 198 for other Companies.
Corporate Social Responsibility.
Duties of Committee
recommend the amount of expenditure to be incurred
formulate and recommend a CSR policy to the board
monitor CSR policy from time to time
1
2
3
Corporate Social Responsibility.
Duties of Board
Ensure that activities included in CSR policy are undertaken
consider & approve CSR policy recommended by committee.
Ensure that company spends, in every financial year, at least 2% of the average net profits
1
2
3
Corporate Social Responsibility.
Disclosures
To Disclose CSR Policy in Board Report.
Disclose of CSR Committee Composition in Board Report.
Reasons for note spending the CSR Budget Allocated in Boards Report.
Corporate Social Responsibility.
CSR Activities
Eradicating hunger, poverty and malnutrition
Promoting Education
Promoting Gender Equality.
Ensuring Environmental Sustainability
Protection of National Heritage, Art and Culture
Measures for the benefit of Armed Forces veterans
Training to Promote Sports
Contribution to the Funds set up by Central Government.
Contributions or Funds provided to Technology Incubators
Rural Development Projects
Undertaking CSR Activities
On its Own
In collaboration with
other Company
Third Party
Registered Society, Trust or Sec. 8
Company.
Registered Trust, Society
or Sec. 8 Company started
by Group Compani
es.
Corporate Social Responsibility.
Undertaking CSR Activities
Corporate Social Responsibility.
Restrictions
CSR Expenditure is not allowed in the Following Activities:
Activities undertaken
outside India
Activities undertaken
only for the
purposes of its
employees and their Families.
Contribution made to
the Political Parties
Amount spent more than 5% of
the CSR Budget for
CSR Capacity building
Activity not coming under the purview of Schedule
VII.
Corporate Social Responsibility.
Ceasing Effect
If the Company ceases to fall under the
Triggering Criteria, in three continuous Financial
Years, then the Company need not:
Constitute CSR Committee
Comply with the Provision of Section 135
Till such time it does not fall under triggering
Criteria.
Companies Act, 2013 – Everthing you need to know.
Thank You.
Meher Kiran Cholkar
Asst. Manager
R & A Associates, Company Secretaries.