CORPORATE LAWS

1 FINALSTUDY NOTESFINAL : PAPER -13 CORPORATE LAWS & COMPLIANCEThe Institute of Cost Accountants of IndiaCMA Bhawan, 12, Sudder Street, Kolkata - 700 016 SYLLABUS - 2016 First Edition : August 2016 Reprint : April 2017 Revised Edition : January 2018 Revised Edition : December 2018 Edition : August 2019 Reprint : January 2020 Revised Edition : October 2020 Reprint : April 2021 Published by :Directorate of StudiesThe Institute of Cost Accountants of India (ICAI)CMA Bhawan, 12, Sudder Street, Kolkata - 700 at :M/s. Aravali Printers & Publishers (P) , Okhla Industrial Area, Phase - IINew Delhi - 110 of these Study Notes is reserved by the Institute of Cost Accountants of India and prior permission from the Institute is necessary for reproduction of the whole or any part - 2016 PAPER 13: CORPORATE LAWS & COMPLIANCES yllabus StructureACompanies Act60%The Companies Act, 2013 50%Insolvency & Bankruptcy Code, 2016 10%BOther CORPORATE Laws25%CCorporate Governance15%A60%C15%B 25%ASSESSMENT STRATEGYT here will be examination of three gain an expert knowledge of CORPORATE functions in the context of Companies Act & related CORPORATE Laws.

2 To be able to assess whether strategies and the organization is in compliance with established regulatory framework, and CORPORATE AimsThe syllabus aims to test the student s ability to: Understand the principles of CORPORATE Laws relevant for compliance and decision-making Analyze and interpret the impact of allied laws Evaluate the essence of CORPORATE Governance for effective implementation Demonstrate the role of a CORPORATE in socio-economic developmentSkill set requiredLevel C: Requiring skill levels of knowledge, comprehension, application, analysis, synthesis and : Subjects related to applicable statutes shall be read with amendments made from time to A : Companies Act1. The Companies Act, 201350% Insolvency and Bankrupcy Code, 2016 (Annexure 1)10%Section B: Other CORPORATE Laws25%2. SEBI laws and Regulation3.

3 The Competition Act, 2002 and its role in CORPORATE Governance4. Foreign Exchange Management Act, 1999 5. Laws related to Banking Sector 6. Laws related to Insurance Sector Section C: CORPORATE Governance15%7. CORPORATE Governance8. Social, Environmental and Economic Responsibilities of Business SECTION A : COMPANIES ACT 2013 [60 MARKS]1. The Companies Act, 2013 rules, regulations prescribed there under with special reference to:(a) Company Formation and Conversion (i) Incorporation of private companies, public companies, company limited by guarantee and unlimited companies and their conversions/reconversion/re-registration (ii) Nidhi Companies, Mutual Benefit Funds and Producer Companies concept, formation, membership, functioning, Dissolution (iii) Formation of Not-for-Profit making companies (iv) Procedure relating to Foreign Companies Carrying on Business in India (v) Conversion of LLPs into Private Limited Companies and vice versa(b) Investment and Loans (i) Procedure for inter- CORPORATE loans, investments, giving off guarantee and security (ii) Acceptance of deposits, renewal, repayment, default and remedies (c) Dividends (i) Profits and ascertainment of divisible profits (ii) Declaration and payment of dividend (iii)

4 Unpaid and unclaimed dividend - treatment and transfer to Investor Education and Protection Fund(d) Accounts and Audit (i) Maintenance of Books of Accounts (ii) Statutory Auditor, Special Auditor and Cost Auditor - Appointment, resignation, removal, qualification, disqualification, rights, duties and liabilities (iii) Companies Auditor Report Order (CARO) Rules (e) Board of Directors & Managerial Personnel (i) Directors and Managerial Personnel - Appointment, Reappointment, Resignation, Removal (ii) Payment of remuneration to Directors and restrictions on the powers of Directors (iii) Powers of Board of Directors and Restrictions on the powers of Directors (iv) Obtaining DIN (v) Compensation for loss of office (vi) Waiver of recovery of remuneration (vii) Making loans to Directors, Disclosure of interest of a Director, Holding of office or Place of Profit by a Director/Relative(f) Board Meetings and Procedures (i) Board Meetings, Minutes and Registers (ii) Powers of the Boards (iii) CORPORATE Governance & Audit Committee (iv) Duties & Liabilities of Directors and (v) Power related to political contributions (g) Inspection, Inquiry and investigation (h) Compromises, arrangements and amalgamations(i) Prevention of oppression and mis-management (i) Majority Rule but Minority Protection (ii) Prevention of Oppression and Mis-management(j) Revival and Rehabilitation of Sick Industrial Companies(k) CORPORATE Winding Up and Dissolution (i) Kinds of Winding up - Powers of the Court and Official Liquidator(l) Companies Incorporated outside India(m)

5 Offences and Penalties(n) National Company Law Tribunal and Special Courts Insolvency and Bankruptcy Code, 2016 (Annexure 1)(a) An introduction(b) CORPORATE Insolvency Resolution Process(c) Liquidation of a CORPORATE PersonSECTION B : OTHER CORPORATE LAWS [25 MARKS]2. SEBI Laws and Regulations(a) The Securities Exchange Board of India Act, 1992 - Rules, Regulations and Guidelines issued there under Clause 49 and SEBI (Issue of Capital and Disclosures Reguations), 2009(b) The Securities Contracts (Reguation) Act, 19563. The Competition Act, 2002(a) Competition Meaning, objectives, extent and applicability(b) Competition Commission of India(c) Areas affecting competition4. Foreign Exchange Management Act, 1999(a) Exports, Imports and Foreign Funds under Deferred Payment, ECB Route, Loans and Export Remittance and Import Remittance5.

