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Website: www.icsi.edu
ICSI Post Membership Qualification Courses (E-Bulletin)
MAY 2014
Contents
1. PMQ Courses offered by the ICSI
2. Timetable & Programme for June 2014 Examination of PMQ Course in
Corporate Governance
3. Academic Updates i) Corporate Governance under the Companies Act 2013 and the
Revised Clause 49 of the Equity Listing Agreement ii) Compromise Arrangement and Mergers Under New Companies Act
2013
4. Recent happenings in the world of Corporate Governance
5. Suggested Readings
ICSI Post Membership Qualification E-Bulletin May 2014 Page 2
PMQ COURSES OFFERED BY THE INSTITUTE OF COMPANY SECRETARIES OF INDIA
The Institute, as a part of building capacity of its members, offers Post Membership
Qualification (PMQ) courses on new and emerging areas with the aim to provide
application oriented knowledge to the members to enable them to render quality
services in diversified areas. A brief description of these PMQ Courses offered by the
Institute is as under:
1. PMQ COURSE IN CORPORATE GOVERNANCE
Corporate governance now offers a comprehensive, interdisciplinary approach to the
management and control of companies. Corporate professionals of today and tomorrow
must imbibe in themselves the evolving principles of good corporate governance across
the globe on a continual basis. Excellence can be bettered only through continuous
study, research and academic and professional interaction of the highest quality in the
theory and practice of good corporate governance. The corporate world looks upon
especially Company Secretaries to provide the impetus, guidance and direction for
achieving world-class corporate governance.
Company Secretaries are the primary source of advice on the conduct of business for
achieving this end. This can take into its fold everything from legal advice on conflicts of
interest, through accounting advice, to the development of strategy and corporate
planning.
The Institute, a pioneer in corporate governance, offers Post Membership Qualification
Course (PMQ) in Corporate Governance aims to enable the members to gain acumen,
insight and thorough knowledge relating to various aspects of corporate governance.
A candidate successfully completing the Post Membership Qualification Course in
Corporate Governance shall be awarded a Diploma Certificate and shall be entitled to
use the descriptive letters “DCG (ICSI)” to indicate that he/she has been awarded “Post
Membership Diploma in Corporate Governance”.
ICSI Post Membership Qualification E-Bulletin May 2014 Page 3
2. PMQ COURSE IN CORPORATE RESTRUCTURING AND INSOLVENCY
Mergers, acquisition, takeovers, are the traditional and widely accepted business
strategies during prosperity while re-construction and revival strategies are adopted in
the times of distress. The restructuring and insolvency practice invariably go hand in
hand as the revival process of bankrupt companies involves innovative restructuring
process as well.
The concept of insolvency practitioners is gaining prominence in India in the context of
revival, rehabilitation and winding up of companies. Recognising this, the Institute of
Company Secretaries of India (ICSI) conducts Post Membership Qualification (PMQ)
Course in Corporate Restructuring and Insolvency to build capacity of members in the
area of legal, practical and application oriented aspects of corporate restructuring,
rescue and insolvency and matters related thereto.
The PMQ Course in Corporate Restructuring and Insolvency aims at capacity building of
Professionals in the area of legal, practical and application oriented aspects of corporate
restructuring, rescue and insolvency and matters related thereto.
A candidate successfully completing the Post Membership Qualification Course in
Corporate Restructuring and Insolvency shall be awarded a Diploma Certificate and
shall be entitled to use the descriptive letters “DCRI (ICSI)” to indicate that he/she has
been awarded “Post Membership Qualification Course in Corporate Restructuring and
Insolvency”.
For further details, please visit www.icsi.edu
ICSI Post Membership Qualification E-Bulletin May 2014 Page 4
SCHEDULE FOR JUNE 2014 EXAMINATION OF PMQ COURSE
IN CORPORATE GOVERNANCE
DATE AND DAY GROUP MORNING SESSION
09.00 A.M. To 12.00 Noon.
05.06.2014
Thursday
I Conceptual Framework of Corporate Governance
06.06.2014
Friday
I Corporate and Board Management
07.06.2014
Saturday
I Legal and Regulatory Framework of Corporate Governance
08.06.2014
Sunday NO EXAMINATION
09.06.2014
Monday
II Board Committees and Role of Professionals
10.06.2014
Tuesday
II Corporate Governance — Codes and Practices
For any enquiry, please contact Directorate of Academics at the Institute Head Quarters
at Lodhi Road, New Delhi, 011-45341039, email: [email protected].
ICSI Post Membership Qualification E-Bulletin May 2014 Page 5
CORPORATE GOVERNANCE UNDER THE COMPANIES ACT 2013 AND THE REVISED CLAUSE 49 OF THE EQUITY LISTING
AGREEMENT*
The Companies Act, 2013 was enacted on August 30, 2013 which provides for a major overhaul
in the Corporate Governance norms for all companies. The rules pertaining to Corporate
Governance were notified on March 27, 2014. The requirements under the Companies Act, 2013
and the rules notified there under would be applicable for every company or a class of
companies.
The Companies Act 2013 envisages radical changes in the area of Corporate Governance
and is set to have far-reaching implications. The new regime is expected to significantly
change the manner in which corporates operate in India. It will have far reaching
consequences on all companies incorporated in India. The new Act promises to
substantively raise the bar on governance and thrusts greater responsibility and
obligation on the Board of Directors and Management in Indian companies.
To review the provisions of the Listing Agreement to align with the provisions of the
Companies Act, 2013, adopt best practices on corporate governance and to make the
corporate governance framework more effective, capital markets regulator, SEBI has
came out with Corporate Governance in listed entities - Amendments to Clauses 35B
and 49 of the Equity Listing Agreement vide its circular No. CIR/CFD/POLICY CELL
/2/2014 dated April 17, 2014. The circular lays down the detailed corporate
governance norms for listed companies, provides for stricter disclosures and protection
of investor rights, including equitable treatment for minority and foreign shareholders.
The full text of the revised Clause 49 of the Equity Listing Agreement is available at
www.sebi.gov.in.
* Compiled by CS Nishita Singhal, AEO, ICSI
ACADEMIC UPDATES
ICSI Post Membership Qualification E-Bulletin May 2014 Page 6
Applicability
The revised Clause 49 would be applicable to all listed companies with effect from
October 01, 2014. However, the provisions of Clause 49(VI)(C) as given in Part-B shall
be applicable to top 100 listed companies by market capitalisation as at the end of the
immediate previous financial year.
The provisions of Clause 49(VII) as given in Part-B shall be applicable to all prospective
transactions. All existing material related party contracts or arrangements as on the
date of this circular which are likely to continue beyond March 31, 2015 shall be placed
for approval of the shareholders in the first General Meeting subsequent to October 01,
2014. However, a company may choose to get such contracts approved by the
shareholders even before October 01, 2014.
For other listed entities which are not companies, but body corporate or are subject to
regulations under other statutes (e.g. banks, financial institutions, insurance companies
etc.), the Clause 49 will apply to the extent that it does not violate their respective
statutes and guidelines or directives issued by the relevant regulatory authorities. The
Clause 49 is not applicable to Mutual Funds.
The highlights of Clause 49 are given below.
Exclusion of nominee Director from the definition of Independent Director.
At least one woman director on the Board of the company.
Compulsory whistle blower mechanism.
Expanded role of Audit Committee.
Prohibition of stock options to Independent Directors.
Separate meeting of Independent Directors.
Constitution of Stakeholders Relationship Committee.
Enhanced disclosure of remuneration policies.
Performance evaluation of Independent Directors and the Board of Directors.
Prior approval of Audit Committee for all material Related Party Transactions
(RPTs)
ICSI Post Membership Qualification E-Bulletin May 2014 Page 7
Approval of all material RPTs by shareholders through special resolution with
related parties abstaining from voting.
Mandatory constitution of Nomination and Remuneration Committee. Chairman
of the said committees shall be independent.
The maximum number of Boards an independent director can serve on listed
companies be restricted to 7 and 3 in case the person is serving as a whole time
director in a listed company.
To restrict the total tenure of an Independent Director to 2 terms of 5 years.
However, if a person who has already served as an Independent Director for 5
years or more in a listed company as on the date on which the amendment to
Listing Agreement becomes effective, he shall be eligible for appointment for one
more term of 5 years only.
The scope of the definition of RPT has been widened to include elements of
Companies Act and Accounting Standards.
A table showing provisions of new Clause 49 of the Listing Agreement corresponding to
the new Companies Act 2013 is given below:
S.No Particulars New Clause 49 of Listing
Agreement
Companies Act 2013 and
Rules
1 Separation of
Nominee
Directors and
Independent
Directors (IDs)
Clause 49(II) (B): Nominee
director is excluded from
the definition of
Independent Directors.
Section 149(6) An
independent director in
relation to a company, means a
director other than a Managing
Director or a Whole Time
Director or a Nominee Director.
2 Modified defini
tion of
Independent
Directors
Clause 49(II)(B): SEBI has
amended the definition of
Independent Director in
align with the provisions of
Companies Act 2013.
Section 149(6) defines the
term Independent Director.
3 Qualification of
IDs
The qualifications of IDs are
not specified in the
amended clause 49 of the
listing agreement.
Companies (Appointment
and Qualification of
Directors) Rules, 2014:
An independent director shall
possess appropriate skills,
experience and knowledge in
one or more fields of finance,
ICSI Post Membership Qualification E-Bulletin May 2014 Page 8
law, management, sales,
marketing, administration,
research, corporate
governance, technical
operations or other disciplines
related to the company’s
business.
4 Whistle -
Blowing
mechanism
Clause49 (II)(F): The
company shall establish a
vigil mechanism for
directors and employees to
report concerns about
unethical behaviour, actual
or suspected fraud or
violation of the company’s
code of conduct or ethics
policy.
This mechanism should also
provide for adequate
safeguards against
victimization of director(s)
/ employee(s) who avail of
the mechanism and also
provide for direct access to
the Chairman of the Audit
Committee in exceptional
cases.
