Companies act 2013.

AN
OVERVIEW
OF
THE COMPANIES ACT, 2013
BEGINNING OF NEW ERA FOR CORPORATES
BY: A.K.RASTOGI
COMPANT SECRETARY & EXECUTIVE DIRECTOR (LAW)
NTPC LIMITED
NEW DELHI

BACKGROUND
 A substantial portion of the Act, will be by way of Rules. In
more than 330 areas, the Rules will clarify the requirements.
 The draft rules has also been notified, comments of the
public were invited and after consulting Ministry of Law these
rules shall be made applicable.
 It hallmarks the transition of ‘Government regulated’ regime
to a new regime of self regulation
 It lays significant emphasis on e-governance and corporate
governance measures.

Background (contd)…
 This Act shall come into force on such dates as the Central Governemnt
may, by notification in the Official Gazette, appoint and different dates
may be appointed for different provisions of the Act. It is not mandated to
enforce the entire Act in totality at one point
 MCA notification 12.09.2013
MCA has issued a notification bringing into force 98 sections of the
Companies Act, 2013 from 23.09.2013
 MCA Circular on 23.09.2013
The circular provided clarification on the application of existing Accounting
Standards until the standards are prescribed by the Central Government. It
also clarified that if the notice was issued prior to 23.09.2013, the
resolutions (special or ordinary as may be required) may be passed in
accordance with the Companies Act, 1956.
 MCA Circular on 18.09.2013
MCA has clarified that the relevant provisions of the 1956 Act corresponding
to provisions of 98 sections of 2013 Act brought into force, will cease to
have effect from 12.09.2013.

Focus Areas in New Act
• Higher
Auditors
Accountability
• Easy
Restructuring
• Emphasis on
Investors
Protection
• Increased
reporting frame
work
CSR NCLT
High
penalty
for
default
Wider
Directors
& Mgt.
Responsib
ility

Some new Concepts under
Co. Act, 2013
Rotation
of
Auditors
KMP
Women
Director
Dormant
Company
Related
Party
Transaction
Secretarial
Audit
Class action
Suit
NCLT &
NFRA

WHAT IS NEW IN COMPANIES ACT,2013
COMPANIES ACT, 1956 COMPANIES ACT, 2013
658 Sections 470 Clauses
13 Parts 29 Chapters
15 Schedules 7 schedules

 Introduction of new class of Co. i.e. One Person Company & Dormant
Company
 Requirement to constitute Remuneration and Nomination Committee and
Stakeholders Grievances Committee
 The New Cos Act subjects private companies to a greater control and
compliances and withdraws most of the exemptions available to private
companies under the Companies Act, 1956
 Granting of More powers to Audit Committee
 Specific clause pertaining to duties of directors
 Mode of appointment of Independent Directors and their tenure
 Code of Conduct for Independent Directors
 Rotation of Auditors and restriction on Auditor's for providing non-audit
services
 Enhancement of liability of Auditors
Some of Key Provisions in new Companies Act-2013

 Disclosure and approval of Related Party Transaction
 Appointment of “Key Managerial Person” by certain Company
 New concept of class action suits with a view of making shareholders and
other stakeholders, more informed about their rights.
 Constitution of National Financial Reporting Authority, an independent
body to take action against the Auditors in case of professional mis-
conduct.
 Mandatory expenditure on CSR activities.
 Introduced Concept of Registered Value.
 Simplification of Merger of Holding Company & Subsidiary Company
 Permits cross border mergers, both ways; a foreign company merging with
an India Company and vice versa but with prior permission of RBI.
 Enabling Shareholders Associations/Group of Shareholders for taking class
action suits and reimbursement of the expenses out of Investor Education
and Protection Fund.
Some of Key Provisions in new Companies Act-2013

Definitions
Section 2 (6) Definition of
Associate Company
(New Definition)
The term Associate Company has been
defined in the Act. Associate Company
means a company, in which that other
company has a significant influence , but
which is not a subsidiary Co. of the Co.
having such influence and includes a joint
venture company.
“Significant influence” means control of
atleast 20% of total share capital or of
business decision under an agreement.
Section 2(12) Book and Paper The term book and paper includes books of
account, deeds, vouchers, writings, documents,
minutes and registers maintained on paper or
in electronic form.

Definitions
Section 2 (40) Definition of Financial Statement
(New Definition)
financial statement” in relation to a company, includes—
(i) a balance sheet as at the end of the financial year;
(ii) a profit and loss account, or in the case of a company carrying on any activity
not for profit, an income and expenditure account for the financial year;
(iii) cash flow statement for the financial year;
(iv) a statement of changes in equity, if applicable; and
(v) any explanatory note annexed to, or forming part of, any document referred to
in sub-clause (i) to sub-clause (iv):
Provided that the financial statement, with respect to One Person Company, small
company and dormant company, may not include the cash flow statement;

Definitions
Section 2 (41)
Financial Year:
(New Definition)
F/Y”, in relation to any company or body corporate,
means the period ending on the 31st March every year,
and where it has been incorporated on or after the 1st
day of January of a year, the period ending on the 31st
day of March of the following year, in respect whereof
financial statement of the company or body corporate
is made up.
If company has holding/ subsidiary incorporated
outside India having different F/Y, then on application
of the Company, Tribunal may allow any period as F/Y,
whether or not that period is a year.
Existing Company having different F/Y shall have to
change their F/Y within 2 years.

Definitions
Section 2 (43) “free
reserves”
means such reserves which, as per the latest audited
balance sheet of a company, are available for
distribution as dividend, except—
(i) any amount representing unrealised gains, notional
gains or revaluation of assets, whether shown as a
reserve or otherwise, or
(ii) any change in carrying amount of an asset or of a
liability recognised in equity, including surplus in
profit and loss account on measurement of the asset or
the liability at fair value,
Section 2 (45)
Government
Company
(No change)
Company in which not less than 51% per cent of the paid-
up share capital is held by the Central Government, or by
any State Government or Governments, or partly by the
Central Government and partly by one or more State
Governments, and includes a company which is a
subsidiary company of such a Government company

Definitions
Section 2(49) Definition of Interested
Director
The Definition of Interested Director is very
exhaustive now.
“interested director” means a director who is in
any way, whether by himself or through any of his
relatives or firm, body corporate or other
association of individuals in which he or any of
his relatives is a partner, director or a member,
interested in a contract or arrangement, or
proposed contract or arrangement, entered into
or to be entered into by or on behalf of a company
Section 2 (51) Key managerial
personnel
(New Definition)
The term key managerial personnel in relation to
a company means:
i) the Chief Executive Officer or the Managing
Director or the Manager
ii) the Company Secretary;
iii) the whole-time Director;
iv) the Chief Financial Officer
v) such other officer as may be prescribed

Definitions
Section 2 (57) Net Worth means the aggregate value of the paid-
up share capital and all reserves
created out of the profits and securities
premium account, after deducting the
aggregate value of the accumulated
losses, deferred expenditure and
miscellaneous expenditure not written
off, as per the audited balance sheet,
but does not include reserves created
out of revaluation of assets, write-back
of depreciation and amalgamation;

Definitions
Section 2(60)
Officer who is in
default
(Modified
definition)
For the purpose of any provision in this Act which enacts that an officer of
the company who is in default shall be liable to any penalty or punishment
by way of imprisonment, fine or otherwise, means any of the following
officers of a company, namely:—
(i) whole-time director;
(ii) key managerial personnel;
(iii) where there is no key managerial personnel, such director or directors
as specified by the Board in this behalf and who has or have given his or
their consent in writing to the Board to such specification, or all the
directors, if no
director is so specified;
(iv) any person who, under the immediate authority of the Board or any
key managerial personnel, is charged with any responsibility including
maintenance, filing or distribution of accounts or records, authorises,
actively participates in, knowingly permits, or knowingly fails to take active
steps to prevent, any default
Contd…

