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Company Administrationand functioning of Board of

The Singareni Collieries Company Limited

J. Rama Krishna GM (CA) & Company Secretary

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Nature, Form and types of business enterprises Non-corporate form of business enterprise

Sole proprietorship Joint Hindu family / HUF Partnership

Corporate form business enterprise Co-operative organisation Company

Distinction between Company & Corporation

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Company – Its Nature and characteristics

Corporate personality Limited liability Perpetual succession Separate property Transferability of shares Common Seal Capacity to sue and be sued Contractual rights Limitation of action Separate management Voluntary association for profit Termination of existence

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Types of Companies:

Types of Companies which may be registered under the Act. Private Companies-limitation, restriction, prohibition

& minimum share capital of Rs.1 lakh Public Companies -minimum share capital of Rs.5

lakhs Producer Companies.

Classification of Companies from the point of view of incorporation Chartered Companies. Statutory Companies. Registered Companies.

Classification of Companies from the point of view of liability. Unlimited Companies. Companies limited by guarantee. Companies limited by shares.

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Other types of Companies.

Associations not for profit having licence under sec.25 of the Act.

Govt. Companies-(not less than 51% of paid up capital is held by Govt., i.e., majority holding)

Foreign Companies. Holding & Subsidiary Companies. Investment Companies. Producer Companies. Finance Companies.

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Relevant criterion to identify a Company with State within the meaning of

Article 12 of the constitution of India. The source of share capital Extent of State control over the corporation and

whether it is deep and pervasive Whether the corporation enjoys monopoly

status Whether the functions of the corporation are of

public importance and closely related to Government functions

Whether what belonged to a department of Government formerly was transferred to the corporation

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Formation of Companies: Type of company Application of availability of name Preparation of Memorandum & Articles of Association Vetting of Memorandum & Articles, printing, stamping and

signing of the same Power of Attorney Additional documents required

Consent of Directors Notice of registered address Particulars of Directors

Statutory declaration Payment of registration fee Certification of incorporation

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Governing statute & Documents of SCCL

Companies Act, 1956Memorandum of Association (Basic document)

* Importance of objects clause * Doctrine of ultra vires

Articles of Association(Bye laws)* Doctrine of constructive notice* Doctrine of indoor management

Tripartite Agreements

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Financial structure Capital – in different senses

Nominal, Authorised or Registered capital Issued capital Subscribed capital Called up capital Un-called capital Paid up capital Up-paid capital Reserve capital Capital reserve Capital assets Preference / equity share capital Fixed and circulating capital Working capital Loan or debenture capital

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Kinds of shares: Equity share capital

With voting rights With differential rights as to dividend, voting or

otherwise SWEAT equity shares

Preference share capital With respect to dividend With respect to capital

Types of preference shares Participating or non-participating Cumulative and non-cumulative Redeemable and irredeemable

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Sources of capital Raising of capital from promoters Raising of capital from public

By issuing a prospectus By an offer for sale or by deemed prospectus By placing of shares

Raising of capital from existing shareholders. Debt capital

Power of company to borrow Un-authorised or ultra vires borrowing Mortgage on security of property Charge on uncalled capital / book debts

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Modes of acquiring membership

By subscribing to the Memorandum of Association By agreement in writing

By an application and allotment By transfer of shares By transmission of shares By acquiescence or estoppel

Holding shares as beneficial owner in the records of depository

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Management and Administration of CompaniesBoard of Directors:

Types of Directors:› Inside Directors› Outside Directors› Professional Directors› Nominee Directors› Special Directors or executive Directors› Independent Directors› Interested Directors› Government Directors› Whole-time Directors› Managing Directors

Disqualifications of Directors Minimum and maximum number of DirectorsMaximum number of Directorships Managing Director ( for public limited companies with paid up capital of Rs.5 crores or more) Chairman

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Appointment of Directors By subscribing to the Memorandum By members in General meetings By Board of Directors By Central Govt., By 3rd parties – if Articles permit. By small shareholders – if Articles permit.