The details of
establishment of such
mechanism shall be
disclosed by the company
on its website and in the
Board’s report.
Section 177(9): Every listed
company and other classes of
companies to establish a Vigil
mechanism for directors and
employees to report genuine
concern.
It provide adequate safeguards
against victimization of
employees and directors who
avail of the Vigil mechanism
and also provide for direct
access to the chairperson of the
Audit committee or
the director nominated to play
the role of audit committee, as
the case may be, in exceptional
cases
Once established, the existence
of the mechanism may be
appropriately communicated
within the organization. The
details of establishment of Vigil
mechanism shall be disclosed
by the company in the
website, if any, and in
the Board’s Report.
5 Prohibited Sto
ck options for
IDs
Clause 49(II)(C): IDs shall
not be entitled to any stock
options.
Section 197(7): IDs shall not
be entitled to any stock option.
6 Separate
meeting of IDs
Clause49 (II)(B)(6): The
IDs of the company shall
hold at least one meeting in
Section 149 read with
Schedule IV: IDs of the
company shall hold at least one
ICSI Post Membership Qualification E-Bulletin May 2014 Page 9
a year, without the
attendance of non-
independent directors and
members of management.
All the independent
directors of the company
shall strive to be present at
such meeting.
meeting in a year, without the
attendance of non-independent
directors and members of
management.
All the independent directors
of the company shall strive to
be present at such meeting.
7 Training of IDs Clause 49(II)(B): The
company shall provide
suitable training to
independent directors to
familiarize them with the
company, their roles, rights,
responsibilities in the
company, nature of the
industry in which the
company operates, business
model of the company, etc.
The details of such training
imparted shall be disclosed
in the Annual Report
The Companies Act 2013 did
not specify any training of IDs
and Board of Directors.
8 Liability of IDs Clause49(II)(E): An
independent director shall
be held liable, only in
respect of such acts of
omission or commission by
a company which had
occurred with his
knowledge, attributable
through Board processes,
and with his consent or
connivance or where he had
not acted diligently with
respect of the provisions
contained in the Listing
Agreement.
Section 149(12): An
independent director; a NED
not being promoter or KMP,
shall be held liable, only in
respect of such acts of omission
or commission by a company
which had occurred with his
knowledge, attributable
through Board processes, and
with his consent or connivance
or where he had not acted
diligently.
9 Stakeholders
Relationship
Committee
Clause 49(VIII)(E): A
committee under the
Chairmanship of a non-
Section- 178(5): The Board of
Directors of a company which
consists of more than one
ICSI Post Membership Qualification E-Bulletin May 2014 Page 10
executive director and such
other members as may be
decided by the Board of the
company shall be formed to
specifically look into the
redressal of grievances of
shareholders, debenture
holders and other security
holders. This Committee
shall be designated as
‘Stakeholders Relationship
Committee’ and shall
consider and resolve the
grievances of the security
holders of the company
including complaints related
to transfer of shares, non-
receipt of balance sheet,
non-receipt of declared
dividends.
thousand shareholders,
debenture-holders, deposit-
holders and any other security
holders at any time during a
financial year shall constitute a
Stakeholders Relationship
Committee (SRC) consisting of
a chair person who shall be a
non-executive director and
such other members as may be
decided by the Board
The SRC shall consider and
resolve the grievances of
security holders of the
company.
10 Disclosure
policy for
Remuneration
Clause 49(VIII)(C): All
pecuniary relationship or
transactions of the non-
executive directors vis-à-vis
the company shall be
disclosed in the Annual
Report.
In addition to the
disclosures required under
the Companies Act, 2013,
the following disclosures on
the remuneration of
directors shall be made in
the section on the corporate
governance of the Annual
Report:
a) All elements of
remuneration package of
individual directors
summarized under major
groups, such as salary,
benefits, bonuses, stock
Sec.197(12) and Companies
(Appointment and
Remuneration of Managerial
Personnel) Rules, 2014:
Every listed company shall
disclose in the Board’s Report:
a) the ratio of the
remuneration of each
director to the median
remuneration of the
employees of the company
for the financial year;
b) the percentage increase in
remuneration of each
director, C FO, CEO, CS or
Manager, if any, in the
financial year;
c) the percentage increase in
the median remuneration of
employees in the financial
year;
d) the number of permanent
ICSI Post Membership Qualification E-Bulletin May 2014 Page 11
options, pension etc.
b) Details of fixed
component and
performance linked
incentives, along with the
performance criteria.
c) Service contracts, notice
period, severance fees.
d) Stock option details, if
any – and whether issued
at a discount as well as
the period over which
accrued and over which
exercisable.
The company shall publish
its criteria of making
payments to non-executive
directors in its annual
report. Alternatively, this
may be put up on the
company’s website and
reference drawn thereto in
the annual report.
The company shall disclose
the number of shares and
convertible instruments
held by non-executive
directors in the annual
report.
Non-executive directors
shall be required to disclose
their shareholding (both
own or held by / for other
persons on a beneficial
basis) in the listed company
in which they are proposed
to be appointed as directors,
prior to their appointment.
These details should be
disclosed in the notice to the
general meeting called for
employees on the rolls of
company;
e) the explanation on the
relationship between
average increase in
remuneration and company
performance;
f) comparison of the
remuneration of the KMP
against the performance of
the company;
g) variations in the market
capitalisation of the
company, price earnings
ratio as at the closing date of
the current financial year
and previous financial year
and percentage increase
over decrease in the market
quotations of the shares of
the company in comparison
to the rate at which the
company came out with the
last public offer in case of
listed companies, and in
case of unlisted companies,
the variations in the net
worth of the company as at
the close of the current
financial year and previous
financial year;
h) average percentile increase
already made in the salaries
of employees other than the
managerial personnel in the
last financial year and its
comparison with the
percentile increase in the
managerial remuneration
and justification thereof and
point out if there are any
exceptional circumstances
for increase in the
ICSI Post Membership Qualification E-Bulletin May 2014 Page 12
appointment of such
director
managerial remuneration;
i) the key parameters for any
variable component of
remuneration availed by the
directors;
j) the ratio of the
remuneration of the highest
paid director to that of the
employees who are not
directors but receive
remuneration in excess of
the highest paid director
during the year; and
k) affirmation that the
remuneration is as per the
remuneration policy of the
company.
11 Performance
evaluation of
IDs
Clause 49(II)(B)(5):
a) The Nomination
Committee shall lay
down the evaluation
criteria for performance
evaluation of
independent directors.
b) The company shall
disclose the criteria for
performance evaluation,
as laid down by the
Nomination Committee,
in its Annual Report.
c) The performance
evaluation of
independent directors
shall be done by the
entire Board of Directors
(excluding the director
being evaluated).
d) d. On the basis of the
report of performance
evaluation, it shall be
determined whether to
extend or continue the
term of appointment of
Section 178(2) read with
Schedule IV:
a) The Nomination and
Remuneration Committee
shall identify persons who
are qualified to become
directors and who may be
appointed in senior
management in accordance
with the criteria laid down,
recommend to the Board
their appointment and
removal and shall carry out
evaluation of every
director’s performance.
b) The performance evaluation
of independent directors
shall be done by the entire
Board of Directors,
excluding the director being
evaluated.
c) On the basis of the report of
performance evaluation, it
shall be determined
whether to extend or
continue the term of
ICSI Post Membership Qualification E-Bulletin May 2014 Page 13
the independent director appointment of the
independent director.
12 Related Party
Transaction(RP
T)
Clause 49 (VII)
A RPT is a transfer of
resources, services or
obligations between a
company and a related
party, regardless of whether
a price is charged. A ‘related
party’ is a person or entity
that is related to the
company. Parties are
considered to be related if
one party has the ability to
control the other party or
exercise significant
influence over the other
party, directly or indirectly,
in making financial and/or
operating decisions and
includes the following:
1. A person or a close
member of that person’s
family is related to a
company if that person:
a. is a related party under
Section 2(76) of the
Companies Act, 2013;or
b. has control or joint
control or significant
influence over the
company; or
c. is a KMP of the
company or of a parent
of the company; or
2. An entity is related to a
company if any of the
following conditions
applies:
a. The entity is a related
party under Section
2(76) of the Companies
Act, 2013; or
Section 2 (76) & 188“related
party”, with reference to a
company, means—
a. a director or his relative
b. a KMP or his relative;
c. a firm, in which a director,
manager or his relative is a
partner;
d. a private company in which
a director or manager is a
member or director;
e. a public company in which a
director or manager is a
director or holds along with
his relatives, more than 2%
of its paid-up share capital;
f. anybody corporate whose
Board of Directors,
managing director or
manager is accustomed to
act in accordance with the
advice, directions or
instructions of a director or
manager;
g. any person on whose
advice, directions or
instructions a director or
manager is accustomed to
act
h. any company which is—
a holding, subsidiary or
an associate company of
such company; or
a subsidiary of a holding
company to which it is
also a subsidiary
“Related party” means a
director or key managerial
personnel of the holding
ICSI Post Membership Qualification E-Bulletin May 2014 Page 14
b. The entity and the
company are members of
the same group (which
means that each parent,
subsidiary and fellow
subsidiary is related to
the others); or
c. One entity is an associate
or joint venture of the
other entity (or an
associate or joint venture
of a member of a group
of which the other entity
is a member); or
d. Both entities are joint
ventures of the same
third party; or
e. One entity is a joint
venture of a third entity
and the other entity is an
associate of the third
entity; or
f. The entity is a post-
employment benefit plan
for the benefit of
employees of either the
company or an entity
related to the company. If
the company is itself
such a plan, the
sponsoring employers
are also related to the
company; or
g. The entity is controlled
or jointly controlled by a
person identified in (1).
h. A person identified in
(1)(b) has significant
influence over the entity
(or of a parent of the
entity); or
The company shall
company or his relative with
reference to a company, shall
be deemed to be a related
party.
No company shall enter into
any contract or arrangement
with a related party, except
with the consent of the Board
of Directors given by a
resolution at a meeting of the
Board and subject to such
conditions
A company having a paid-up
share capital of Rs.10 Crores
or more shall not entered into
a contract or arrangement,
except with the prior approval
of the company by a special
resolution.