Definitions
(v) any person in accordance with whose advice, directions or
instructions the Board of Directors of the company is
accustomed to act, other than a person who gives advice to the
Board in a professional capacity;
(vi) every director, in respect of a contravention of any of the
provisions of this Act, who is aware of such contravention by
virtue of the receipt by him of any proceedings of the Board or
participation in such proceedings without objecting to the same,
or where such contravention had taken place with his consent
or connivance;
(vii) in respect of the issue or transfer of any shares of a
company, the share transfer agents, registrars and merchant
bankers to the issue or transfer

Definitions
Section 2(68) Private
Company
limit of maximum number of members has been
increased from 50 to 200.
Related Party
Sec 2(76)
The term related party has been defined in the Act as
under, Related Party Means:-
(i) a director or his relative;
(ii) a key managerial personnel or his relative;
(iii) a firm, in which a director, manager or his relative is a
partner;
(iv) a private company in which a director or manager is a
member or director;
(v) a public company in which a director or manager is a
director or holds along with his relatives, more than two
per cent. of its paid-up share capital;
Contd…

Definitions
(vi) any body 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;
(vii) any person on whose advice, directions or instructions a
director or manager is accustomed to act:
Provided that nothing in sub-clauses (vi) and (vii) shall apply to the
advice, directions or instructions given in a professional capacity;
(viii) any company which is—
(A) a holding, subsidiary or an associate company of such
company; or
(B) a subsidiary of a holding company to which it is also a
subsidiary;
(ix) such other person as may be prescribed;

Definitions
Section 2(85) Small
Company
‘‘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
(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;
Section 2(91)
Turnover
means the aggregate value of the realization of amount made
from the sale, supply or distribution of goods or on account of
services rendered, or both, by the company during a financial
year.

Publication of Name of the Company
Section 12 : Publication of
Name of the Company with
Corporate Identification
Number in the Letter Head
(New requirement)
•The Company shall get its name, address of its
registered office and the Corporate Identity Number
alongwith telephone number, fax number, if any, e-
mail and website addresses, if any, printed in all its
business letters, billheads, letter papers and in all its
notices and other official publications.
• If the characters employed therefore are not those
of the language or of one of the languages in general
use in that locality, also in the characters of that
language or of one of those languages;
• In case of one person Company words ‘‘One Person
Company’’ shall be mentioned in brackets below the
name of such company, wherever its name is printed,
affixed or engraved.

Incorporation of Company
One Person Company (OPC) –
the intent is apparently to permit entrepreneurship of a single individual to
obtain the benefit of a corporate form of organization
Features:-
1. formed as a private limited company.
2. only one person as a member
3. minimum of 1 director
4. An OPC is not required to hold an annual general meeting
5. Meeting of Board of Directors of OPC to be conducted in each half of a
calendar year and the gap between the two meetings is not less than
ninety days
Memorandum of Association:
 Bifurcation of the objects clause into main, ancillary and other objects is
not required. Only objects for which company is incorporated along with
matters considered necessary for its furtherance shall be mentioned.

Dormant Company: Section 455
 Any existing Active Company,
 Where a company is formed and registered for a future
project or to hold an asset or intellectual property
and
 has no significant accounting transaction, such a
company or an inactive company
 In that case, Company may apply in prescribed form
to RoC for giving status of Dormant Company.
 Dormant Company is subject to lesser compliances
than Active Company
 Dormant Company can also be converted back to
Active Company

Share Capital:
 Commencement of Business : No need to obtain certificate of commencement of
business, a declaration and verification is required by the Public Company.
 Prospectus : The content to be prescribed in the Prospectus has now been made
more detailed.
 Global Depository Receipt (Section 41): A company may, after passing a special
resolution in its general meeting, issue depository receipts in any foreign country
in such manner, and subject to such conditions, as may be prescribed.
 Return of Allotment is required for all kinds of Securities including debentures.
 Time Period for Allotment: within 60 days of receipt of application money, in
case of Private Placement -
 Intimation of Change in Promoters Shareholding: (Section 93): Every listed
company shall file a return in the prescribed form with the Registrar with respect
to change in the number of shares held by promoters and top ten shareholders of
such company, within 15 days of such change.

Acceptance of Deposits by Companies
 Prohibition on Acceptance of Deposits from Public
 Only the following companies may invite deposits from the public
(i) Banking companies
(ii) Non Banking Financial Companies (NBFC), subject to RBI
guidelines
(iii) Notified companies
(iv) Public company having such net worth or turnover as may be
prescribed as per audited balance sheet of the immediately
preceding financial year
 A company other than those specified above:- Invite, accept or
renew deposits only from its members

• All charges on the company’s property, assets or undertaking
require registration.
• Earlier registration was required only for following:
Registration of Charges :Sec. 77 to 87
• Securing debenture issue • Uncalled share capital
• Immovable property • Book debts
• Movable property not being pledge • Floating charge on undertaking
• Calls made but not paid • Ship or share in a ship
• Goodwill, patent, licence under a
patent, trademark or copyright or
licence under a copyright

Maintenance & Inspection of
documents
 Maintenance & Inspection of documents in electronic
form : (Section 120) any document, record, register,
minutes, etc., can be maintained by the Company in
electronic form.
 Its inspection or copies of the same can also be given in
electronic form.
 Report on AGM :(Section 121): Every listed public company
shall prepare in the prescribed manner a report on each
AGM including the confirmation to the effect that the
meeting was convened, held and conducted as per the
provisions of this Act and the rules made there under.
 Report is to be filed with ROC with in 30 days of AGM.

ACCOUNTS & AUDIT
ACT 2013
Defined “Financial Statement” (i) Balance sheet (ii) Profit and loss
account (iii) cash flow statement;
(iv) a statement of changes in equity,
Consolidation of Accounts mandatory with subsidiaries/ JVs/
Associates
Financial year can end only on 31st March – no extension permitted at
present
Books of Accounts can be maintained in electronic form also.
To include Cash Flow Statement and statement of changes in equity
Highlights

Highlights
•Additional disclosures like extract of annual return,
detail of loan, related party transaction etc. needs to be
given of the compliances made during the year
Re-open or re-cast of accounts will be possible subject to
the prescribed conditions
Facility to revise the financials after taking an approval of
the tribunal
Rotation of Auditors
Auditors not to rendered certain services

ACCOUNTS & AUDIT
 Preparation of Financial Statement: Section 129
 Maintenance of books of accounts and other books and papers in electronic
mode is now permitted
 Every Financial statement:
 shall comply with Accounting Standards notified u/s133
 shall be in the format prescribed under Schedule III.
 Exceptions: Insurance Companies, Banking Co., Power Generating Co.,
Electricity supply co. etc. may prepare their financial statement as per the Act
governing such class of companies.
 Consolidated Financial Statement :- If Company has one or more
subsidiaries then along with financial statement, consolidated financial
statement of the company and all its subsidiaries, in same form & manner at
its own, shall also be laid before the Annual General Meeting.
 Subsidiary shall for the purpose of this requirement include associate
company and joint venture.

ACCOUNTS & AUDIT
 All Provision relating to preparation of Fin.
statement of Holding Co. shall mutatis mutandis
apply on consolidated Fin. Statement
 In case of contravention of provisions relating to
Books of Accounts (Section 128), MD, WTD (Fin.),
CFO and any other person of a company charged by
the Board with the duty of complying with the
provisions of this section is liable to imprisonment
which may extend to one year or with fine which
shall not be less than fifty thousand rupees but
which may extend to five lakh rupees or with both.

