2(24) “company secretary” or “secretary” means a company secretary as defined in clause (c) of sub-section (1) of section 2 of the Company Secretaries Act, 1980 who is appointed by a company to perform the functions of a company secretary under this Act;

Role of Company SecretaryRole of Company Secretary

2(25) “company secretary in practice” means a company secretary who is deemed to be in practice under sub-section (2) of section 2 of the Company Secretaries Act, 1980;

in so far as it relates to the winding up of a company, means a person appointed by—

(a) the Tribunal in case of winding up by the Tribunal; or

(b) the company or creditors in case of voluntary winding up, as a Company Liquidator from a panel of professionals maintained by the Central Government under sub-section (2) of section 275;

2(23) Company Liquidator2(23) Company Liquidator

2 (38) “expert” includes an engineer, a valuer, a chartered accountant, a company secretary, a cost accountant and any other person who has the power or authority to issue a certificate in pursuance of any law for the time being in force;

* Advise on Matters to be stated in prospectus Advise on Amalgamations/ Arrangements

* Advise Company Administrator* Act as member of SFIO* Act as Mediator & Conciliator* Professional assistance to Company Liquidator* Advise on other applicable laws

(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; and(v) such other officer as may be prescribed;

2(51) “key managerial personnel”, in relation to a company, means—

2(51) “key managerial personnel”, in relation to a company, means—

(a) to report to the Board about compliance with the provisions of this Act, the rules made there under and other laws applicable to the company;

(b) to ensure that the company complies with the applicable secretarial standards;

(c) to discharge such other duties as may be prescribed.

205. FUNCTIONS OF COMPANY SECRETARY.

205. FUNCTIONS OF COMPANY SECRETARY.

Role of Company Secretaries

Annual Return :• Requirement of compliance certificate done

away with• Scope of annual return enlarged• Annual Return to be signed by Director and

Company Secretary or where there is no Company Secretary, by a Company Secretary in practice.

ROLE OF COMPANY SECRETARY

ROLE OF COMPANY SECRETARY

• Certain companies, as may be prescribed, have to appoint Company Secretary mandatorily.

• Company Secretary will be included within the definition of Key Managerial Personnel.

Appointment :

Appointment :

Company Secretary has to ensure that the Company complies with the Secretarial Standards. 205

Secretarial Standards :

Secretarial Standards :

For all the companies except One Person Companies and small companies, Annual Return has to be signed either by Company Secretary in employment or by a Company Secretary in practice.

Certification :

Certification :

409. Qualification of President and Members of Tribunal.

(a) has, for at least fifteen years been a member of the Indian Corporate Law Service or Indian Legal Service out of which at least three years shall be in the pay scale of Joint Secretary to the Government of India or equivalent or above in that service; or

(b) is, or has been, in practice as a chartered accountant for at least fifteen years; or

NATIONAL COMPANY LAW TRIBUNAL AND APPELLATE TRIBUNAL (NCLT)

NATIONAL COMPANY LAW TRIBUNAL AND APPELLATE TRIBUNAL (NCLT)

(c) is, or has been, in practice as a cost accountant for at least fifteen years; or

(d) is, or has been, in practice as a company secretary for at least fifteen years; or

(e) is a person of proven ability, integrity and standing having special knowledge and experience, of not less than fifteen years, in law, industrial finance, industrial management or administration, industrial reconstruction, investment, accountancy, labour matters, or such other disciplines related to management, conduct of affairs, revival, rehabilitation and winding up of companies; or

(f) is, or has been, for at least five years, a presiding officer of a Labour Court, Tribunal or National Tribunal constituted under the Industrial Disputes Act, 1947.

Types :

1.Financial Valuer2.Technical Valuer

REGISTERED VALUERS

REGISTERED VALUERS

Valuation of Stocks, Shares, Debentures, Securities, Goodwill

• A Chartered Accountant, Company Secretary or Cost Accountant in whole time practice

• Shall have 5 years of Post Qualification experience

Financial Valuer

Financial Valuer

• A Merchant Banker registered with SEBI and which has in employment under it CA/CS/CWA for carrying out (signing) Valuation

Internal Auditor

Section 138 of the Companies Act, 2013

Companies Act 2013

Companies Act 2013Chapter-III Chapter-III

Chapter III

Prospectus and Allotment of

Securities

Chapter III

Prospectus and Allotment of

Securities

Abridged ProspectusAbridged ProspectusS.2(1) :(notified) Abridged Prospectus means a memorandum

containing such salient features as may be specified by SEBI.S.33 (notified)Every application form issued for securities in a public

offer to be accompanied with an abridged prospectus.As per Act 1956, S.2(1) The power to specify the content of the abridged prospectus

was vested with the Central Govt.S.56 Similar requirement of issuance of an abridged prospectus in the

form as specified in Form 2A.