A company shall not enter into
any contract or arrangement
with related party subject to
conditions;
sale, purchase or supply of
any goods or materials
directly or through
appointment of agents
exceeding25%. of the
annual turnover
selling or otherwise
disposing of, or buying,
property of any kind
directly or through
appointment of agents
exceeding10% of Net Worth
leasing of property of any
kind exceeding10% of the
net worth or exceeding 10%
of turnover.
ICSI Post Membership Qualification E-Bulletin May 2014 Page 15
formulate a policy on
materiality of RPTs and also
on dealing with RPTs.
A transaction with a related
party shall be considered
material if the transaction /
transactions to be entered
into individually or taken
together with previous
transactions during a
financial year;
• exceeds 5% of the
annual turnover or
• 20% of the net worth
of the company as
per the last audited
financial statements
of the company.
whichever is higher.
All RPTs shall require prior
approval of the Audit
Committee.
All material RPTs shall
require approval of the
shareholders
through special
resolution and the related
parties shall abstain from
voting on such resolutions
availing or rendering of any
services directly or through
appointment of agents
exceeding10% of Net
Worth.
appointment to any office or
place of profit in the
company, its subsidiary
company or associate
company at a monthly
remuneration exceeding
Rs.2,50,000/-
remuneration for
underwriting the
subscription of any
securities or derivatives
thereof of the company
exceeding 1% of the net
worth.
(Turnover or Net Worth shall
be on the basis of the Audited
Financial statements of the
preceding Financial Year.)
In case of wholly owned
subsidiary, the special
resolution passed by the
holding company shall be
sufficient for the purpose of
entering into the transactions
between wholly owned
subsidiary and holding
company.
No member of the company
shall vote on such special
resolution, to approve any
contract or arrangement which
may be entered into by the
company, if such member is a
related party:
ICSI Post Membership Qualification E-Bulletin May 2014 Page 16
Where any director is
interested in any
contract or arrangement
with a related party,
such director shall not
be present at the
meeting during
discussions on the
subject matter of the
resolution relating to
such contract or
arrangement.
Every contract or
arrangement entered
into, shall be referred to
in the Board’s report to
the shareholders along
with the justification for
entering into such
contract or
arrangement.
Where any contract or
arrangement is entered
into by a director or any
other employee, without
obtaining the consent of
the Board or approval
by a special resolution
in the general meeting
and if it is not ratified by
the Board or, as the case
may be, by the
shareholders at a
meeting within three
months from the date
on which such contract
or arrangement was
entered into, such
contract or arrangement
shall be voidable at the
option of the Board and
if the contract or
ICSI Post Membership Qualification E-Bulletin May 2014 Page 17
arrangement is with a
related party to any
director, or is
authorised by any other
director, the directors
concerned shall
indemnify the company
against any loss
incurred by it.
13 Disclosure of
RPTs
Clause 49(VIII)(A): Details
of all material transactions
with related parties shall
be disclosed quarterly along
with the compliance report
on corporate governance.
The company shall
disclose the policy on
dealing with RPTs on its
website and also in
the Annual Report.
No such Provision.
14 Disclosure of
different
Accounting
standard
Clause 49(VIII)(B): Where
in the preparation of
financial statements, a
treatment different from
that prescribed in an
Accounting Standard has
been followed, the fact shall
be disclosed in the financial
statements, together with
the management’s
explanation as to why it
believes such alternative
treatment is more
representative of the true
and fair view of the
underlying business
transaction in the Corporate
Governance Report.
Section-129(5): Where the
financial statements of a
company do not comply with
the accounting standards ,the
company shall disclose in its
financial statements, the
deviation from the accounting
standards, the reasons for such
deviation and the financial
effects, if any, arising out of
such deviation
15 Constitution of
Nomination &
Remuneration
Committee
Clause 49(IV): The
company shall set up a
nomination and
remuneration committee
Section 178 and Companies
(Meetings of Board and its
Powers) Rules, 2014: The
Nomination and Remuneration
ICSI Post Membership Qualification E-Bulletin May 2014 Page 18
which shall comprise at
least 3 directors, all of
whom shall be NEDs and at
least ½ shall be
independent. Chairman of
the committee shall be an
independent director. The
role of the committee shall,
inter-alia, include the
following:
Formulation of the
criteria for determining
qualifications, positive
attributes and
independence of a
director and recommend
to the Board a policy,
relating to the
remuneration of the
directors, KMP and other
employees;
Formulation of criteria
for evaluation of IDs and
the Board;
Devising a policy on
Board diversity;
Identifying persons who
are qualified to become
directors and who may
be appointed in senior
management in
accordance with the
criteria laid down, and
recommend to the Board
their appointment and
removal. The company
shall disclose the
remuneration policy and
the evaluation criteria in
its Annual Report.
The Chairman of the
nomination and
Committee is applicable to the
following classes of Companies
Every listed Company
Every other Public
company-
Having Paid up capital
of Rs.10crores or more;
or
Having turnover of
Rs.100 Crores which
have, in aggregate,
outstanding loans or
borrowings or
debentures or deposits
exceeding Rs.50 Crores.
The paid up share capital or
turnover or outstanding loans,
or borrowings or debentures
or deposits, as the case may be,
as existing on the date of last
audited Financial Statements
shall be taken into account for
the purposes of this rule.
The above mentioned classes of
companies shall constitute the
Nomination and Remuneration
Committee consisting of – 3 or
more NEDs out of which not
less than one half shall be IDs.
The chairperson of the
company (whether executive
or non-executive) may be
appointed as a member of the
Nomination and Remuneration
Committee but shall not chair
such Committee.
The Nomination and
Remuneration Committee
shall-
Identify persons who are
qualified to become
ICSI Post Membership Qualification E-Bulletin May 2014 Page 19
remuneration committee
could be present at the AGM,
to answer the shareholders’
queries. However, it would
be up to the Chairman to
decide who should answer
the queries
directors and who may be
appointed in senior
management in
accordance with the
criteria laid down,
Recommend to the Board
their appointment and
removal,
Carry out evaluation of
every director’s
performance.
Formulate the criteria for
determining qualificatio
ns, positive attributes and
independence of a
director and
Recommend to the Board
a policy, relating to the
remuneration for the
directors, key managerial
personnel and other
employees.
The Nomination and
Remuneration Committee shall
ensure that—
the level and composition
of remuneration is
reasonable and sufficient
to attract, retain and
motivate directors of the
quality required to run
the company successfully;
relationship of
remuneration to
performance is clear and
meets appropriate
performance
benchmarks; and
remuneration to
directors, KMPs and
senior management
ICSI Post Membership Qualification E-Bulletin May 2014 Page 20
involves a balance
between fixed and
incentive pay reflecting
short and long-term
performance objectives
appropriate to the
working of the company
and its goals
The policy shall be disclosed in
the Board’s report.
16 Appointment of
one Woman
Director
Clause 49 (II)(A)-
The Board of Directors of
the company shall have an
optimum combination of
executive and non-executive
directors with at least one
woman director and not less
than fifty percent of the
Board of Directors
comprising non-executive
directors
Section 149(1) and
Companies (Appointment
and Qualification of
Directors) Rules, 2014:
every listed company;
every other public
company having - paid–
up share capital of
Rs.100 Crores or more;
or turnover of Rs.300
Crore or more
shall appoint at least one
woman director.
A company shall comply with
provisions within a period of
six months from the date of its
incorporation.
Any intermittent vacancy of a
woman director shall be filled-
up by the Board at the earliest
but not later than immediate
next Board meeting or three
months from the date of such
vacancy whichever is later.
17 Max.No. of
directorship of
IDs.
Clause 49 (II)(B)(3)A
person shall not serve as an
independent director in
more than seven listed
companies.
Section 165:A person shall
hold not office as a director,
including any alternate
directorship in more than 20
companies.
ICSI Post Membership Qualification E-Bulletin May 2014 Page 21
Any person who is serving
as a whole time director in
any listed company shall
serve as an independent
director in not more than
three listed companies.
The max number of public
companies in which a person
can be appointed as a director
shall not exceed 10.
18 Max. tenure of
IDs
Clause 49(II)(B): An
independent director shall
hold office for a term up
to five consecutive years on
the Board of a company and
shall be eligible for
reappointment for another
term of up to five
consecutive years on
passing of a special
resolution by the company.
A person who has already
served as an independent
director for five years or
more in a company as on
October 1, 2014 shall be
eligible for appointment, on
completion of his present
term, for one more term of
up to five years only.
An independent director,
who completes his above
mentioned term shall be
eligible for appointment as
independent director in the
company only after the
expiration of three years of
ceasing to be an
independent director in the
company.
Section 149: An independent
director shall hold office for a
term up to five consecutive
years on the Board of a
company, but shall be eligible
for reappointment on passing
of a special resolution by the
company and disclosure of
such appointment in the
Board’s report.
No independent director shall
hold office for more than two
consecutive terms, but such
independent director shall be
eligible for appointment after
the expiration of three years of
ceasing to become an
independent director.
19 Risk
management
Clause 49 (VI):The
company shall lay down
procedures to inform Board
members about the risk
assessment and
Section 134(3):
A statement indicating
development and
implementation of a risk
management policy for the
ICSI Post Membership Qualification E-Bulletin May 2014 Page 22
minimization procedures
The Board shall be
responsible for framing,
implementing and
monitoring the risk
management plan for the
company.
The company shall also
constitute a Risk
Management Committee.
The Board shall define the
roles and responsibilities of
the Risk Management
Committee and may
delegate monitoring and
reviewing of the risk
management plan to the
committee and such other
functions as it may deem fit.
company including
identification therein of
elements of risk, if any, which
in the opinion of the Board may
threaten the existence of the
company.
20 Succession
planning
Clause 49 (II)(D)(6):The
Board of the company shall
satisfy itself that plans are
in place for orderly
succession for appointments
to the Board and to senior
management.
There is no such provision.