ACCOUNTS & AUDIT
Revision of Financial statement or Board’s Report
 Mandatory reopening or recasting: (Section 130)
 A company can reopen its books of accounts and recast its financial
statements if:
 The relevant accounts were prepared in fraudulent manner or Affairs
of the company were mismanaged during the relevant period casting
a doubt on the reliability of the financial statements.
 On an application by Central Government, IT authorities SEBI or any
regulatory body and an order being made by Court of Tribunal.
 Voluntary Revision: (Section 131)
 The company may, if it appears to the directors that the Financial
Statements or Board’s Report are not in compliance with the provisions of
the Act, may prepare revised financial statement or a revised Board’s
Report in respect of any of the three preceding financial year with the
approval of Tribunal.

ACCOUNTS & AUDIT
 Appointment of Auditors:- (Section 139)
Appointment of Statutory Auditors for 5 years term .
 However, the company shall place the matter relating to such appointment for
ratification by members at every annual general meeting.
 If change before 5 year then Special Resolution + Approval of Central Government
 Notice of Appointment of Auditors to be filed with ROC in 15 days of appointment.
 In case of Government Company, Auditors are to be appointed by C&AG within a
period of 180 days from the commencement of the F/Y.
 First Auditors of Govt. Company: to be appointed by the C&AG within 60 days from
the date of registration of the company and in case the Comptroller and Auditor-
General of India does not appoint such auditor within the said period, the Board of
Directors of the company shall appoint such auditor within the next 30 days; and in
the case of failure of the Board to appoint such auditor within next thirty days, it shall
inform the members of the company who shall appoint such auditor within sixty days
at an extraordinary general meeting

ACCOUNTS & AUDIT
Prohibition on Reappointment of Auditor :
 Listed company or class of Companies as may be prescribed, shall not appoint or re-appoint-
(a) an INDIVIDUAL as auditor for more than one term of five consecutive years
(b) an AUDIT FIRM as auditor for more than two terms of five consecutive years.
 Automatic reappointment of existing auditor (without passing any resolution) at AGM where no
auditor is appointed/ reappointed at AGM.
 Limited Liability Partnerships may be appointed as Auditors
 Auditing Standards to be made mandatory.
Auditor not to render certain services: Auditor shall provide to the company only such other
services as are as are approved by the Board of Directors or the audit committee, as the case may
be, but which shall not include any of the following services (whether such services are rendered
directly or indirectly to the company or its holding company or subsidiary company or associate
company), namely:—(a) accounting and book keeping services; (b) internal audit; (c) design and
implementation of any financial information system; (d) actuarial services; (e) investment
advisory services; (f) investment banking services; (g) rendering of outsourced financial
services; (h) management services; and (i) other services as may be prescribed.

ACCOUNTS & AUDIT
 Matters to be stated in Auditor’s Report interalia
include:
 Whether, in his opinion, the financial statements
comply with the accounting standards.
 The observations or comments of the auditors on
financial transactions or matters which have any
adverse effect on the functioning of the company.
 Whether the directors is disqualified from being
appointed as a director under sub-section (2) of
section 164.

ACCOUNTS & AUDIT
Matters to be stated in Auditor’s Report interalia include:
 Any qualification, reservation or adverse remark relating to the
maintenance of accounts and other matters connected therewith.
 Whether the company has adequate internal financial controls
system in place and the operating effectiveness of such controls.
 such other matters ad may be prescribed.
 The Auditors shall also report on:
 Whether the company has disclosed the effect, if any, of pending
litigations on its financial position in its financial statement.
 Whether the company has made provision for foreseeable losses, if
any on long term contracts including derivative contracts.
 Whether there has been delay in depositing money into the
Investor Education and Protection Fund by the company.

ACCOUNTS & AUDIT
 Signing of Financial Statement:
 Financial Statement including Consolidated
financial Statement shall be approved by the Board
and to be signed by,
 1. two directors of which one shall be MD or CEO
 2. CFO and Company Secretary

Dividend
 DECLARATION AND PAYMENT OF DIVIDEND
 No Compulsory Transfer of Profits to Reserves. A Company MAY, if
consider appropriate, before the declaration of any dividend in any
financial year, transfer such percentage of its profits for that
financial year to the reserves of the company
 Unpaid dividend can be claimed any time:-Time limit of seven
years will not apply.
 Interim Dividend: In case company has suffered loss during the
current F/Y upto the end of the quarter immediately preceding the
date of declaration of dividend, in that case, rate of interim
dividend shall not be higher than the average dividend declared
during last 3 F/Y.


Management & Administration
 Register for holders of all type of securities issued by the Company has to be maintained.
 Annual Return:
 Annual Return of the Company shall now to contain more information than required
under the Co. Act 1956. including particulars of holding, subsidiary and associate
companies, details of meeting of Board/Committee with attendance of Directors,
remuneration of directors and key managerial personnel, penalty or punishment
imposed on the company, its directors or officers.
 Place of keeping registers and returns :
 Co. Act 2013 allows registers of members, debenture-holders, any other security
holders or copies of return, to be kept at any other place in India in which more than
one-tenth of members reside [section 94(1)]. In Co. Act 1956, it was limited to a
place within the city, town or village in which the registered office is situated.
 Listed companies will be required to file a return with the ROC with respect to the
change in the number of shares held by promoters and top ten shareholders within 15
days of such a change[section 93].
 Every Company shall have observe secretarial standards specified by the Institute of
Company Secretaries of India with respect to general and board meetings [section 118
(10) ]

Meeting of Shareholders
 General meetings :
 Now first annual general meeting should be held within nine
months from the date of closing of the first financial year of the
company [section 96(1) of 2013 Act], whereas the 1956 Act
requires the first annual general meeting to be held within 18
months from the date of incorporation
 Voting through electronic means by members at meetings is
permitted.
 Quorum :
 Previously 5 members personally present in case of a public
company constituted a quorum. Now, U/s 103, if
 No. of Members is upto 1000 then 5 members
 No. of Members is more than 1000 but upto 5000 then 15 members
 No. of member exceeding 5000 then 30 members , will constitute quorum.

Directors
 Women Directors:[Section 149(1) of 2013 Act] :
 Following Co. Shall have at least of one woman director :
 (i) Every listed company, within one year from the commencement of second
proviso to sub-section (1) of section 149.
 (ii) Every other public company that has paid–up share capital of Rs. 100 crore
or more, or a turnover of Rs. 300 crore or more within three years from the
commencement of second proviso to sub-section (1) of section 149.
 Number of Directorship :The 2013 Act increases the limit for number
of directorships that can be held by an individual from 12 to 15.
 Resident Director: One director to be resident in India. At least one
director must have stayed in India for at least 182 days in the previous
calendar year [Section 149(3) ]
 Number of directors
• Minimum : Public company -3 Private -2 , One Person Co.-1.
• Maximum : limit increased to 15 from 12 .
More directors can be added by passing of special resolution without
getting the approval of Central Government.

Board Meetings & Companies Act
2013
 Section 173: Meeting of Board
 First Board Meeting- with in 30 days of incorporation
 Mini. - 4 meetings to be held every year.
 Max. 120 days gap between two meetings.
 Directors may participate either
 In Person; or
 through Video Conference; or
 Other Audio visual means, as may be prescribed which are
capable of recording, recognition of Participation by
directors , recording and storing the proceeding with date &
time.
 As per draft rules, Directors should attend at least one meeting
in financial year in person.

Board meetings & Companies Act 2013
 Section 173: Meeting of Board
 Central Government may prescribe items which cannot be
dealt in a meeting through video conferencing.
 As per draft rules: Following items can't be dealt through
video conferencing:
 Approval of Annual Financial Statement
 Board Report
 Notice : Min. 7 days notice required for calling Board Meeting
 Meeting on Shorter Notice : for transacting urgent matter, but
presence of one independent Director, if any, is must.
 However, if one Independent Director was not present, then
decisions shall be circulated to all directors and shall be final only
when it is ratified by one independent director, if any.
 Penalty for default: Rs.25,000/- to every officer whose duty is to
give notice.
•As per section 118 of Companies Act 2013, all companies are required to follow Secretarial Standards.
•Secretarial Standard- I is about Meetings of the Board Of Directors.