Removal of Directors Removal by shareholders Removal by Central Govt. Removal by CLB / Tribunal Retirement of Directors Resignation of Directors

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Powers of Directors Powers exercisable only at Board meetings. Powers exercisable only with the consent of the Company in general meeting. All other powers which the Company is authorised to exercise

Duties of Directors Statutory duties

Duty to attend Board meetings Duty not to contract without Board’s consent Duty to disclose interest Duty to make disclosure of shareholding Duty in connection with general meeting To disclose receipt from transfer of property To disclose receipt of compensation from transferee of shares Duty to file declaration of solvency To file return of allotments

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Fiduciary and general duties Not to be negligent and not to commit or let others to

commit tortuous acts. Not to exceed powers To have regard to and act in the best interests of the

Company and its stake holders Duty to creditors if business is conducted with intent to

defraud them Duty of confidentiality Duty not to exercise powers for a collateral purpose Duty not to misapply company assets Duty not to compete with the company Duty not to delegate Duty not to make secret profits

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Liabilities of Directors Liability to outsiders

When they enter into contracts on behalf of the Company When they issue a prospectus When they found guilty of fraud When they allot shares in an irregular manner When the liability has been made unlimited When the court issues any orders

Liability to Company When they are negligent in the performance of their

duties When they commit an act which is ultra vires their /

company’s powers When any illegal act / breach of trust is committed

Liability to the Shareholders Liability for statutory defaults and violations

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Kinds of Company meetings Shareholders meetings

Statutory meetings Annual general meetings Extraordinary general meeting Class meeting of shareholders

Board meetings Meetings of Board Committee Meetings of debenture holders Meetings of creditors Meetings of contributors in winding up

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Functional Directors (5)FinancePersonnel, Admn. & Welfare

OperationsPlanning & Projects Electrical & Mechanical

Part-time Directors (5)from Govt. of IndiaDirector (C.A)), Director (Fin) and CMD of WCL)

from Govt. of A.P Prl. Secretary. Energy & Prl . Secy, Finance

Constitution of Board of SCCL

Chairman & Managing Director

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Role of the Board

- Framing policies, rules, regulations, Manuals etc.

- Delegation of powers to the Board under the Companies Act / by the Govt. of India.

- Delegation of powers to C&MD

Sub-delegation of powers

- Sub-delegation of powers to functional Directors

- Sub-delegation of powers to below Board level officers

Decision making process

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Mode of exercise of powers by the Board- Through meetings

- Through Circular Resolutions

- Through Board Committees

Standing Committees in SCCL- Technical Committee (Scope)

- Manuals Committee

- Manpower Committee

- Shares allotment / transfer Committee

- Audit Committee (Statutory)

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Meetings of Board of Directors, Procedures & Practical aspects

- Minimum number of meetings- Quorum of meeting- Agenda for meeting- Minutes of meeting- Action on minutes of meeting

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Organisational functions

Line function Staff function

Decision making role Advisory role

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Corporate Governance-issues- Audit Committee- Directors’ responsibility statement- Independent Directors- Clause-49 of Listing Agreement with Stock exchanges

(For listed Companies)

Right to Information Act,2005- Applicability to SCCL - Information that can be sought

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Financial Structure

Shareholding pattern of SCCL

Sl

No.

Held by

No. of shares

Amount paid up (Rs.)

1 Governor of A.P. (1) 88,55,99,139 885,59,91,390 2 President of I ndia (1) 84,75,59,997 847,55,99,970 3 GoAP Directors (8) 8 80 4 GoI Directors (3) 3 30 5 I ndian private

shareholders (161) 37,252 3,72,520

6 Foreign private shareholders (10)

1,720 17,200

Total (184) 173,31,98,119 1733,19,81,190

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Debt-equity compositionDebt swappingAccrual Vs. Cash basis of accountingTax implications

Deferred tax Fringe benefit tax Service tax Value added tax

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Accounts & Audit Requirements of keeping books of Account.