21 Filing of Casual
Vacancy of IDs
Clause 49 (II)(D): An
independent director who
resigns or is removed from
the Board of the Company
shall be replaced by a new
independent director at the
earliest but not later than
the immediate next Board
meeting or three months
from the date of such
vacancy, whichever is later.
Where the company fulfils
the requirement of
independent directors in its
Board even without filling
the vacancy created by such
Schedule IV: An independent
director who resigns or is
removed from the Board of the
company shall be replaced by a
new independent director
within a period of not more
than one hundred and eighty
days from the date of such
resignation or removal, as the
case may be.
Where the company fulfils the
requirement of independent
directors in its Board even
without filling the vacancy
created by such resignation or
removal, as the case may be,
ICSI Post Membership Qualification E-Bulletin May 2014 Page 23
resignation or removal, as
the case may be, the
requirement of replacement
by a new independent
director shall not apply.
the requirement of
replacement by a new
independent director shall not
apply.
22 Code of Conduct
of BoD &Senior
Management
Clause 49(II)(E): The
Board shall lay down a code
of conduct for all Board
members and senior
management of the
company. The code of
conduct shall be posted on
the website of the company.
All Board members and
senior management
personnel shall affirm
compliance with the code on
an annual basis. The Annual
Report of the company shall
contain a declaration to this
effect signed by the CEO.
The Code of Conduct shall
suitably incorporate the
duties of Independent
Directors as laid down in
the Companies Act, 2013.
Section 149 & Part III of
Schedule –IV: The
independent directors shall—
(1) undertake appropriate
induction and regularly update
and refresh their skills,
knowledge and familiarity with
the company;
(2) seek appropriate
clarification or amplification of
information and, where
necessary, take and follow
appropriate professional
advice and opinion of outside
experts at the expense of the
company;
(3) strive to attend all meetings
of the Board of Directors and of
the Board committees of which
he is a member;
(4) participate constructively
and actively in the committees
of the Board in which they are
chairpersons or members;
(5) strive to attend the general
meetings of the company;
(6) where they have concerns
about the running of the
company or a proposed action,
ensure that these are
addressed by the Board and, to
the extent that they are not
resolved, insist that their
concerns are recorded in the
minutes of the Board meeting;
(7) keep themselves well
informed about the company
and the external environment
ICSI Post Membership Qualification E-Bulletin May 2014 Page 24
in which it operates;
(8) not to unfairly obstruct the
functioning of an otherwise
proper Board or committee of
the Board;
(9) pay sufficient attention and
ensure that adequate
deliberations are held before
approving related party
transactions and assure
themselves that the same are in
the interest of the company;
(10) ascertain and ensure that
the company has an adequate
and functional vigil mechanism
and to ensure that the interests
of a person who uses such
mechanism are not
prejudicially affected on
account of such use;
(11) report concerns about
unethical behaviour, actual or
suspected fraud or violation of
the company’s code of conduct
or ethics policy;
(12) acting within his
authority, assist in protecting
the legitimate interests of the
company, shareholders and its
employees;
(13) not disclose confidential
information, including
commercial secrets,
technologies, advertising and
sales promotion plans,
unpublished price sensitive
information, unless such
disclosure is expressly
approved by the Board or
required by law.
23 Disclosure of
Appointment of
Director
Clause 49(VIII)(G): The
letter of appointment of the
independent director along
A return containing the
particulars of appointment of
director or key managerial
ICSI Post Membership Qualification E-Bulletin May 2014 Page 25
with the detailed profile
shall be disclosed on the
websites of the company
and the Stock Exchanges not
later than one working day
from the date of such
appointment
personnel and changes therein,
shall be filed with the Registrar
in Form DIR-12 along with
such fee as may be provided in
the Companies (Registration
Offices and Fees) Rules,
2014 within thirty days of such
appointment or change, as the
case may be.
24 Disclosure of
Resignation of
Director
Clause 49(VIII)(F): The
company shall disclose the
letter of resignation along
with the detailed reasons of
resignation provided by the
director of the company on
its website not later than
one working day from the
date of receipt of the letter
of resignation.
The company shall also
forward a copy of the letter
of resignation along with
the detailed reasons of
resignation to the stock
exchanges not later than
one working day from the
date of receipt of
resignation for
dissemination through its
website
Section 169: A director may
resign from his office by giving
a notice in writing to the
company and the Board shall
on receipt of such notice take
note of the same and the
company shall intimate the
Registrar in such
manner, within 30 days in form
DIR-12 and shall also place the
fact of such resignation in the
report of directors laid in the
immediately following general
meeting by the company.
Where a director resigns from
his office, he shall within a
period of thirty days from the
date of resignation, forward to
the Registrar a copy of his
resignation along with reasons
for the resignation in Form
DIR-11 along with the fee as
provided in the Companies
(Registration Offices and Fees)
Rules, 2014.
ICSI Post Membership Qualification E-Bulletin May 2014 Page 26
COMPROMISE ARRANGEMENT AND MERGERS UNDER NEW
COMPANIES ACT 2013*
INTRODUCTION
Chapter XV (Section 230 to 240) of Companies Act, 2013(the Act) contains provisions
on ‘Compromises, Arrangements and Amalgamations’, that covers compromise or
arrangements, mergers and amalgamations, Corporate Debt Restructuring, demergers,
fast track mergers for small companies/holding subsidiary companies, cross border
mergers, takeovers, amalgamation of companies in public interest etc.,. The procedural
aspects involved such as format of application to be made to National Company Law
Tribunal (the Tribunal), form of notice and the procedural aspects involved with respect
to the substantive law are covered under the Rules made under Chapter XV of the Act
which are yet to be notified.
The scheme of Chapter XV goes as follows.
1. Section 230-231 deals with compromise or arrangements.
2. Section 232 deals with mergers and amalgamation including demergers.
3. Section 233 deals with amalgamation of small companies (also called fast track
mergers)
4. Section 234 deals with amalgamation with foreign company (also called cross
border mergers)
5. Section 235 deals acquisition of shares of dissenting shareholders.
6. Section 236 deals with purchase of minority shareholding.
7. Section 237 deals with power of central government to provide for
amalgamation of companies in public interest.
8. Section 238 deals with registration of offer of schemes involving transfer of
shares.
9. Section 239 deals with preservation of books and papers of amalgamated
companies.
10. Section 240 deals with liability of officers in respect of offences committed prior
to merger, amalgamation etc.
* Compiled by CS Lakhsmi Arun, Deputy Director, Academics, ICSI. It may be noted that
the provisions of Chapter XV, Chapter XIX and Chapter XX of the Companies Act
2013 and the draft rules made there under, dealing with Compromises,
arrangements and amalgamations, Revival and rehabilitation of sick companies
and winding up of companies respectively, are yet to be notified.
ICSI Post Membership Qualification E-Bulletin May 2014 Page 27
COMPROMISE OR ARRANGEMENT WITH MEMBERRS OR CREDITORS (SECTION
231)
When a compromise or arrangement is proposed—
(a) between a company and its creditors or any class of them; or
(b) between a company and its members or any class of them,
the Tribunal may, on the application of the (i) company or (ii) of any creditor or(iii)
member of the company, or (iv) in the case of a company which is being wound up, of
the liquidator, order a meeting of the creditors or class of creditors, or of the members
or class of members, as the case may be, to be called, held and conducted in such
manner as the Tribunal directs.
The application to the tribunal to disclose by affidavit—
(a) all material facts relating to the company, such as the latest financial position of
the company, the latest auditor’s report on the accounts of the company and the
pendency of any investigation or proceedings against the company;
(b) reduction of share capital of the company, if any, included in the compromise or
arrangement;
(c) any scheme of corporate debt restructuring consented to by not less than seventy-
five per cent. of the secured creditors in value, including—
(ii) a creditor’s responsibility statement in the prescribed form;
(iii) safeguards for the protection of other secured and unsecured creditors;
(iv) report by the auditor that the fund requirements of the company after the
corporate debt restructuring as approved shall conform to the liquidity test
based upon the estimates provided to them by the Board;
(v) where the company proposes to adopt the corporate debt restructuring
guidelines specified by the Reserve Bank of India, a statement to that effect;
and
(vi) a valuation report in respect of the shares and the property and all assets,
tangible and intangible, movable and immovable, of the company by a
registered valuer.
Notice of the meeting called in pursuant to the order of the tribunal shall be sent to all
the creditors or class of creditors and to all the members or class of members and the
debenture-holders of the company, individually at the address registered with the
company which shall be accompanied by
1. a statement disclosing the details of the compromise or arrangement,
2. a copy of the valuation report, if any, and
3. explaining their effect on creditors, key managerial personnel, promoters
and non-promoter members, and the debenture-holders and
ICSI Post Membership Qualification E-Bulletin May 2014 Page 28
4. the effect of the compromise or arrangement on any material interests of the
directors of the company or the debenture trustees, and
5. such other matters as may be prescribed:
Such notice and other documents shall also be placed on the website of the company, if
any, and in case of a listed company, these documents shall be sent to the Securities and
Exchange Board and stock exchange where the securities of the companies are listed,
for placing on their website and shall also be published in newspapers in such manner
as may be prescribed:
When the notice for the meeting is also issued by way of an advertisement, it shall
indicate the time within which copies of the compromise or arrangement shall be made
available to the concerned persons free of charge from the registered office of the
company.