Board meetings & Companies Act 2013
Quorum: (Section 174)
 1/3 of total strength or 2 Directors, which ever is higher
 Directors attending through video conferencing shall be included in
quorum.
 Where a meeting of the Board could not be held for want of quorum, then,
unless the articles of the company otherwise provide, the meeting shall
automatically stand adjourned to the same day at the same time and place
in the next week or if that day is a national holiday, till the next succeeding
day, which is not a national holiday, at the same time and place.
 Exceptions:
 If number of interested directors ≥ 2/3 of total strengths, then remaining
Directors will constitute the quorum.
 If number of directors reduced below the quorum fixed by the Act,
remaining directors can meet to increase number of Directors or for calling
General Meeting.

Passing of resolution by Circulation:
Section 175
 Should be only for those items which are not statutorily
required to be transacted in the Board Meeting.
 Resolution in draft Should be sent to all Directors at
their address registered with the Company in India,
either by post or hand or electronic mean and shall
be approved by majority.
 Where not less than 1/3rd of the total number of
Directors of the company for the time being require
that any resolution under circulation must be decided at
a meeting, the chairperson shall put the resolution to be
decided at a meeting of the Board.
 Resolution passed by circulation shall be noted in
subsequent meeting & made part of the minutes.

Powers of the Board of Directors:
Section 179
 Following Powers to be exercised at the Board meeting only:
(a) to make calls on shareholders in respect of money unpaid on their shares;
(b) to authorise buy-back of securities under section 68;
(c) to issue securities, including debentures, whether in or outside India;
(d) to borrow monies;
(e) to invest the funds of the company;
(f) to grant loans or give guarantee or provide security in respect of loans;
(g) to approve financial statement and the Board’s report;
(h) to diversify the business of the company;
(i) to approve amalgamation, merger or reconstruction;
(j) to take over a company or acquire a controlling or substantial stake in
another company;
(k) any other matter which may be prescribed.
....Contd.

Powers of the Board of Directors:
Section 179
Further, in addition to Section 179, as per rules, following items
are required to be transacted at the Board meeting:
(1) to make political contributions;
(2) to fill a casual vacancy in the Board;
(3) to enter into a joint venture or technical or financial
collaboration or any collaboration agreement;
(4) to commence a new business;
(5) to shift the location of a plant or factory or the registered
office;
(6) to appoint or remove key managerial personnel (KMP) and
senior management personnel one level below the KMP;
....Contd.

COMMITTEE OF DIRECTORS
 2 new Committees of Directors has been introduced:
STAKEHOLDERS RELATIONSHIP COMMITTEE :-
 1) Every company having more than 1000 shareholders, debenture-holders, deposit-
holders and any other security holders at any time during a financial year
 2) consist of a chairperson who shall be a non-executive director and such other members
as may be decided by the Board.
NOMINATION AND REMUNERATION COMMITTEE –
1) Every listed company and prescribed class of companies, shall constitute the
Nomination and Remuneration Committee.
2) consist of three or more non-executive directors out of which not less than
one half shall be independent directors.


Audit Committee
 Required for :
 All listed company
 Public Company paid up capital of Rs.100 cr. or more
 Borrowings or debentures exceeding Rs.200 cr. or more
 Constitutions: Mini. 3 directors but majority of Independent Director
 Scope: Every Audit Committee shall act in accordance with the terms
of reference specified in writing by the Board which shall inter alia,
include,—
 (i) the recommendation for appointment, remuneration and terms of appointment of
auditors of the company;
 (ii) review and monitor the auditor’s independence and performance and effectiveness of
audit process;
 (iii) examination of the financial statement and the auditors’ report thereon;
 (iv) approval of transactions of the company with related parties;
 (v) scrutiny of inter-corporate loans and investments;
 (vi) valuation of undertakings or assets of the company, wherever it is necessary;
 (vii) evaluation of internal financial controls and risk management systems;
 (viii) monitoring the end use of funds raised through public offers and related matters.

Audit Committee
 Audit Committee is empowered to investigate into
matters referred by the Board or Act.
 All Listed Companies & prescribed categories of
Company are required to establish vigil mechanism
for reporting of genuine concern.
 Mechanism should provide for director access to
Chairman of Audit Committee
 Requirement of attending the AGM by the
Chairman of Audit Committee is not required now.

CSR COMMITTEE :
 Following co. need to have a CSR Committee
 Net worth ≥ Rs.500 Crore; or
 Turn over ≥ Rs. 1,000 Crore; or
 Net Profit ≥ Rs. 5 Crore
 Committee to consist of at least 3 directors out of which at
least 1 director shall be independent director.
 At least 2% of average net profits of the three immediately
previous financial years to be spent on CSR activities
specified in Schedule VII
 Company shall disclose in Director’s Report about the policy
adopted, giving reasons on failure of implementation

BOARD’S REPORT
 The requirements for disclosure in the Board’s report
interalia include:
 Extract of Annual Return
 Number of meetings of Board of Directors
 For listed and prescribed class of companies – policy on
directors reappointment, remuneration and annual
evaluation of the performance of the Board of Directors.
 Related party contracts
 Development and implementation of a Risk Management
Policy.
 Corporate Social Responsibility.
 Contd…

BOARD’S REPORT
 Listed company shall disclose in the Board’s report, the ratio of the
remuneration of each director to the median employee’s remuneration and
such other details.
 The report shall contain a separate section wherein a report on the
performance and financial position of each of the subsidiaries, associates
and joint venture companies included in the CFS.
 Director’s responsibility statement shall state about:
 In the preparation of annual accounts, the applicable accounting
standards had been followed alongwith proper explanation relating to
material departures.
 Selection and application of accounting policies, judgments and
estimates that are reasonable and prudent so as to give a true and fair
view of the state of affairs of the company at the4 end of the financial
year and of the profit and loss of the company for that period.

BOARD’S REPORT
 Director’s responsibility statement shall also state
about:
 Proper and sufficient care being taken for the maintenance of
adequate accounting records- in accordance with the provisions
of this Act for safeguarding the assets of the company and for
preventing and detecting fraud and other irregularities.
 Preparation of the annual accounts on a going concern basis.
 For listed companies, whether internal controls have been laid
down and such internal controls are adequate and were
operating effectively.
 Devising of proper systems to ensure compliance- with the
provisions of all applicable laws and that such systems were
adequate and operating effectively.

No Company shall directly or indirectly advance any loan including book debt or give
guarantee or provide security to its directors or to any other person in whom the director
is interested.
‘any other person in whom the Directors is interested’:
1. any director of the lending Company or its holding co or any partner or relative of
any such director
2. any firm in which such director or relative is a partner
3. Any private co of which any such director is a director or member
4. Any body corporate at a GM of which not less than 25% of total voting power is
exercised/controlled by any such director, or by two or more
5. Any body corporate, the Board, MD or manager, whereof is accustomed to act in
accordance with the directions or instruction of the Board, or of any director or
directors, of the lending company.
Loan to Directors – Section 185

Exception:
The said section does not apply to:-
a. Loan to MD/WTD
•As a part of contract of services extended to all its employees; or
•Pursuant to scheme approved by members by special resolution
b. A Company which in the ordinary course of its business provides loans
or gives guarantees or securities for the due repayment of any loan and in
respect of such loans an interest is charged at a rate not less than the
bank rate declared by RBI
Loan to Directors – Section 185

Related Party Transaction
 Except with the consent of the Board of Directors given by a resolution at
a meeting of the Board and subject to such conditions as may be
prescribed, no company shall enter into any contract or arrangement with
a related party with respect to-
 (a) sale, purchase or supply of any goods or materials;
 (b) selling or otherwise disposing of, or buying, property of any kind;
 (c) leasing of property of any kind;
 (d) availing or rendering of any services;
 (e) appointment of any agent for purchase or sale of goods, materials,
services or property;
 (f) such related party's appointment to any office or place of profit in the
company, its subsidiary company or associate company; and
 (g) underwriting the subscription of any securities or derivatives thereof,
of the company.