Place of keeping Books of accounts in respect of branch office True and fair view Preservation

Inspection of books of accounts Directors’ right of inspection Inspection by the RoC / SEBI officers Members’ right of inspection Auditors’ right of inspection

Persons responsible for keeping the books of accounts

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Annual Accounts Balance sheet Profit & Loss account Cash flow statement Accounting standards Recommendations of Audit Committee on Annual

Accounts Approval of Annual accounts by Board and

authentication Audit of accounts by Statutory Auditors & C&AG Laying of accounts before AGM and adoption Dividend Laying of annual accounts before Parliament & State

Legislature.

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Accountability of Govt. Companies Responsible to Government(s) as shareholders; Subject to Audit by Statutory Auditors appointed by

Comptroller & Auditor General of India. Subject to audit & review by C&AG of India. Answerable to Assembly & Parliament. Answerable to COPU etc. Publishing / furnishing of information under RTI Act. All actions are subject to judicial review and amenable to

writ jurisdiction. Apart from the above there are certain statutory authorities

viz; Registrar of Companies, Regional Directors and Dept. of Company Affairs under the Companies Act.

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Liberalisation, Privatisation and Globalisaton

- Dismantelling of Administered price mechanism regime.

- Delicensing - Reduction of import duties- Simplification of procedures

Disinvestment (Restructuring of PSUs)- More autonomy to PSUs - Outsourcing of activities.

Foreign direct investment

Reforms undertaken in our country

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Sickness of the Company

Potential Sickness Sickness

Mandatory reference to Board for Industrial & Financial Reconstruction

Remedial measures Appeal to Appellate Authority for Industrial &

Financial Reconstruction

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Financial restructuring July 1999

Infusion of additional equity of Rs.198.04 crores during IX Plan period in addition to Rs.327.47 crores.

10-year interest free moratorium up to 31.3.2007 on payment of funded interest of Rs.663.34 crores accrued on GoI loans during VIII Plan.

Waiver of Rs.65.08 crores penal interest and interest on interest by GoI accrued on the loans from 1.4.1997 to 31.3.1999.

Re-schedulement of VIII Plan loan instalments of Rs.157.49 crores due up to 31.3.1997 to repay in 1999-00 and 2000-01 in two instalments.

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Difference between Govt. Companies and Govt. departments

Commercial enterprises - profit motive. Non-profit organisation - Service motive. Govt. Companies - Within legal frame work.

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Future outlook

Opportunities – Expansion/ backward - forward Integration

/ DiversificationThreats

- Limitation of coal reserves- Environmental restrictions- Land acquisition problems- Denationalization- Price tariff commission - Reduction of import duty

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Vision of SCCL

Plan and attain production level commensurate with extractable reserves.

Use of IT for optimal exploitation of coal reserves and optimum use of resources.

Introduction of mechanisation with SDLs & LHDs, Continuous Miners.

Develop deep shaft mines. Provide decent working conditions to workmen and

pioneering in introduction of manriding systems in UG Mines.

Right sizing of manpower. Enhancing image of the Company through good relations

with public in general and customers in particular.

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Mission of SCCL

To retain our strategic role of a premier Coal producing Company in the country and excel in a competitive business environment.

To strive for self-reliance by optimum utilization of existing resources and earn adequate returns on capital employed.

To exploit the available mining blocks with maximum conservation and utmost safety by adopting suitable technologies and practices and constantly upgrading them against international benchmarks.

To supply reliable and qualitative coal in adequate quantities and strive to satisfy customers needs by constantly sharing their experience and customizing our product.

To emerge as a model employer and maintain harmonious industrial relations within the legal and social framework of the state.

To emerge as a responsible Company through good Corporate Governance, by laying emphasis on protection of environment & ecology and with due regard for corporate social obligations.

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THANK YOUfor

patient listening