Procedural aspects relating to notice under Rule 15.3
Rule 15.3 states that the notice of the meeting pursuant to the order of the Tribunal to be
given in Form No. 15.3, and shall be sent individually specifying therein, inter alia,
including
1. details of the order of the Tribunal directing the calling, convening and conducting
of the meeting;
2. details of the company ,
3. if the scheme of compromise or arrangement relates to more than one company,
the fact and details of any relationship subsisting between such companies
including holding, subsidiary or of associate companies;
4. the date of the board meeting at which the scheme was approved by the Board of
directors including the name of the directors voted in favor of the resolution, voted
against the resolution and not voted/ participated on such resolution;
5. details of the scheme of compromise or arrangement including: i. parties involved
in such compromise or arrangement; ii. in case of amalgamation or merger,
appointed date, share exchange ratio and other consideration, if any; iii.
valuation report including basis of valuation and fairness opinion of the registered
valuer, if any; iv. details of capital/debt restructuring, if any; v. rationale for the
compromise or arrangement; vi. benefits of the compromise or arrangement as
perceived by the board of directors to the company, members, creditors and others;
vii. amount due to other unsecured Creditors and the security available to the
creditors thereon
6. disclosure of nature and extent of interest and effect of compromise or
arrangement on such interest of: (a) key managerial personnel; (b) directors; (c)
promoters; (d) non-promoter members; (e) depositors; (f) creditors; (g) debenture
holders; (h) deposit and debenture trustee(s); (i) promoters, directors, and key
managerial personnel of holding company, subsidiary and associate companies; (j)
ICSI Post Membership Qualification E-Bulletin May 2014 Page 29
employees of the company stating clearly that the changes, if any, in the terms and
conditions of employment are not detrimental to the interest of the employees;
7. where there is no interest or there is no effect on such interest of any promoter,
director or key managerial personnel, a statement to the effect that there is no
interest or there is no effect of the scheme of compromise or arrangement on such
interests of such persons;
8. investigation proceedings, if any, pending against the company or against any
promoter, director or key managerial personnel of such company;
9. details of shareholding of directors, key managerial personnel and promoters of the
company as on the date of making this statement and change in their shareholding
in the last six months including the date on which and price at which change took
place;
10. details of any No-objection(s), approvals or sanctions, if already received from the
concerned authorities for the compromise or arrangement;
11. details of the availability of the following documents for obtaining extract from or
for making copies of or for inspection by the members and creditors, namely:
a. latest audited financial statements of the company including consolidated
financial statements;
b. copy of the order of Tribunal in pursuance of which the meeting is to be
convened;
c. copy of scheme of compromise or arrangement;
d. contracts or agreements material to the compromise or arrangement; and
e. such other information/documents as the Board/Management believes
necessary and relevant for making decision for / against the scheme;
12. declaration to the effect that the scheme is in the best interests of the employees,
creditors, debenture holders, members particularly non-promoter members and
minority shareholders of the company, as detailed in the scheme.
13. Status of approval(s) of regulatory or any other authority(ies), required, if any in
connection with compromise or arrangement,.
14. The notice shall provide for the information required under sub section (4) of
section 230 of the Act.
For the purposes of this rule, disclosure required to be made by a company shall be made
in respect of all the companies which are the part of the compromise or arrangement.
The notice shall be sent by the chairman appointed for the meeting, or, if the Tribunal so
directs, by the company (or its liquidator), or any other person as the Tribunal may direct,
by post, e-mail or any other mode as directed by the Tribunal to their last known addresses
at least four weeks before the date fixed for the meeting.
ICSI Post Membership Qualification E-Bulletin May 2014 Page 30
Rule 15.5 states that the notice of the meeting shall be advertised in such newspapers and
in such manner as the Tribunal may direct, not less than fourteen clear days before the
date fixed for the meeting. The advertisement shall be in Form No. 15.5.
Notice to provide for voting by themselves or through proxy or through postal
ballot
Subsection (4) of section 230 states that a notice under sub-section (3) shall provide
that the persons to whom the notice is sent may vote in the meeting either themselves
or through proxies or by postal ballot to the adoption of the compromise or
arrangement within one month from the date of receipt of such notice:
Who can object to the scheme?
Any objection to the compromise or arrangement shall be made only by persons holding
not less than ten per cent. of the shareholding or having outstanding debt amounting to
not less than five per cent of the total outstanding debt as per the latest audited
financial statement.
Rule 15.8 states that the consent or objections under sub-section (4) of section 230 may be
conveyed in writing to the Chairperson of the meeting within a month from the date of the
receipt of the notice.
Notice to be sent to the regulators seeking their representations
Section 230(5) states that a notice under sub-section (3) along with all the documents
in such form as may be prescribed shall also be sent to the Central Government, the
income-tax authorities, the Reserve Bank of India, the Securities and Exchange Board,
the Registrar, the respective stock exchanges, the Official Liquidator, the Competition
Commission of India established under sub-section (1) of section 7 of the Competition
Act, 2002, if necessary, and such other sectoral regulators or authorities which are likely
to be affected by the compromise or arrangement and shall require that
representations, if any, to be made by them shall be made within a period of thirty days
from the date of receipt of such notice, failing which, it shall be presumed that they have
no representations to make on the proposals.
Rule 15.4 of Chapter XV states that the notice to the regulators be made in form 15.4
Approval and sanction of the scheme
Section 230(6) states that when at a meeting held in pursuance of sub-section (1),
majority of persons representing three-fourths in value of the creditors, or class of
creditors or members or class of members, as the case may be, voting in person or by
proxy or by postal ballot, agree to any compromise or arrangement and if such
compromise or arrangement is sanctioned by the Tribunal by an order, the same shall
be binding on the company, all the creditors, or class of creditors or members or class of
members, as the case may be, or, in case of a company being wound up, on the
liquidator and the contributories of the company.
ICSI Post Membership Qualification E-Bulletin May 2014 Page 31
15.9 states that the decisions of the meeting or meetings held in pursuance of the order of
the Tribunal and the manner as prescribed in section 230 of the Act, on all resolutions
shall be ascertained only by taking a poll while considering the representations of such
authorities as per sub-section (5) thereof and the consents adopting the arrangement or
compromise as received from the eligible persons.
15.10 states that the chairman of the meeting (or where there are separate meetings, the
chairman of each meeting) shall, within the time fixed by the Tribunal, or where no time
has been fixed, within seven days after the conclusion of the meeting, report the result
thereof to the Tribunal. The report shall state accurately the number of creditors or class
of creditors or the number of members or class of members, as the case may be, who were
present and who voted at the meeting either in person or by proxy, their individual values
and the way they voted. The report shall be in Form No. 15.6.
Order of the tribunal sanctioning the scheme to provide for the Certain matters
An order made by the Tribunal shall provide for all or any of the following matters,
namely:—
(a) where the compromise or arrangement provides for conversion of preference
shares into equity shares, such preference shareholders shall be given an option to
either obtain arrears of dividend in cash or accept equity shares equal to the value
of the dividend payable;
(b) the protection of any class of creditors;
(c) if the compromise or arrangement results in the variation of the shareholders’
rights, it shall be given effect to under the provisions of section 48;
(d) if the compromise or arrangement is agreed to by the creditors under sub-section
(6), any proceedings pending before the Board for Industrial and Financial
Reconstruction established under section 4 of the Sick Industrial Companies
(Special Provisions) Act, 1985 shall abate;
(e) such other matters including exit offer to dissenting shareholders, if any, as are in
the opinion of the Tribunal necessary to effectively implement the terms of the
compromise or arrangement:
Compromise or arrangement is to be in conformity with the accounting standards
No compromise or arrangement shall be sanctioned by the Tribunal unless a certificate
by the company's auditor has been filed with the Tribunal to the effect that the
accounting treatment, if any, proposed in the scheme of compromise or arrangement is
in conformity with the accounting standards prescribed under section 133.
Order of tribunal to be filed with the Registrar
Section 230(8) states that the order of the Tribunal shall be filed with the Registrar by
the company within a period of thirty days of the receipt of the order.
ICSI Post Membership Qualification E-Bulletin May 2014 Page 32
Tribunal may dispense with calling of meeting of creditors
Section 230(9) states that the Tribunal may dispense with calling of a meeting of
creditor or class of creditors where such creditors or class of creditors, having at least
ninety per cent value, agree and confirm, by way of affidavit, to the scheme of
compromise or arrangement.
Compromise in respect of buy back is to be in compliance with section 68
As per Section 230(10), no compromise or arrangement in respect of any buy-back of
securities under this section shall be sanctioned by the Tribunal unless such buy-back is
in accordance with the provisions of section 68.
Compromise includes takeover
Section 230(11) states that any compromise or arrangement may include takeover offer
made in such manner as may be prescribed. In case of listed companies, takeover offer
shall be as per the regulations framed by the Securities and Exchange Board.
Power of the tribunal to enforce compromise or arrangement
As per section 231(1) when the Tribunal makes an order under section 230 sanctioning
a compromise or an arrangement in respect of a company, it—
(a) shall have power to supervise the implementation of the compromise or
arrangement; and
(b) may, at the time of making such order or at any time thereafter, give such
directions in regard to any matter or make such modifications in the
compromise or arrangement as it may consider necessary for the proper
implementation of the compromise or arrangement.
Sub-section (2) states that if the Tribunal is satisfied that the compromise or
arrangement sanctioned under section 230 cannot be implemented satisfactorily with
or without modifications, and the company is unable to pay its debts as per the scheme,
it may make an order for winding up the company and such an order shall be deemed to
be an order made under section 273.
MERGER AND AMALGAMATION OF COMPANIES (SECTION 232)
Tribunal’s power to call meeting of creditors or members, with respect to merger
or amalgamation of companies
Section 232(1) states that when an application is made to the Tribunal under section
230 for the sanctioning of a compromise or an arrangement proposed between a
company and any such persons as are mentioned in that section, and it is shown to the
Tribunal—
(a) that the compromise or arrangement has been proposed for the purposes of, or in
connection with, a scheme for the reconstruction of the company or companies
involving merger or the amalgamation of any two or more companies; and
ICSI Post Membership Qualification E-Bulletin May 2014 Page 33
(b) that under the scheme, the whole or any part of the undertaking, property or
liabilities of any company (hereinafter referred to as the transferor company) is
required to be transferred to another company (hereinafter referred to as the
transferee company), or is proposed to be divided among and transferred to two
or more companies,
the Tribunal may on such application, order a meeting of the creditors or class of
creditors or the members or class of members, as the case may be, to be called, held and
conducted in such manner as the Tribunal may direct and the provisions of sub-sections
(3) to (6) of section 230 shall apply mutatis mutandis.