Special Resolution:
 If paid up capital exceeds prescribed limit (presently Rs. 1 crore or
more) or transactions exceeds prescribed limit ( presently, 5% of
annual turn over or 20% of net worth etc.) then prior approval of
shareholders by way of Special Resolution required .
Justification of transaction:
 Details of Contract / arrangement shall be disclosed in Boards’
Report with justification of transaction
Consequence:
 If consent not received by Board/ Shareholders or not ratified
within 3 months : transaction shall be voidable at the option of the
Board (+) Interested Director to indemnify the Company for losses

Related Party Transaction: Section 188
 Except with the consent of the Board of Directors given by a resolution
at a meeting of the Board and subject to such conditions as may be
prescribed, no company shall enter into any contract or arrangement
with a related party with respect to-
 (a) sale, purchase or supply of any goods or materials;
 (b) selling or otherwise disposing of, or buying, property of any kind;
 (c) leasing of property of any kind;
 (d) availing or rendering of any services;
 (e) appointment of any agent for purchase or sale of goods, materials,
services or property;
 (f) such related party's appointment to any office or place of profit in
the company, its subsidiary company or associate company; and
 (g) underwriting the subscription of any securities or derivatives
thereof, of the company.

Related Party Transaction: Section 188
Special Resolution:
 If paid up capital exceeds prescribed limit (presently Rs. 1 crore or
more) or transactions exceeds prescribed limit ( presently, 5% of
annual turn over or 20% of net worth etc.) then prior approval of
shareholders by way of Special Resolution required .
Justification of transaction:
 Details of Contract / arrangement shall be disclosed in Boards’ Report
with justification of transaction
Consequence:
 If consent not received by Board/ Shareholders or not ratified within 3
months : transaction shall be voidable at the option of the Board (+)
Interested Director to indemnify the Company for losses

Draft Rules: Requirement in case of
Related Party transaction :
Stringent penalty :
 In case of default by the listed Companies - imprisonment upto 1 year or fine min. Rs. 25000, max.
Rs.5 lakh or both
 For others Companies: fine min. Rs. 25000, max. Rs.5 lakh
Exemption:
transactions in ordinary course of business at arms length.
Conditions:
The notice of the Board/ Explanatory statement of the meeting shall disclose
(a) name of the related party and nature of relationship;
(b) nature, particulars of the contract or arrangement;
(c) material terms of the contract or arrangement
(e) any other information relevant or important for the Board to take a decision on the proposed
transaction.
 Required to maintain Register of Contract : Open for inspection at AGM by member / proxy

Related Party [Section 2(76)]: means —
1. a director or his relative;
2. a key managerial personnel or his relative;
3. a firm, in which a director, manager or his relative is a partner;
4. a private company in which a director or manager is a member or
director;
5. a public company in which a director or manager is a director or holds
along with his relatives, more than two per cent. of its paid-up share
capital;
6. 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;

7. any person on whose advice, directions or
instructions a director or manager is
accustomed to act ( not in a professional
capacity)
8. any company which is—
a. a holding, subsidiary or an associate company of
such company; or
b. a subsidiary of a holding company to which it is
also a subsidiary;
9. such other person as may be prescribed.

Related Party Transaction:
Draft Company Rule:
 Meaning of “Related Party” further widened by rules.
Following shall be deemed to be a related party-
(1) a director or key managerial personnel of the holding,
subsidiary or associate company of such company or his
relative;
(2) any person appointed in senior management in the
company or its holding, subsidiary or associate
company i.e. personnel of the company or its holding,
subsidiary or associate company who are members of
core management team excluding Board of directors
comprising all members of management one level below
the executive directors, including the functional heads.

 Earlier definition of Related Party was only in AS-18,
under new act Related Party has been defined in widest
possible manner.
 Requirement of approval of Central Govt. has been
dispensed for entering into contract or for appointment
of related party at the place of profit .
 key managerial personnel including Company Secretary
or his relative is included in definition of related party.
 Like Directors Company Secretary, CFO is also required to
make disclosure of interest in any contract or
arrangement

Key Managerial Personnel
 Appointment of Key Managerial Personnel [Clause 203(1)]
• Every company belonging to such class or classes of companies as may be
prescribed shall have the wholetime key managerial personnel.
• an individual shall not be the chairperson of the company as well as the
managing director or Chief Executive Officer of the company at the same time
Exception:-(i) Articles of a company provide otherwise
(ii) Company does not carry multiple businesses
 TIME PERIOD FOR FILLING VACANCY INOFFICE OF KMP:-
Board of Directors at Board Meeting shall appoint within 6 months.

Independent Director
Under Companies Act, 1956 :
• Not applicable to unlisted companies (whether public or private)
• Applicable only to listed companies under Listing Agreement:
1/3 rd to ½ of total directors to be independent directors (depending
upon executive/non-executive nature of chairman)
Under new Companies Act, 2013:
• Requirement: 1/3rd of total directors to be independent directors.
• Applicability:
1. All Listed Companies
2. Companies notified by Central Govt i.e. as per draft rules:
(a) Public Cos with paid up share capital in excess of Rs. 100 crores, or
(b) Public Cos with outstanding loans/borrowings/ debentures/
deposits in excess of Rs.200 crores.

Definition of Independent Director
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:
(a) who, in the opinion of the Board, is a person of
integrity and possesses relevant expertise and
experience;
(b) (i) who is or was not a promoter of the company or its
holding, subsidiary or associate company;
(ii) who is not related to promoters or directors in the
company, its holding, subsidiary or associate company;

(c) who has or had no pecuniary relationship with the company, its
holding, subsidiary or associate company, or their promoters, or
directors, during the two immediately preceding financial years or
during the current financial year
(d) none of whose relatives has or had pecuniary relationship or
transaction with the company, its holding, subsidiary or associate
company, or their promoters, or directors, amounting to two per
cent. or more of its gross turnover or total income or fifty lakh
rupees or such higher amount as may be prescribed, whichever is
lower, during the two immediately preceding financial years or
during the current financial year

(e) who, neither himself nor any of his relatives—
(i) holds or has held the position of a key managerial personnel or is or has been
employee of the company or its holding, subsidiary or associate company in
any of the three financial years immediately preceding the financial year in
which he is proposed to be appointed;
(ii) is or has been an employee or proprietor or a partner, in any of the three financial
years immediately preceding the financial year in which he is proposed to be
appointed, of—
(A) a firm of auditors or company secretaries in practice or cost auditors of the
company or its holding, subsidiary or associate company; or
(B) any legal or a consulting firm that has or had any transaction with the company,
its holding, subsidiary or associate company amounting to ten per cent. or more
of the gross turnover of such firm;
(iii) holds together with his relatives two per cent. or more of the total voting power of
the company; or
(iv) is a Chief Executive or director, by whatever name called, of any nonprofit
organisation that receives twenty-five per cent. or more of its receipts from the
company, any of its promoters, directors or its holding, subsidiary or associate
company or that holds two per cent. or more of the total voting power of the
company; or

(f) who possesses such other qualifications as prescribed :
An independent director shall possess appropriate balance of skills,
experience and knowledge in one or more fields of finance, law,
management, sales, marketing, administration, research, corporate
governance, technical operations or other disciplines related to the
company’s business.

Definition of independent director under Companies Act, 2013 wider
in scope than listing agreement/SEBI ESOP guidelines. The criteria is
based on:
 Independence from Management
 Independence from Promoter Group
 No substantial shareholding
 Other significant relationship which may cause a conflict of interest
 Tenure of Independent Director
 5 (original term) + 5 years (additional term subject to a special
resolution).
 After expiry of term - ineligible for re appointment for 3 years.

