Audit Committee is one of the main pillars of the corporate governance mechanism in any company. The Committee is charged with the principal oversight of financial reporting and disclosure and aims to enhance the confidence in the integrity of the company’s financial reporting, the internal control processes and procedures and the risk management systems.The constitution […]
The Duties and Responsibilities can be broadly classified into two categories: Duties of Directors under Section 166 of the Companies Act, 2013: The following duties of the directors have been provided under Section 166 of the Companies Act, 2013 and apply to all types of directors including Independent Directors. Powers of the Board In terms […]
Board composition is one of the most important determinants of board effectiveness. Beyond the legal requirement of minimum directors, a board should have a judicious mix of internal and independent directors with a variety of experience and core competence. The potential competitive advantage of a Board structure comprising executive directors and independent non-executive directors lies […]
Director Disqualifications: Under company law, a director can be disqualified for any of the following reasons: Effects of Disqualification: Once disqualified, a person is ineligible for directorship in the affected company or any other for five years. The Ministry of Corporate Affairs strictly enforces these provisions, publishing disqualified directors’ names on the government website. Remedies […]
Applicability of Woman Director: According to Section 149(1) of the Companies Act, 2013, certain companies are mandated to have at least one woman director on their board. Rule 3 further specifies that the following companies must appoint a woman director: The appointment must be made within six months of meeting the specified criteria. The woman […]
As per the Companies Act, 2013, directors can be classified into different types based on their roles, functions, and relationships with the company. Here are the main types of directors under the Companies Act, 2013: 1. Executive Director (Section 2(18)): 2. Non-Executive Director (Section 2(28)): 3. Independent Director (Section 149(6)): 4. Woman Director (Section 149(1)): […]
The issue of bonus shares is a corporate action wherein a company distributes additional shares to its existing shareholders without receiving any additional payment. Bonus shares are issued in proportion to the existing shareholding, and they are typically allotted to shareholders free of charge. The issuance of bonus shares is governed by the Companies Act, […]
An Information Memorandum (IM) is a comprehensive document prepared by a company or its financial advisors to provide detailed information about the business, its operations, financial performance, and prospects. It is often used in various financial transactions such as mergers and acquisitions, private placements, and initial public offerings (IPOs). The purpose of an Information Memorandum […]
Employee Stock Option Scheme (ESOP) is a popular and widely used mechanism by companies to attract, retain, and motivate employees by providing them with an ownership stake in the company. ESOPs are regulated by the Securities and Exchange Board of India (SEBI) and are governed by the SEBI (Share Based Employee Benefits) Regulations, 2014. Regulatory […]
Book building is a process used in capital markets for price discovery and efficient allocation of securities during an initial public offering (IPO) or other securities issuance. The Companies Act of 2013 in India, along with the Securities and Exchange Board of India (SEBI) regulations, governs the procedure of book building. Let’s elaborate on the […]