Circulation of documents for members/creditors meeting
Section 232(2) states that when an order has been made by the Tribunal under sub-
section (1), merging companies or the companies in respect of which a division is
proposed, shall also be required to circulate the following for the meeting so ordered by
the Tribunal, namely:—
a) the draft of the proposed terms of the scheme drawn up and adopted by the
directors of the merging company;
b) confirmation that a copy of the draft scheme has been filed with the Registrar;
c) a report adopted by the directors of the merging companies explaining effect of
compromise on each class of shareholders, key managerial personnel,
promotors and non-promoter shareholders laying out in particular the share
exchange ratio, specifying any special valuation difficulties;
d) the report of the expert with regard to valuation, if any;
e) a supplementary accounting statement if the last annual accounts of any of the
merging company relate to a financial year ending more than six months before
the first meeting of the company summoned for the purposes of approving the
scheme.
Sanctioning of scheme by tribunal
Section 232(3) states that the Tribunal, after satisfying itself that the procedure
specified in sub-sections (1) and (2) has been complied with, may, by order, sanction
the compromise or arrangement or by a subsequent order, make provision for the
following matters, namely:—
a) the transfer to the transferee company of the whole or any part of the undertaking,
property or liabilities of the transferor company from a date to be determined by
the parties unless the Tribunal, for reasons to be recorded by it in writing, decides
otherwise;
b) the allotment or appropriation by the transferee company of any shares,
debentures, policies or other like instruments in the company which, under the
compromise or arrangement, are to be allotted or appropriated by that company
to or for any person:
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No transferee company can hold shares in its own name or under any trust
A transferee company shall not, as a result of the compromise or arrangement,
hold any shares in its own name or in the name of any trust whether on its behalf
or on behalf of any of its subsidiary or associate companies and any such shares
shall be cancelled or extinguished;
c) the continuation by or against the transferee company of any legal proceedings
pending by or against any transferor company on the date of transfer;
d) dissolution, without winding-up, of any transferor company;
e) the provision to be made for any persons who, within such time and in such
manner as the Tribunal directs, dissent from the compromise or arrangement;
f) where share capital is held by any non-resident shareholder under the foreign
direct investment norms or guidelines specified by the Central Government or in
accordance with any law for the time being in force, the allotment of shares of the
transferee company to such shareholder shall be in the manner specified in the
order;
g) the transfer of the employees of the transferor company to the transferee
company;
h) when the transferor company is a listed company and the transferee company is
an unlisted company,—
(A) the transferee company shall remain an unlisted company until it
becomes a listed company;
(B) if shareholders of the transferor company decide to opt out of the
transferee company, provision shall be made for payment of the value of
shares held by them and other benefits in accordance with a pre-
determined price formula or after a valuation is made, and the
arrangements under this provision may be made by the Tribunal:
The amount of payment or valuation under this clause for any share shall
not be less than what has been specified by the Securities and Exchange
Board under any regulations framed by it;
i) where the transferor company is dissolved, the fee, if any, paid by the transferor
company on its authorised capital shall be set-off against any fees payable by the
transferee company on its authorised capital subsequent to the amalgamation;
and
j) such incidental, consequential and supplemental matters as are deemed necessary
to secure that the merger or amalgamation is fully and effectively carried out:
Auditor’s certificate as to conformity with accounting standard
No compromise or arrangement shall be sanctioned by the Tribunal unless a certificate
by the company’s auditor has been filed with the Tribunal to the effect that the
ICSI Post Membership Qualification E-Bulletin May 2014 Page 35
accounting treatment, if any, proposed in the scheme of compromise or arrangement is
in conformity with the accounting standards prescribed under section 133.
Transfer of property or liabilities
Sub-section (4) stares that an order under this section provides for the transfer of any
property or liabilities, then, by virtue of the order, that property shall be transferred to
the transferee company and the liabilities shall be transferred to and become the
liabilities of the transferee company and any property may, if the order so directs, be
freed from any charge which shall by virtue of the compromise or arrangement, cease to
have effect.
Certified copy of the order to be filed with the registrar
Section 232(5) states that every company in relation to which the order is made shall
cause a certified copy of the order to be filed with the Registrar for registration within
thirty days of the receipt of certified copy of the order.
Effective date of the scheme
Section 232(6) states that the scheme under this section shall clearly indicate an
appointed date from which it shall be effective and the scheme shall be deemed to be
effective from such date and not at a date subsequent to the appointed date.
Annual statement certified by CA/CS/CWA to be filed with registrar every year
until the completion of the scheme
Section 232 (7) states that every company in relation to which the order is made shall,
until the completion of the scheme, file a statement in such form and within such time as
may be prescribed with the Registrar every year duly certified by a chartered
accountant or a cost accountant or a company secretary in practice indicating whether
the scheme is being complied with in accordance with the orders of the Tribunal or not.
Punishment
Section 232(8) states that if a transferor company or a transferee company contravenes
the provisions of this section, the transferor company or the transferee company, as the
case may be, shall be punishable with fine which shall not be less than one lakh rupees
but which may extend to twenty-five lakh rupees and every officer of such transferor or
transferee company who is in default, shall be punishable with imprisonment for a
term which may extend to one year or with fine which shall not be less than one lakh
rupees but which may extend to three lakh rupees, or with both.
Compromise or arrangement includes `demerger’
Rule 15.31 of the Rules made under Chapter XV states that For the purpose of Chapter XV
of the Act, `demerger’ in relation to companies means transfer, pursuant to scheme of
arrangement by a ‘demerged company’ of its one or more undertakings to any ‘resulting
company’ in such a manner as provided in section 2(19AA) of the Income Tax Act, 1961,
subject to fulfilling the conditions stipulated in section 2(19AA) of the Income Tax Act and
ICSI Post Membership Qualification E-Bulletin May 2014 Page 36
shares have been allotted by the ‘resulting company’ to the share holders of the .demerged
company’ against the transfer of assets and liabilities.
(2)For the purpose of the compromise in the nature of ‘demerger’ till the Accounting
Standards is prescribed for the purpose of ‘demerger’, the Accounting Treatment shall be
in accordance with the conditions stipulated in section 2(19AA) of the Income Tax Act,
1961 and (i)in the books of the ‘demerged company’:-
a) Assets and liabilities shall be transferred at the same value appearing in the books,
without considering any revaluation or writing off of assets carried out during the
preceding two financial years; and
b) The difference between the value of assets and liabilities shall be credited to capital
reserve or debited to good will.
(ii)In the books of ‘resulting company’:-
a) Assets and liabilities of ‘demerged company’ transferred shall be recorded at the
same value appearing in the books of the ‘demerged company’ without considering
any revaluation or writing off of assets carried out during the preceding two
financial years;
b) Shares issued shall be credited to the share capital account; and
c) The excess or deficit, if any, remaining after recording the aforesaid entries shall be
credited to capital reserve or debited to good will as the case may be.
A certificate from a Chartered Accountant is to be submitted to the Tribunal to the effect
that both ‘demerged company’ and ‘resulting company’ have complied with conditions as
above and accounting treatment prescribed in this rule
MERGER AND AMALGAMATION OF CERTAIN COMPANIIES - FAST TRACK
MERGERS
Section 233 prescribes simplified procedure for Merger or amalgamation of
two or more small companies or
between a holding company and its wholly-owned subsidiary company or
such other class or classes of companies as may be prescribed;
As What is a holding company?
per Section 2(46) “holding company”, in relation to one or more other companies,
means a company of which such companies are subsidiary companies;
What is a small company?
As per section 2(85) ‘‘small company’’ means a company, other than a public
company,—
(i) paid-up share capital of which does not exceed fifty lakh rupees or such
higher amount as may be prescribed which shall not be more than five crore
rupees; or
ICSI Post Membership Qualification E-Bulletin May 2014 Page 37
(ii) turnover of which as per its last profit and loss account does not exceed two
crore rupees or such higher amount as may be prescribed which shall not be
more than twenty crore rupees:
Provided that nothing in this clause shall apply to—
(A) a holding company or a subsidiary company;
(B) a company registered under section 8; or
(C) a company or body corporate governed by any special Act;
What is a subsidiary company?
As per 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 controls more than one-half of the total share capital either at its
own or together with one or more of its subsidiary companies:
Provided that such class or classes of holding companies as may be prescribed shall not
have layers of subsidiaries beyond such numbers as may be prescribed.
Explanation.—For the purposes of this clause,—
(a) a company shall be deemed to be a subsidiary company of the holding
company even if the control referred to in sub-clause (i) or sub-clause (ii) is of
another subsidiary company of the holding company;
(b) the composition of a company’s Board of Directors shall be deemed to be
controlled by another company if that other company by exercise of some
power exercisable by it at its discretion can appoint or remove all or a majority
of the directors;
(c) the expression “company” includes any body corporate;
(d) “layer” in relation to a holding company means its subsidiary or subsidiaries;
Merger of small companies/holding and subsidiary companies
Accordingly sub-section (1) of Section 233 states that notwithstanding the provisions of
section 230 and section 232, a scheme of merger or amalgamation may be entered into
between two or more small companies or between a holding company and its wholly-
owned subsidiary company or such other class or classes of companies as may be
prescribed, subject to the following, namely:—
(a) a notice of the proposed scheme inviting objections or suggestions, if any, from
the Registrar and Official Liquidators where registered office of the respective
companies are situated or persons affected by the scheme within thirty days is
issued by the transferor company or companies and the transferee company;
(b) the objections and suggestions received are considered by the companies in their
ICSI Post Membership Qualification E-Bulletin May 2014 Page 38
respective general meetings and the scheme is approved by the respective
members or class of members at a general meeting holding at least ninety per
cent. of the total number of shares;
(c) each of the companies involved in the merger files a declaration of solvency, in
the prescribed form, with the Registrar of the place where the registered office of
the company is situated; and
(d) the scheme is approved by majority representing nine-tenths in value of the
creditors or class of creditors of respective companies indicated in a meeting
convened by the company by giving a notice of twenty-one days along with the
scheme to its creditors for the purpose or otherwise approved in writing.
