The 2013 Act also intends to improve corporate governance by requiring disclosure of nature of concern or interest of every director, manager, any other key managerial personnel and relatives of such a director, manager or any other key managerial personnel and reduction in threshold of disclosure from 20% to 2%. The term ‘key managerial personnel’ has now been defined in the 2013 Act and means the chief executive officer, managing director, manager, company secretary, whole-time director, chief financial officer and any such other officer as may be prescribed.
The 2013 Act states that requirement of certification by a company secretary in practice of annual return will be extended to companies having paid up capital of five crore INR or more and turnover of 25 crore INR or more* (section 92(2)of 2013 Act and the 1956 Act requires certification only for listed companies).
The information that needs to be included in the annual return has been increased. The additional information required, includes particulars of holding, subsidiary and associate companies, remuneration of directors and key managerial personnel, penalty or punishment imposed on the company, its directors or officers [section 92(1) of 2013 Act].
2. Place of keeping registers and returns
The 2013 Act allows registers of members, debenture-holders, any other security holders or copies of return, to be kept at any other place in India in which more than one-tenth of members reside [section 94(1) of 2013 Act]. The flexibility in the 1956 Act is limited to a place within the city, town or village in which the registered office is situated.
3. General meetings
The 2013 Act states that the first annual general meeting should be held within nine months from the date of closing of the first financial year of the company [section 96(1) of 2013 Act], whereas the 1956 Act requires the first annual general meeting to be held within 18 months from the date of incorporation.
Currently, the 1956 Act does not define business hours, which the 2013 Act now defines as between 9 am and 6 pm. The 2013 Act states that annual general meeting cannot be held on a national holiday whereas the annual general meeting cannot be held on a public holiday as per the existing provisions of section 166(2) of the 1956 Act [section 96(2) of 2013 Act].
In order to call an annual general meeting at shorter notice, the 2013 Act requires consent of 95% of the members as against the current requirement in the 1956 Act which requires consent of all the members [section 101(1) of 2013 Act].
The 2013 Act states that besides director and manager, the nature of concern or interest of every director, manager, any other key managerial personnel and relatives of such director, manager or any other key managerial personnel in each item of special business will also need to be mentioned in the notice of the meeting [section 102 (1) of 2013 Act]. Also, the threshold of disclosure of share holding interest in the company to which the business relates of every promoter, director, manager and key managerial personnel has been reduced from 20% to 2% [section 102 (2) of 2013 Act].
The 2013 Act states that in case of a public company, the quorum will depend on number of members as on the date of meeting. The required quorum is as follows:
Five members if number of members is not more than one thousand
Fifteen members if number of members is more than one thousand but up to five thousand
Thirty members if number of members is more than five thousand [section 103 (1) of 2013 Act]
A limit has been introduced on the number of members which a proxy can represent. The 2013 Act has introduced a dual limit in terms of number of members, which is prescribed as 50 members and also sets a limit in terms of number of shares holding in the aggregate not more than 10 % of the total share capital of the company carrying voting rights* [section 105 (1) of 2013 Act].
Further, it is relevant to note that private companies cannot impose restrictions on voting rights of members other than due to unpaid calls or sums or lien [section 106 (1) of 2013 Act].
Listed companies will be required to file with the ROC a report in the manner prescribed in the rules on each annual general meeting including a confirmation that the meeting was convened, held and conducted as per the provisions of the 2013 Act and the relevant rules [section 121 of 2013 Act].
4. Other matters
Listed companies will be required to file a return with the ROC with respect to the change in the number of shares held by promoters and top ten shareholders within 15 days of such a change[section 93 of 2013 Act]. This requirement again demonstrates the effort made towards synchronizing the requirements under the 2013 Act and the requirements under SEBI. Additionally, on an annual basis, companies are also currently required to make the disclosures with respect to top shareholders under the Revised Schedule VI the 1956 Act.
The 2013 Act requires every company to observe secretarial standards specified by the Institute of Company Secretaries of India with respect to general and board meetings [section 118 (10) of 2013 Act], which were hitherto not given cognisance under the 1956 Act. Additionally, it is also pertinent to note that these standards do not have a mandatory status for the practicing company secretaries.