Prospectus Prospectus Section 2(70) (notified) defines a ‘prospectus’ to

mean ‘any document described or issued as a prospectus and includes a RHP referred to in Section 32 of the 2013 Act or shelf prospectus referred to in Section 31 of the 2013 Act or any notice, circular, advertisement or other document inviting offers from the public for the subscription or purchase of any securities of a body corporate’.

Public offer and private placement Public offer and private placement Section 23: (notified)• A public company may issue securities through three specified

modes:(a)Public offer(include IPO, FPO, or OFS to the public through a

prospectus)(b) private placement through issue of a private placement offer letter

(Sec.42) (not notified) (c) rights issue or bonus issue.• A private company may issue securities (a) by a rights issue or bonus

issue, (b) through a private placement. (not notified)

Powers of SEBI to regulate issue & transfer of securities

Powers of SEBI to regulate issue & transfer of securities

Section 24:(notified) • The administration provisions in relation

to the listed (and to be listed) companies are to be administered by SEBI, in so far as they relate to- issue and transfer of securities & - non-payment of dividend

Remarks: • Power of SEBI has been extended

Where a dividend has been declared by a company but has not been paid or the warrant in respect thereof has not been posted within thirty days from the date of declaration to any shareholder entitled to the payment of the dividend,

127. Punishment for failure to distribute dividends.

127. Punishment for failure to distribute dividends.

every director of the company shall, if he is knowingly a party to the default,

be punishable with imprisonment which may extend to two

years and with fine which shall not be less than one

thousand rupees for every day during which such default continues and the

company shall be liable to pay simple interest at the rate of eighteen per cent. per annum during the period for which such default continues:

Provided that no offence under this section shall be deemed to have been committed:—

(a) where the dividend could not be paid by reason of the operation of any law;

(b) where a shareholder has given directions to the company regarding the payment of the dividend and those directions cannot be complied with and the same has been communicated to him;

(c) where there is a dispute regarding the right to receive the dividend;

(d) where the dividend has been lawfully adjusted by the company against any sum due to it from the shareholder; or

(e) where, for any other reason, the failure to pay the dividend or to post the warrant within the period under this section was not due to any default on the part of the company.

Deemed Prospectus Deemed Prospectus Section 25(notified) & 28: • any document by which securities are offered to

public for sale, shall be considered as deemed prospectus and all the provisions which apply to Prospectus will apply to the deemed Prospectus.

• Selling shareholders may propose to offer their shares to the public, in consultation with the BOD of the company.

• Procedure for OFS has been prescribed by the CG in Draft Rules.

• Selling shareholders shall reimburse the expenses incurred by the company in undertaking the OFS.

ProspectusProspectusSection 26:• Every Prospectus issued by /on behalf of company shall be

dated and signed.• Contents of the prospectus have been listed in the section.• Source of promoters’ Contribution also needs to be disclosed.• No prospectus to be issued unless delivered to the Registrar

for registration.• Consent of expert required to be obtained.• RoC not to register the prospectus unless the requirements of

Section 26 are complied with.• No prospectus shall be valid if it is issued more than 90 days

after the date on which a copy thereof is delivered to the RoC for registration.

Variation in Objects in ProspectusVariation in Objects in ProspectusSection 27 • If a Co., having raised money from public, has not

utilized amount so raised, it shall not change its objects for which such monies were raised unless approved by way of a Special Resolution.

• Details of notice shall be published in the newspapers.• Dissenting shareholders shall be given an opportunity

to exit .• Money cannot be used for buying of listed sharesAs per Act 1956:• No explicit mechanism for changing use of the

proceeds of a public offer.

Public Offer of Securities in Dmat form Public Offer of Securities in Dmat form Section 29: (notified) • Every Co. making public offer shall issue securities

only in Dmat form.Draft Rule:Entire Promoters holding needs to be in dmat mode

only prior to the public offering. As per Act 1956 Section 68B: • IPO beyond an issue size of Rs. 10 crores was reqd.

to be of securities in dematerialized form.

Advertisement of prospectus Advertisement of prospectus

Section 30(notified) Any advertisement of a prospectus shall

contain contents of the memorandum, liability of members;

amount of share capital; names of the signatories to the memorandum; number of shares subscribed for by the signatories & the company’s capital structure.

Shelf Prospectus Shelf Prospectus Section 31(notified) • Any class of companies, as prescribed by SEBI, may

issue a shelf prospectus which shall be valid for 1 year.

• Company filing a shelf prospectus shall file, with the ROC an Information Memorandum containing all material facts relating to new changes created.

• The Draft Rules mentions that IM shall be filed with ROC within 1month prior to the issue of a second or subsequent offer of securities under the shelf prospectus.

Red Herring Prospectus Red Herring Prospectus Section 32(notified) • A company proposing to make an offer of securities

may issue a RHP prior to issue of prospectus. RHP to be filed with ROC at least 3 days prior to issue opening date.

• RHP to carry the same obligations as that of a prospectus.

• Any variations between the RHP and the prospectus to be highlighted as variations in the prospectus.