Rule 15.25 states as follows with respect to section 233(1)
(1) For the purposes of sub-section (1) of section 233, a company shall be deemed to be
"wholly owned subsidiary" only if hundred per cent of share capital is held by the
holding company except the shares held by the nominee or nominees to ensure that
the number of members of subsidiary company is not reduced below the statutory
limit as provided in section 187.
(2) For the purposes of clause (c) of sub-section (1) of section 233, the declaration of
solvency shall be filed by the each of the companies involved ina scheme of
compromise or arrangement involving merger in Form No. 15.12 along with such
fee as provided in Annexure ‘B ‘before convening the meeting of members and
creditors for approval of the scheme.
(3) For the purposes of clause (b) and (d) of sub-section (1) of section 233, the notice of
the meeting to the members and creditors shall be accompanied by
(a) a statement, as far as applicable, referred to in sub-section (3) of section
230;
(b) the declaration of solvency made in pursuance of clause (c) of sub-section
(1) of section 233;
(c) a copy of the scheme.
Transferee Company to file a copy of scheme approved
Section 233(2) states that the transferee company shall file a copy of the scheme so
approved in the manner as may be prescribed, with the Central Government, Registrar
and the Official Liquidator where the registered office of the company is situated.
Rule 15.25(4) prescribes the following procedure as to section 233(2)(4)
(f) For the purposes of sub-section (2) of section 233, the transferee company shall,
within seven days after the conclusion of the meeting(s) of members or class of
members or creditors or class of creditors, file in Form No. 15.13 a copy of the
scheme as approved by the members and creditors, along with report of the result
of each of the meetings with the Central Government, Registrar of Companies and
ICSI Post Membership Qualification E-Bulletin May 2014 Page 39
the Official Liquidator, of the place where the registered office of the company is
situated.
(g) Copy of the scheme shall be filed with the Registrar of Companies along with the
prescribed fee through the MCA e-filing system.
(h) Copy of the scheme shall be filed with the Central Government and Official
Liquidator, by sending them through hand delivery or registered or speed post or
through electronic filing system as may be approved by the Central Government.
Central Government to issue confirmation order, where there are no objections or
suggestions from registrar or official liquidator
Section 233(3) states that on the receipt of the scheme, if the Registrar or the Official
Liquidator has no objections or suggestions to the scheme, the Central Government shall
register the same and issue a confirmation thereof to the companies.
Rule 15.25(5) states as under with respect to section 233(3)
When no objection or comment is received to the scheme from the Registrar and Official
Liquidator or where even after the receipt of objections or comments of Registrar and
Official Liquidator, the Central Government is of the opinion that the scheme is in the
public interest or in the interest of creditors the Central Government shall issue in Form
No. 15.14, a confirmation order of such scheme of compromise, or arrangement.
Objections if any by the registrar or official liquidator to be communicated to the
central government
Section 233(4) If the Registrar or Official Liquidator has any objections or suggestions,
he may communicate the same in writing to the Central Government within a period of
thirty days. If no such communication is made, it shall be presumed that he has no
objection to the scheme.
Application by Central Government to the Tribunal
Section 233(5) states that if the Central Government after receiving the objections or
suggestions or for any reason is of the opinion that such a scheme is not in public
interest or in the interest of the creditors, it may file an application before the Tribunal
within a period of sixty days of the receipt of the scheme under sub-section (2) stating
its objections and requesting that the Tribunal may consider the scheme under section
232.
Tribunal’s Action to Central Government’s application
Section 233(6) states that on receipt of an application from the Central Government or
from any person, if the Tribunal, for reasons to be recorded in writing, is of the opinion
that the scheme should be considered as per the procedure laid down in section 232,
the Tribunal may direct accordingly or it may confirm the scheme by passing such order
as it deems fit:
If the Central Government does not have any objection to the scheme or it does not file
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any application under this section before the Tribunal, it shall be deemed that it has no
objection to the scheme.
Registrar having jurisdiction over transferee company has to be communicated
Section 233(7) states that a copy of the order under sub-section (6) confirming the
scheme shall be communicated to the Registrar having jurisdiction over the transferee
company and the persons concerned and the Registrar shall register the scheme and
issue a confirmation thereof to the companies and such confirmation shall be
communicated to the Registrars where transferor company or companies were situated.
As per Rule 15.25(7) states that for the purposes of sub-section (7) of section 233, the
confirmation order of the scheme issued by the Central Government or tribunal, shall be
filed in Form 15.15 along with the prescribed fee, with registrars having jurisdiction over
transferor and transferee companies respectively.
Effect of registration of the scheme
Section (8) states that the registration of the scheme under sub-section (3) or sub-
section (7) shall be deemed to have the effect of dissolution of the transferor company
without process of winding-up.
Section 233 (9) states that the registration of the scheme shall have the following
effects, namely:—
(a) transfer of property or liabilities of the transferor company to the transferee
company so that the property becomes the property of the transferee
company and the liabilities become the liabilities of the transferee company;
(b) the charges, if any, on the property of the transferor company shall be
applicable and enforceable as if the charges were on the property of the
transferee company;
(c) legal proceedings by or against the transferor company pending before any
court of law shall be continued by or against the transferee company; and
(d) where the scheme provides for purchase of shares held by the dissenting
shareholders or settlement of debt due to dissenting creditors, such amount,
to the extent it is unpaid, shall become the liability of the transferee
company.
Transferee Company not to hold any share in its own name or trust and all such
shares are to be cancelled or extinguished
Section 233 (10) states that a transferee company shall not on merger or
amalgamation, hold any shares in its own name or in the name of any trust either on its
behalf or on behalf of any of its subsidiary or associate company and all such shares
shall be cancelled or extinguished on the merger or amalgamation.
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Transferee Company to file an application with Registrar along with the scheme
registered
Section 233(11) The transferee company shall file an application with the Registrar
along with the scheme registered, indicating the revised authorised capital and pay the
prescribed fees due on revised capital. The fee, if any, paid by the transferor company
on its authorised capital prior to its merger or amalgamation with the transferee
company shall be set-off against the fees payable by the transferee company on its
authorised capital enhanced by the merger or amalgamation.
CROSS BORDER MERGERS
Merger or amalgamation of a Company with a foreign company
Section 234(2) Subject to the provisions of any other law for the time being in force, a
foreign company, may with the prior approval of the Reserve Bank of India, merge into a
company registered under this Act or vice versa and the terms and conditions of the
scheme of merger may provide, among other things, for the payment of consideration to
the shareholders of the merging company in cash, or in Depository Receipts, or partly in
cash and partly in Depository Receipts, as the case may be, as per the scheme to be
drawn up for the purpose.
For the purposes of sub-section (2), the expression “foreign company” means any
company or body corporate incorporated outside India whether having a place of
business in India or not.
Section 234. (1) states that the provisions of this Chapter unless otherwise provided
under any other law for the time being in force, shall apply mutatis mutandis to
schemes of mergers and amalgamations between companies registered under this Act
and companies incorporated in the jurisdictions of such countries as may be notified
from time to time by the Central Government. The Central Government may make rules,
in consultation with the Reserve Bank of India, in connection with mergers and
amalgamations provided under this section.
PROVISIONS OF COMPANIES ACT 2013 RELATING TO MINORITY SHAREHOLDERS
AT THE TIME OF COMPROMISE/ARRANGEMENT
Section 235 of the Companies Act 2013 prescribes the manner of acquisition of shares
of shareholders dissenting from the scheme or contract approved by the majority
shareholders holding not less than nine tenth in value of the shares, whose transfer is
involved. It includes notice to dissenting shareholders, application to dissenting
shareholders to tribunal, deposit of consideration received by the transferor company
in a separate bank account etc.,
Further Section 236 prescribes the manner of notification by the acquirer(majority) to
the company, offer to minority for burying their shares, deposit an amount equal to the
value of shares to be acquired, valuation of shares by registered valuer etc.,
ICSI Post Membership Qualification E-Bulletin May 2014 Page 42
Further section 230(7)(e) provides that the order made by the National Company Law
Tribunal may provide for exit offer to dissenting shareholders, if any as are in the
opinion of the tribunal necessary to effectively implement the terms of the compromise
or arrangement.
Section 232(3)(h)(B)provides exit route for the shareholders of unlisted transferor
company.
POWER OF THE CENTRAL GOVERNMENT TO PROVIDE FOR AMALGAMATION OF
COMPANIES IN PUBLIC INTEREST
Power of Central Government to provide for amalgamation of Companies
Section 237(1) states that when the Central Government is satisfied that it is essential in
the public interest that two or more companies should amalgamate, the Central
Government may, by order notified in the Official Gazette, provide for the amalgamation
of those companies into a single company with such constitution, with such property,
powers, rights, interests, authorities and privileges, and with such liabilities, duties and
obligations, as may be specified in the order.
Continuation of legal proceedings
Section 237 (2) states that the order under sub-section (1) may also provide for the
continuation by or against the transferee company of any legal proceedings pending by
or against any transferor company and such consequential, incidental and supplemental
provisions as may, in the opinion of the Central Government, be necessary to give effect
to the amalgamation.
Interest or rights of members, creditors, debenture holders not to be affected.
As per Section 237(3), every member or creditor, including a debenture holder, of each
of the transferor companies before the amalgamation shall have, as nearly as may be,
the same interest in or rights against the transferee company as he had in the company
of which he was originally a member or creditor, and in case the interest or rights of
such member or creditor in or against the transferee company are less than his interest
in or rights against the original company, he shall be entitled to compensation to that
extent, which shall be assessed by such authority as may be prescribed and every such
assessment shall be published in the Official Gazette, and the compensation so assessed
shall be paid to the member or creditor concerned by the transferee company.
Appeal to tribunal
As per Section 237 (4) Any person aggrieved by any assessment of compensation made
by the prescribed authority under sub-section (3) may, within a period of thirty days
from the date of publication of such assessment in the Official Gazette, prefer an appeal
to the Tribunal and thereupon the assessment of the compensation shall be made by the
Tribunal.