Code of conduct for Independent Director
 Section 149 (7) provides that Company & Independent Directors
shall abide by Schedule IV
 Schedule IV provides for following:
1. Guidelines for professional conduct
2. Role & functions of independent Director
3. Duties of independent Director
4. Manner of Appointment
5. Re-appointment
6.Resignation / removal
7.Separate Meeting
8. Evaluation Mechanism

Guidelines of professional conduct for
Independent Director
An independent director shall:
(1) uphold ethical standards of integrity and probity;
(2) act objectively and constructively;
(3) act in a bona fide manner in the interest of the company;
(4) devote sufficient time and attention for informed and balanced
decision making;
(5) not abuse his position to gaining direct or indirect personal
advantage or advantage;
(6) refrain from any action that would lead to loss of his
independence;
(7) where circumstances arise which make an independent director
lose his independence, the independent director must immediately
inform the Board accordingly;
(8) assist the company in implementing the best corporate
governance practices

Role & Functions of Independent Director
The independent directors shall:
1) bring independent judgment on the Board’s deliberations
(2) bring an objective view in the evaluation of the performance of board and
management;
(3) scrutinise the performance of management
(4) satisfy themselves on the integrity of financial information and that financial
controls and the systems of risk management
(5) safeguard the interests of all stakeholders, particularly the minority shareholders;
(6) balance the conflicting interest of the stakeholders;
(7) determine appropriate levels of remuneration of executive directors, key
managerial personnel and senior management and have a prime role in
appointing and where necessary recommend removal of executive directors, key
managerial personnel and senior management;
(8) moderate and arbitrate in the interest of the company as a whole, in situations of
conflict between management and shareholder’s interest.

Duties of Independent Director
Some of duties are:
 undertake appropriate induction and regularly update and refresh
their skills, knowledge
 strive to attend all meetings
 participate constructively and actively in the committees of the
Board
 strive to attend the general meetings
 not to unfairly obstruct the functioning
 ensure that adequate deliberations are held before approving
related party transactions and are in interest of the Company
 assist in protecting the legitimate interests of the company,
shareholders and its employees
 not to disclose confidential information

Manner of appointment of Independent
Director
 Appointment process shall be independent of the company
management, balance should be between skills, experience and
knowledge in the Board
 Appointment shall be approved at the meeting of the
shareholders.
 Explanatory statement to the notice shall include a statement
that in the opinion of the Board, the independent director
proposed fulfils the conditions specified in the Act and the rules
 Process shall be formalised through a letter of appointment
defining tenure, expectations by the Board, duties & liabilities
etc.
 Term & condition of appointment shall be open for inspection at
the registered office & posted on website

Other provisions Related to Independent
Director
Re-appointment:
 Re-appointment only on the basis of performance appraisal
Resignation or Removal
 In case of resignation/removal, should be replaced by a new independent
director within a period of not more than one hundred and eighty days
Separate Meeting:
 At least one meeting in a year without presence of non independent directors
& management to review performance of non independent directors, Board,
Chairman and to access quality, quantity etc. of flow of information to Board.
Evaluation Mechanism:
 Performance appraisal of independent directors to be done by entire board
excluding directors being evaluated

Directors: Resignation
 Resignation of director:-
• A director may resign from his office by giving notice in writing.
• The Board shall on receipt of such notice, intimate the Registrar and
also place such resignation in the subsequent General Meeting of the
Company.
• The director shall also forward a copy of resignation along with detailed
reasons for the resignation to the Registrar.
• The notice shall become effective from the date on which the notice is
received by the company or the date.

Merger : Simplified
 Currently all compromise / arrangements including reconstruction
/ mergers have to go through court route.
 Court process delays the corporate restructuring.
 Section 233 provides for mergers/ amalgamations outside the
Tribunal process & this facility is available to:
 Merger / amalgamation of small companies.
 Merger / amalgamation between holding company and WOS.
 Such other class of companies as Central Government may
prescribed.

83
Investor Protection Measures
Issue and Transfer of Securities and Non Payment of Dividend by Listed Companies shall be administered by SEBI
Fraudulent Inducement of Persons to Invest Money is punishable with Imprisonment for a Term which may extend
to Ten Years and with Fine which shall not be less than Three Times the Amount involved
Suit may be filed by a person who is affected by any Misleading Statement in the Prospectus or who has invested
money by fraudulent inducement
Other Imp. Provisions
Class Action Suits
Specified No. of Members, Depositors or any Class of them may file an application before the Tribunal
Where the Members or Depositors seek any Damages or or demand any other suitable action from or against an
audit firm, the liability shall be of the firm as well as of each partner who was involved in making any improper
statement of particulars in the audit report or who acted in a fraudulent, unlawful or wrongful manner
The order passed by the Tribunal shall be binding on the company and all its Members, Depositors and Auditors

Section
No.
Section Compliance to be made Status of Compliance Remark
CHAPTER -II- INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO
5 Articles 5(6) The Articles of the Company shall be in such forms, as
specified in Schedule ‐ I, Table F.
5(9) Nothing in this Section shall apply to the Articles of a
Company registered under any previous company law unless
amended under this Act.
to be Complied The notification for
exemption to Govt.
companies are yet to be
issued by the MCA. After
grant of exemptions to
Govt. companies and
notification of remaining
sections, the Articles
shall be amended.
12 Registered
office of
company.
12(3)(a) Every Company shall paint or affix the name and
address of registered office and keep the same painted/affixed,
outside every office or place in which its business is carried on,
in conspicuous position and legible letters.
Complied Circular in this regard has
been sent to all Projects &
offices and necessary
compliance has been
made.
12(3)(c) Every Company shall get its name, address of registered
office, CIN, telephone/fax no. (if any) and email/website address
(if any) printed on all business letters, billheads, letter papers,
Notices and other official publications
Complied Circular in this regard has
been sent to all Projects
and offices and necessary
compliance has been
made. Letter heads as per
the new requirement has
been printed.

Section No. Section Compliance to be made Status
of
Compli
ance
Remark Section No.
CHPTER – III : PROSPECTUS AND ALLOTMENT OF SECURITIES
23 to 41 Public offer of securities by the
company
Contains provisions regarding public issue of
securities, content of prospectus, red herring
prospectus, self prospectus, liability for mis-
statement in prospectus etc.
to be Complied Necessary Compliance shall
be made as per the
requirement of Act & rules
in case of Public offer of
securities.
42 Offer or invitation for
subscription of securities on
private placement
In case of issue of NCDs on private placement,
company shall pass Special Resolution in General
Meeting once in a year.
Being complied The company has taken
approval of shareholder by
special resolution at AGM
held on 27.08.2014 for issue
of bonds upto Rs.13000
crore in next one year or till
the date of next AGM on
placement basis.
CHAPTER – IV : SHARE CAPITAL AND DEBENTURE
46 Certificate of shares. In case of the Composition of Board permits,
share certificate shall be signed by one non-
executive Director out of two Director and by
Company Secretary. Share Certificate has to be
in new format and is required to be signed by
one non-executive Director
Being complied Share Certificate in new
format as prescribed under
SH1 are being issued with
signature of one
Independent Director and
one Functional Director.
71 Debentures. Issue of Debentures, appointment of debenture-
trustee, creation of debenture- redemption
reserves and security and redemption.
Being complied In case of issue of bonds by
the Company, Compliance as
prescribed under the rules
are being made.