Without prejudice to any liability including repayment of any debt under this Act or any other law for the time being in force, any person who is found to be guilty of fraud, shall be punishable with imprisonment for a term which shall not be less than six months but which may extend to ten years and shall also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud:

•

447. Punishment for fraud447. Punishment for fraud

Provided that where the fraud in question involves public interest, the term of imprisonment shall not be less than three years.

(i) “fraud” in relation to affairs of a company or any body corporate, includes any act, omission, concealment of any fact or abuse of position committed by any person or any other person with the connivance in any manner, with intent to deceive, to gain undue advantage from, or to injure the interests of, the company or its shareholders or its creditors or any other person, whether or not there is any wrongful gain or wrongful loss;

Explanation.—For the purposes of this section—

Explanation.—For the purposes of this section—

(ii) “wrongful gain” means the gain by unlawful means of property to which the person gaining is not legally entitled;

(iii) “wrongful loss” means the loss by unlawful means of property to which the person losing is legally entitled.

Criminal liability for mis-statements in prospectus

Criminal liability for mis-statements in prospectus

Section 34(notified) • Criminal liability for Untrue or Misleading

statement equated with criminal liability of ‘fraud’ (u/s 447) & the liability shall be upon the person who authorizes the issue of prospectus.

• Imprisonment for a term of six months but which

may extend to ten years and also liable to fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved .

Civil liability for misstatements in prospectus

Civil liability for misstatements in prospectus

Section 35:(notified) • Civil liability shall be attracted for ‘misleading

statements’ on the director, promoter, expert(not notified) or any other authorized person.

• Remain liable to pay compensation to every person who has sustained such loss or damage.

Fraudulently inducing persons to invest Fraudulently inducing persons to invest Section 36: (notified) • Any person who makes any statement, promise or

forcast which is false or misleading induce another person to enter into any agreement

– for acquiring, disposing, subscribing, underwriting shares; or

– for securing profit to any parties from the yield of securities;

– to obtain credit facilities from any bank or financial institution

shall be liable under section 447 (Fraud).

Action by affected personsAction by affected persons

Section 37:(notified) • Person or group of persons or any

association of persons affected by any misleading statements in the prospectus may file a suit or take any other action u/s 34 or 35 or 36.

Punishment for personation for acquisition, etc. of Securities

Punishment for personation for acquisition, etc. of Securities

Section 38:(notified) • Action u/s 447 (Fraud) if any person

makes application under fictitious name, makes multiple applications in different names or otherwise induces a co. to allot or transfer securities in fictitious name.

Any person who—• (a) makes or abets making of an application in a fictitious

name for acquiring, or subscribing for, its securities; or• (b) makes or abets making of multiple applications in

different names or in different combinations of his name or surname; or

• (c) otherwise induces directly or indirectly a company to allot, or register any transfer of, securities to him, or to any other person in a fictitious name, shall be liable for action under section 447.

DisgorgementDisgorgement

The amount received through disgorgement or disposal of securities as above shall be credited to the Investor Education and Protection Fund.

Allotment of securities by CompanyAllotment of securities by CompanySection 39: (notified) Allotment of Securities in a public offering cannot be made unless •Minimum subscription, as stated n the prospectus, is received by cheque or any other instrument.•Minimum application amount cannot be less than 5% of the face value.•In case minimum subscription application money is not received within 30 days from the date of the issue of prospectus, application money received must be returned, as prescribed.

Securities to be dealt with in stock exchanges

Securities to be dealt with in stock exchanges

Section 40: (notified) •Every Company making public offer will make application to one or more stock exchange(s) and obtain permission for securities to be dealt with in such stock exchanges.

•All monies received on application from the public for subscription to be kept in a separate bank account in a scheduled bank.

Global Depository Receipt (GDR)Global Depository Receipt (GDR)Section 2(44):(notified) GDR means any instrument in the form of a depository receipt, by whatever name called , created by a foreign depository outside India & authorized by a co. making an issue of such depository receipts. Section 41: Company may issue depository receipts in any foreign country after passing a special resolution in its general meeting and subject to such conditions as may be prescribed.

Private PlacementPrivate PlacementSection 42: •Co. may make private placement of securities through private placement offer letter.•Private Placement offer can be made to maximum 50 persons or such higher numbers (200 as per draft rules) of persons in FY (excluding QIBs and ESOP)•Private Placement offer made to more than prescribed number of persons will be treated as public offer.Private placement means any offer of securities to a select group of persons by a co. (other than by way of public offer) through issue of a private placement offer letter and which satisfies the conditions specified in this section.

Private PlacementPrivate PlacementSection 42: •No fresh private placement unless allotment in respect of previous private placement has been made.•All payments under the private placement to be made through banking channel and not by cash.•Private Placement application money to be kept in a separate bank account in a scheduled bank till allotment.•Allotment to be made within 60 days. If allotment is not made, the application money to be refunded within 15 days from 60th day failing which interest to be paid @ 12%.

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