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Conditions for order under Section 237
As per Section 237 (5) No order shall be made under this section unless—
(a) a copy of the proposed order has been sent in draft to each of the companies
concerned;
(b) the time for preferring an appeal under sub-section (4) has expired, or where
any such appeal has been preferred, the appeal has been finally disposed off;
and
(c) the Central Government has considered, and made such modifications, if any, in
the draft order as it may deem fit in the light of suggestions and objections
which may be received by it from any such company within such period as the
Central Government may fix in that behalf, not being less than two months from
the date on which the copy aforesaid is received by that company, or from any
class of shareholders therein, or from any creditors or any class of creditors
thereof.
Copies of order to be laid before each house of parliament
As per Section 237 (6) the copies of every order made under this section shall, as soon
as may be after it has been made, be laid before each House of Parliament.
Registration of offer of schemes involving transfer of shares
Section 238(1) states that in relation to every offer of a scheme or contract involving the
transfer of shares or any class of shares in the transferor company to the transferee
company under section 235,—
(a) every circular containing such offer and recommendation to the members of the
transferor company by its directors to accept such offer shall be accompanied by
such information and in such manner as may be prescribed;
(b) every such offer shall contain a statement by or on behalf of the transferee
company, disclosing the steps it has taken to ensure that necessary cash will be
available; and
(c) every such circular shall be presented to the Registrar for registration and no such
circular shall be issued until it is so registered: Provided that the Registrar may
refuse, for reasons to be recorded in writing, to register any such circular which
does not contain the information required to be given under clause (a) or which
sets out such information in a manner likely to give a false impression, and
communicate such refusal to the parties within thirty days of the application.
Section 238(2) states that an appeal shall lie to the Tribunal against an order of the
Registrar refusing to register any circular under sub-section (1).
Section 238(3) states that the director who issues a circular which has not been
presented for registration and registered under clause (c) of sub-section (1), shall be
ICSI Post Membership Qualification E-Bulletin May 2014 Page 44
punishable with fine which shall not be less than twenty-five thousand rupees but
which may extend to five lakh rupees.
Preservation of books and papers of amalgamated company
As per section 239, the books and papers of a company which has been amalgamated
with, or whose shares have been acquired by, another company under this Chapter shall
not be disposed of without the prior permission of the Central Government and before
granting such permission, that Government may appoint a person to examine the books
and papers or any of them for the purpose of ascertaining whether they contain any
evidence of the commission of an offence in connection with the promotion or
formation, or the management of the affairs, of the transferor company or its
amalgamation or the acquisition of its shares.
Liability of officers in respect of offences committed prior to amalgamation
As per Section 240, notwithstanding anything in any other law for the time being in
force, the liability in respect of offences committed under this Act by the officers in
default, of the transferor company prior to its merger, amalgamation or acquisition shall
continue after such merger, amalgamation or acquisition.
ICSI Post Membership Qualification E-Bulletin May 2014 Page 45
RECENT UPDATES IN THE WORLD OF CORPORATE GOVERNANCE
1. Corporate Governance in Japan-A Revolution in the making
Consequent to the accounting scandal in Olympus in 2011-12, which is the
country’s biggest accounting scandal in decades; Japanese asset managers will this
year sign up to a new stewardship code which will be introduced by the
government of Shinzo Abe, the prime minister. Shareholders will be strongly
encouraged to monitor firms closely, and speak up when needed.
For detail news, please click here.
2. United Kingdom: FRC Proposes Revisions to the UK Corporate
Governance Code
In April 2014 the Financial Report Council (FRC) published its consultation
document on the proposed revisions to the UK Corporate Governance Code
(the Code). The consultation follows previous consultations in 2013 on directors'
remuneration and risk management, internal control and the going concern basis
of accounting. The consultation document sets out eight key proposals made by
the FRC including the following proposals relating to directors' remuneration and
risk management. The proposed changes to the UK Corporate Governance Code
are that:
greater emphasis be placed on ensuring that remuneration policies are
designed with the long-term success of the company in mind, and that the
lead responsibility for doing so rests with the remuneration committee;
companies should put in place arrangements that will enable them to
recover or withhold variable pay when appropriate to do so, and should
consider appropriate vesting and holding periods for deferred
remuneration;
ICSI Post Membership Qualification E-Bulletin May 2014 Page 46
companies should explain when publishing AGM results how they intend to
engage with shareholders when a significant percentage of them have voted
against any resolution;
companies should state in their financial statements whether they consider it
appropriate to adopt the going concern basis of accounting and identify any
material uncertainties to their ability to continue to do so;
companies should robustly assess their principal risks and explain how they
are being managed and mitigated;
companies should state whether they believe they will be able to continue in
operation and meet their liabilities taking account of their current position
and principal risks, and specify the period covered by this statement and
why they consider it appropriate. It is expected that the period assessed will
be significantly longer than 12 months; and
companies should monitor their risk management and internal control
systems and, at least annually, carry out a review of their effectiveness, and
report on that review in the annual report.
For detail news, please click here.
3. TWSE Launches a Corporate Governance Evaluation System
as Incentive for Good Corporate Governance
Taiwan Stock Exchange launched a Corporate Governance Evaluation System on
March 31, 2014. The evaluation system follows the OECD Principles of Corporate
Governance (rights of shareholders, equitable treatment of shareholders, role of
stakeholders, disclosure and transparency, and responsibilities of the board) with
five corresponding sections and a total of 92 indicators. All TWSE listed companies
will be evaluated in 2015 based on publicly available information, and the
evaluation will be conducted annually. Companies which rank in the top 20
percent with the highest evaluation scores will be disclosed.
For detail news, please click here.
ICSI Post Membership Qualification E-Bulletin May 2014 Page 47
4. U.S. Steel General Counsel And Senior Vice President Suzanne
Rich Folsom Named Leader Of The Year At The 2014 Women
In Compliance Awards
United States Steel Corporation (NYSE: X) announced on 24th March 2014, that
Suzanne Rich Folsom, general counsel and senior vice president - governmental
affairs, as the Leader of the Year at the 2014 Women in Compliance Awards in
London. Folsom was honored for her body of work in corporate governance and
compliance.
For detail news, please click here.
5. PICG, IoD to introduce AC programme in Company Direction
Pakistan Institute of Corporate Governance (PICG) has joined hands with the
Institute of Directors (IoD) UK, to introduce the globally recognised 'Accelerated
Certificate (AC) Programme' in Company Direction under Royal Charter in
Pakistan. The Accelerated Certificate would present an opportunity to become
part of an exclusive global network of463 Certificate and Diploma holders, across
34 countries and more than 2000 Certificate holders in the UK.
For detail news, please click here.
6. NCC releases Code for Corporate Governance in Telecoms
Industry
The Nigerian Communications Commission (NCC), on Thursday in Lagos released
the code of corporate governance for the Nigerian telecommunications industry.
The need to develop a sector specific Corporate Governance Code for the Nigerian
Telecommunication Industry was felt to address the peculiarities of the sector that
are not typically dealt with under broadly-aimed codes. The provisions of the code
ICSI Post Membership Qualification E-Bulletin May 2014 Page 48
are based on international best practices sought to foster good corporate
governance practices in the Nigerian telecommunications industry.
For detail news, please click here.
7. CalPERS Proposes to Amend Global Principles
The investment committee of CalPERS’ (California Public Employees' Retirement
System) Board of Administration is scheduled to consider several amendments to
CalPERS’ Global Principles of Accountable Corporate Governance. Among other
changes, the committee will consider adding the following principle with respect
to board tenure, board member responsibilities, CalPERS’ equity compensation
principles etc.
For detail news, please click here.
ICSI Post Membership Qualification E-Bulletin May 2014 Page 49
SUGGESTED READINGS
1) Corporate Social Responsibility: Provision in the Companies Act, 2013
Chartered Secretary May 2014
(https://www.icsi.edu/WebModules/LinksOfWeeks/MayCS_2014.pdf)
2) Composition of Board of Indian Companies and its effect on Corporate
Governance, Chartered Secretary April 2014
(https://www.icsi.edu/WebModules/LinksOfWeeks/AprilCS_2014.pdf)
3) Companies Act 2013 – A big leap to punish and prevent fraud, Chartered
Secretary, March 2014
(https://www.icsi.edu/WebModules/LinksOfWeeks/ICSI_March_2014.pdf)
4) Inclusive model of Corporate Governance: The leitmotif of the Companies Act,
2013, Chartered Secretary Feb 2014
(https://www.icsi.edu/WebModules/LinksOfWeeks/ICSI_February_2014.pdf)
5) Women in the boardroom: A global perspective
(http://www.corpgov.deloitte.com/binary/com.epicentric.contentmanagement.ser
vlet.ContentDeliveryServlet/InEng/Documents/Home/Women%20on%20Boards%
20March%202013.pdf)
6) Article by FCA Patricia Barker “Corporate Governance - A Virgin Birth!”
(http://www.lexology.com/library/detail.aspx?g=dfc53ed5592c-47f0-bb2d-
2300241a56e9)
7) The changing role of the company secretary - a focus on governance - Melissa
Reid and Mary Shier
(https://www.charteredaccountants.ie/Members/Technical/Corporate-
Governance/Corporate-Governance-Articles/The-changing-role-of-the-company-
secretary---focus-on-governance---Melissa-Reid-and-Mary-Shier/ )
8) How social media has influenced corporate governance-Is social media - an
opportunity or a risk for businesses today?
(http://www.insidecounsel.com/2014/05/08/how-social-media-has-influenced-
corporate-governan?ref=nav)
9) Mergers and Acquisitions By Professor Alexander Roberts, Dr William
Wallace, Dr Peter Moleshttps
(www.ebsglobal.net/documents/course-tasters/english/pdf/h17mq-bk-taster.pdf )
ICSI Post Membership Qualification E-Bulletin May 2014 Page 50
Vision
“To be a global leader in promoting good corporate
governance”
Mission
“To develop high calibre professionals facilitating good
corporate governance”
For any views/suggestions/feedback please write to: Director (Academics) at [email protected] or
[email protected] or contact 011-45341014