Section No. Section Compliance to be made Status of
Compliance
Remark Section No.
CHAPTER V: ACCEPTANCE OF DEPOSITS BY COMPANIES
73 Prohibition on
acceptance
of deposits from
public.
73 (1) On and after the
commencement of the
Companies Act, 2013, no
Company shall invite, accept or
renew deposit under this Act
from the public except in a
manner provided under Section
73.
Complied NTPC has stopped
accepting/ renewing
deposits w.e.f.
11.05.2013 under NTPC
Public Deposits Scheme.
73 Prohibition on
acceptance of
deposits from
public.
Any money paid towards
subscription to any security,
including share application
money pending allotment, if not
allotted within 60 days or not
refunded within 15 days after 60
days time, shall be treated as
deposits.
Being Complied Already being
communicated to Subs/
JVs to allot shares within
a period of 60 days from
receiving subscription
amount from NTPC
74 Repayment of
deposits, etc.,
accepted before
commencement
of this Act.
Companies having deposit on
the date of 1/4/2014 are to (a)
file return in prescribed form
with in 3 months and (b) Repay
within one year
Complied Necessary returns has
already been filed with
ROC and the leftover
deposit will be paid on
or before 31.03.2015.
CHAPTER VI REGISTRATION OF CHARGES
77 Duty to Register
Charge
Duty of every Company to
register charge within 30 days
Being Complied

CHAPTER VII MANAGEMENT AND ADMINISTRATION
93 Return to be filed
with
Registrar in case
promoters’
stake changes.
Intimation to ROC for any change
(increase/decrease) of 2% or more, in shareholding
position (value/volume) of promoters and top ten
shareholders
Being complied Necessary Return will be filed if there is
any change in Promoters' Shareholding.
101 Notice of Annual
General Meeting
(1) General meeting can be convened by providing
clear 21 days notice, either in writing or in
electronic mode
Being complied Notice of the 38th AGM was sent as per
the new provisions to shareholders
thorough registered post, who did not
have registered email and through email
to all other shareholders having
registered email ids .
Notice of Annual
General Meeting
(3) Notice shall be given to every member, legal
representatives, auditors and directors of the
Company
Being complied Notice of the 38th AGM eas sent to all
auditors, directors & shareholders.
Notice of Annual
General Meeting
The notice of the meeting shall be given by speed
post or registered post or through electronic mode
.
Being complied Notice of the 38th AGM & Postal Ballot
was sent as per the new provisions to
shareholders thorough registered post.
103 Quorum for the
meeting
Quorum is based on the number of the members
of the Company
Being complied Quorum for the 38th AGM was as per the
requirement of New Act.
105 Proxies Proxy shall have no right to speak or vote except
on poll and one person not to be proxy for
members exceeding 50 in numbers or holding not
more than 10% of shareholding of the Company
Being complied Necessary instruction in this regard was
the printed in the notice of the AGM.
107 Voting by show of
hands
At any general meeting, a resolution put to the
vote of the meeting shall, unless a poll is
demanded under section 109 or the voting is
carried out electronically, be decided on a show of
hands.
Being complied No decision by show of hands at AGM , in
view of circular 20/2014 dated
17.06.2014 as the Company has opted e-
voting for AGM resolutions

Section
No.
Section Compliance to be made Status of
Compliance
Remark
108 Voting through electronic
means.
The Central Government may prescribe the
class or classes of companies and
manner in which a member may exercise his
right to vote by the electronic means.
Being complied The company is providing e-voting
facility to its members. In respect
of 38th AGM & postal ballots
necessary e-voting platform was
made available to all shareholders.
110 Postal ballot Certain items should be transacted only by
means of Postal Ballot.
Being complied In order to increase the borrowing
powers of the Company from
100000 crore to Rs. 150000 Crore
and to create charge on property
approval of shareholders were
taken through postal ballot.
118 Minutes of proceedings of
general meeting, meeting of
Board of Directors and other
meeting and resolutions
passed by postal ballot
Every company shall cause minutes of the
proceedings of every general meeting of any
class of shareholders or creditors, and every
resolution passed by postal ballot and every
meeting of its Board of Directors or of every
committee of the Board, to be prepared and
signed in such manner as may be prescribed
and kept within thirty days of the conclusion
of every such meeting concerned, or passing
of resolution by postal ballot in books kept for
that purpose with their pages consecutively
numbered.
to be complied Existing Secretarial Standard has
not been notified by the Central
Government. In absence of
notification regarding Secretarial
Standard, Minutes are made as
per the Companies Act, 2013.
120 Maintenance and inspection
of documents in electronic
form.
Document, record, register, minutes,
etc.,required to be kept by a company are
required to be maintained in electronic form.
to be complied As per the Clarification issued by
MCA, maintenance of documents
in electronic form is not
mandatory no. However, feasibility
of maintenance of documents in
electronic form is being prepared

Compliance
Remark
CHAPTER IX ACCOUNTS OF COMPANIES
129 Financial statement Financial Statement to be in form as prescribed under
Schedule- II
Being complied In view of circular 08/2014
dated 04.04.2014, Financial
Statements and Auditors
Report for the year 2013-
14 were prepared in the
formats as prescribed in
the Companies Act, 1956.
134 Financial
statement, Board's
report etc.
In director responsibility statement two additional
statements are required to be given : (i) adequacy of
internal financial control system and (ii) compliance of
all laws
Being complied In view of circular 08/2014
dated 04.04.2014,
Directors Report and its
Annexure for the year
2013-14 were prepared as
per the Companies Act,
1956.
135 Corporate Social
Responsibility
As per Section 135 (1) every company having net
worth of rupees five hundred crore or more, or
turnover of rupees one thousand crore or more or a
net profit of rupees five crore or more during any
financial year constitute a Corporate Social
Responsibility Committee of the Board consisting of
three or more directors, out of which at least one
director shall be an independent director.
Further the Board of every company referred to in
sub-section (1), shall ensure that the company spends,
in every financial year, at least two percent of the
average net profits of the company made during the
three immediately preceding financial years, in
pursuance of its Corporate Social Responsibility Policy.
Being complied CSR and SD committee
has been reconstituted
inline with New Companies
Act and 2% of profit every
year is proposed to be
spent on CSR.

Compliance
Remark
138 Internal audit 1) Such class or classes of companies as may be
prescribed shall appoint chartered accountant or
a cost accountant, or such other professional as
may be decided by the Board to conduct internal
audit of the functions and activities of the
company.
2) The Central Government may, by rules,
prescribe the manner and intervals in which the
internal audit shall be conducted and reported to
the Board.
Being complied The Company has separate
Internal Audit Department which
comprises Chartered Accountants
as well as Cost Accountants to
conduct Internal Audit at
Corporate. For NTPC Projects /
Stations, as per the revised
procedure approved in 407th
Board Meeting, NTPC has
empanelled Chartered / Cost
Accountants for internsl Audit.
CHAPTER X AUDIT AND AUDITOR
144 Auditors not to
render certain
services
Certain services shall not be rendered whether directly or
indirectly by the Auditors to the company or its holding
company or subsidiary company,
Being complied
146 Auditor to attend
general meeting
Auditors/ Authorised Representatives to attend the AGM
unless exempted by the Company
Being complied AGM held on 27.08.2014
was attended by the
Auditors
148 Central Government
to specify audit of
items of cost in
respect of certain
companies
The remuneration recommended by the Audit Committee
under (i) shall be considered and approved by the Board
of Directors and ratified subsequently by the
shareholders
Being complied Approval of Shareholders
was taken for
remuneration payable to
the Cost Auditors for the
2014-15 at the AGM held
on 27/8/2014.

Section
No.
Section Compliance to be made Status of
Compliance
Remark
CHAPTER XI : APPOINTMENT AND QUALIFICATION OF DIRECTORS
149 Company to have
Board of Directors
(1) Following class of companies shall have woman
director:
‐ every listed company;
‐ Other public company having paid‐up share capital
of Rs. 100 Crore or more;
‐ Other public company having turnover of Rs. 300
Crore or more
Being
complied
Ms Daruwalla is Woman Director on
the Board of NTPC. Further, for all
JVs and Subsidiaries, covered under
specified ceiling, NTPC has
nominated Woman Director
(3) Every company shall have at least 1 director
resident of India for a total period of not less than
182 days in previous calendar year.
Being
complied
All Directors are resident of India.
(4) Every listed public company shall have at least
one-third of the total number of directors as
independent directors and the Central Government
may prescribe the minimum number of independent
directors in case of any class or classes of public
companies.
to be
complied
Presently, position of two
independent Director is vacant. As
Independent Directors are to be
appointed by the Central
Government, Company is following
up the matter with the Central
Government.
(8) Company and Independent Director shall abide by
Schedule IV (Code for Independent Directors)
Being
complied
Code of Conduct is being modified.
(10) An Independent Director shall hold office for a
term up to five consecutive years.
Being
complied
All Directors are appointed by
Central Govt for a fixed tenure /
terms. Presently none Independent
Director has term for 5 years or
more

160 Right of persons
other than retiring
directors to stand for
directorship.
A non‐retiring director shall be eligible for
appointment as director, provided a member
nominates him at least 14 days before the
meeting and deposits Rs. 1 Lacs (refundable on
successful appointment)
Being complied Three Directors has been
appointed in AGM and in
respect of their
appointment deposit of
Rs.1 Lakh each was made
by three members.
165 Number of
directorships
‐ No person shall be a director in more than 20
companies
‐ Maximum number of public companies can be
10
Being complied
CHAPTER XII MEETINGS OF BOARD AND ITS POWERS
173 Meetings of Board (1) Minimum number of four Board Meetings
every year with not more than 120 days gap
between two meetings
Being complied
(2) Board Meeting through Video Conferencing to be Complied Holding meeting through
video conference is
optional. It will be
complied as and when
required.
(3) At least 7 days' Notice for the Board Meeting.
Notice to be delivered by hand/post/electronic
mode
Being complied NTPC , as a good
Governance Practices
under which it always send
Notice 7 days in advance
to its Directors
(3) P1 & P2‐ Meeting can be convened on a
shorter notice for urgent matters, with presence
of at least one independent director, if any
‐ In case of absence of independent director,
decision taken shall be circulated to all the
directors and shall be final only on ratification by
Being complied Shall be complied as and
when required.

177 Audit
committee
(1) Following class of companies shall have Audit Committee:
‐ all public companies having paid‐up share capital of Rs. 10
Crore or more;
‐ all public companies having turnover of Rs. 100 Crore or
more;
‐ all public companies having outstanding loan/debt/deposits
exceeding Rs. 50 Crore
Complied NTPC already have Audit
Committee.
177 Audit
committee
‐ Audit Committee shall have minimum three directors with
independent director forming majority ‐ Majority of Audit
Committee members, including Chairman, shall have ability to
read and understand financial statements
Complied Constitution of Audit
Committee is as per the
requirement of the Act.
(4) Every Audit Committee shall have specified terms of
reference
Complied The terms of reference of
Audit Committee have
been modified in
accordance with the
section 177.
(8) Composition of Audit Committee to be disclosed in the
Board Report along with recommendation of Committee, not
accepted by Board, if any
Being complied
(9) Following class of companies shall have Vigil Mechanism for
directors and employees:
‐ all public companies which accepts deposits from public
‐ all public/private companies having borrowing from banks/FI
exceeding Rs. 50 Crore
Complied NTPC has formulated
Whistle Blower Policy &
Fraud Prevention Policy.

178 Nomination
and
Remuneration
committee and
Stakeholders
relationship
Committee
(1) Following class of companies shall have
Nomination and Remuneration Committee:
‐ all public companies having paid‐up share
capital of Rs. 10 Crore or more;
‐ all public companies having turnover of Rs. 100
Crore or more;
‐ all public companies having outstanding
loan/debt/deposits exceeding Rs. 50 Crore
Complied NTPC has already constituted a
Remuneration Committee.
However, since Directors of the
Company are appointed by the
Central Govt, the Company along
with other PSUs have
approached DPE for exemption.
A notification in this regard is
awaited.
Nomination and Remuneration Committee shall
consists of three or more non‐executive
directors, with not less than one‐ half shall be
independent
‐ Chairperson (ED/NED) of the Company may join
as member but not as Chairman of the
Committee
Complied As above
(5) Every Company having more than 1000
shareholders/security holders shall constitute a
Stakeholder Relationship Committee, with a
Non‐Executive Director as Chairman and such
other member as decided by Board
Complied Shareholder Grievance
Committee has been renamed as
Stakeholders Relationship
Committee and also its terms of
reference have been amended as
per Section 178 (5).
179 Powers of the
Board
Board to exercise certain powers by a resolution
at its meeting only
Being Complied List of items appearing in Section
179 which requires approval in
the Board meeting are strictly
observed by the Company.

180 Restriction on
powers of the Board
Board to exercise following powers only
with prior approval of shareholders by
Special Resolution:
‐ Sell, Lease or dispose‐off Undertaking
or substantial the whole of Undertaking;
‐ To invest otherwise in trust securities;
‐ To borrow money in excess of paid‐up
capital and free reserves;
‐ To give time to director for re‐payment
of debt
Being Complied Approval of Shareholders for
borrowing in excess of paid up share
capital & free reserve up to 1.5 lakh
crore was taken through postal ballot
.
185 Loan to directors, etc (1) Unless specifically provided, no
Company shall, directly or indirectly,
advance any loan/guarantee or security
in connection with loan, to any director
or any other person in which such
director is interested
Being complied
188 Related party
transactions
No company shall enter into any
contract or arrangement with any
Related Party without prior approval of
the Board of Directors and
shareholders.
Exception:
‐ Ordinary Course of Business; and
‐ Arms' Length
to be complied Policy regarding Related party
transaction with Subsidiary & joint
ventures & director, if any, is being
prepared. Necessary guidelines has
already been issued to all projects,
station, Jvs & Subsidiarries in this
regard. A policy for dealing with
Related Party Transactions are being
prepared.

197 Overall maximum
managerial
remuneration and
managerial
remuneration in case of
absence or inadequacy
(5) Sitting Fees can be paid to any Director for
attending meeting of Board or Committee thereof or
for any other purpose as may be decided by the Board
‐ Sitting Fees shall not exceed Rs. 1 Lac per meeting
Being complied Sitting fee of Rs. 20000/- is
paid for attending meeting
to Independent Director.
As per provisions of AOA
any increase in Sitting fee
requires approval of MOP.
DPE is expected to issue a
clarification in this regard.
(12) Every Listed Company to disclose the ratio of
remuneration of directors to median salary of
employee
‐ Disclosures shall also include particulars mentioned
in Rules
to be complied Necessary disclosure shall
be made in the Directors'
Report for the F/Y 2014-
15.
203 Appointment of key
managerial personnel
(1) Every Listed Company and Public Companies
having paid‐up share capital of Rs. 10 Crore or more
shall have following whole‐time KMP:
‐ MD or CEO or Manager or in their absence WTD;
‐ CS;
‐ CFO
Complied
(2) Every KMP shall be appointed by Board Resolution
containing terms and conditions of the appointment,
including remuneration
Being Complied

204 Secretarial audit read with section 179- Every Listed
Company and Public Companies
having:
‐ Paid‐up capital of Rs. 50 Crore or
more;
‐ Turnover of Rs. 250 Crore or more
shall have Secretarial Report from
PCS in Form MR‐3, annexed to Board
Report. Secretarial Auditor shall be
appointed by Board.
to be complied
CHAPTER XIV TO CHAPTER XXII
Not applicable as of now
CHAPTER XXIII : GOVERNMENT COMPANIES
394 Annual reports on
Government companies
Where the Central Government is a
member of a Govt. company the
annual report of such company shall
be placed in the Parliament together
with copy of the Audit report and
C&AG comment.
Being complied Annual Report of the
Company are laid before
the Parliament.

Companies act 2013.

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