6 Laws related to Banking Sector: (a) The Banking Regulation Act, 1949(b) The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002(c) The Prevention of Money Laundering Act, 2002 Role of Cost Accountants in Anti-Money Laundering (AML) Audits to check tax evasion and transfer of funds6. Laws related to Insurance Sector: (a) The Insurance Act, 1938(b) The Insurance Regulatory and Development Authority Act, 1999 SECTION C : CORPORATE GOVERNANCE [15 MARKS]7. CORPORATE Governance(a) Overview-Issues and Concepts(b) CORPORATE Governance Practices/Codes in India(c) CORPORATE Governance in family business(d) CORPORATE Governance in state-owned business the MOU system8. Social, Environmental and Economic Responsibilities of Business.(a) National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business(b) CORPORATE Social Responsibility Nature of activities.

7 Evaluation of CSR projects(c) E-governanceSECTION A - COMPANIES ACTS tudy Note 1 : The Companies Act, 2013 Part A: COMPANY FORMATION AND CONVERSIONA : Incorporation of private companies, public companies, company limited by guarantee and unlimited companies and their conversions/reconversion/re-registration 1 A : Nidhi Companies, Mutual Benefit Funds and Producer Companies - concept, formation, membership, functioning, Dissolution 23A : Formation of Not-for-Profit making companies 32A : Procedure relating to Foreign Companies Carrying on Business in India 35A : Conversion of LLPs into Private Limited Companies and vice versa 38 Part B: INVESTMENT AND LOANSB : Procedure for inter- CORPORATE loans, investments, giving off guarantee and security 41B : Acceptance of deposits, renewal, repayment, default and remedies 43 Part C: DIVIDENDSC : Profits and ascertainment of divisible profits 51 C : Declaration and payment of dividend 51C : Unpaid and unclaimed dividend - Treatment and transfer to Investor Education and Protection Fund 54 Part D: ACCOUNTS AND AUDITD : Maintenance of Books of Accounts 57D : Statutory Auditor, Special Auditor and Cost Auditor - Appointment, resignation, removal, qualification, disqualification, rights, duties and liabilities 70D : Company Auditor Report Order (CARO) 83 Part E: BOARD OF DIRECTORS & MANAGERIAL PERSONNELE : Directors and Managerial Personnel - Appointment, Reappointment, Resignation, Removal 89 E.

8 Payment of remuneration to Directors and Managerial Personnel and Disclosure 102 E : Powers of Board of Directors and Restrictions on the Powers of Directors 110E : Obtaining DIN 112E : Compensation for Loss of office 116E : Waiver of recovery of Remuneration 117 ContentsE : Making loans to Directors, Disclosure of Interest of a Director, Holding of office or Place of Profit by a Director/Relative 117E : Interested Directors 122 Part F: BOARD MEETINGS AND PROCEDURESF : Board Meetings, Minutes and Registers 125F : Powers of the Board 134F : CORPORATE Governance & Audit Committee 137F : Nomination and Remuneration Committee 143F : Stakeholders Relationship Committee 144F : CORPORATE Social Responsibility Committee 145F : Duties and Liabilities of Directors 145F : Powers related to Political Contributions 147 Part G: INSPECTION, INQUIRY AND INVESTIGATIONG : Power to call for information, inspect books and conduct inquiries 152G : Conduct of inspection and inquiry 154G : Report on inspection made 154G : Search and seizure 155G : investigation into affairs of Company 156G : Establishment of serious fraud investigation office (SFIO) 156G : investigation into affairs of Company by SFIO 157G : investigation into Company s affairs in other cases 159G : Security for payment of costs and expenses of investigation 160G : Firm, body CORPORATE or association not to be appointed as Inspector 160G : investigation of ownership of company 160G : Procedure, powers, etc.

9 , of Inspectors 160G : Protection of employees during investigation 162G : Power of Inspector to conduct investigation into affairs of related companies, etc. 163G : Seizure of documents by Inspector 164G : Freezing of assets of Company on inquiry and investigation 164G : Imposition of restrictions upon securities 164G : Inspector s report 165G : Actions to be taken in pursuance of Inspector s report 165G : Expenses of investigation 166G : Voluntary winding up of company, etc., not to stop investigation proceedings 166G : Legal advisers and bankers not to disclose certain information 167G : investigation etc. of foreign companies 167G Penalty for furnishing false statement, mutilation, destruction of document 167 Part H: COMPROMISES, ARRANGEMENTS AND AMALGAMATIONSH : Power to compromise or make arrangements with creditors and members 170H : Power of Tribunal to enforce compromise or arrangement 173H : Merger and amalgamation of companies 173H : Merger and amalgamation of certain companies 176H : Merger or amalgamation of company with foreign company 179H : Power to acquire shares of shareholders dissenting from scheme or contract approved by majority 179H : Purchase of minority shareholding 179H : Power of Central Government to provide for amalgamation of companies in public interest 180H : Registration of offer of schemes involving transfer of shares 180H.

10 Preservation of books and papers of amalgamated companies 181H : Liability of officers in respect of offences committed prior to merger, amalgamation, etc 181 Part I: PREVENTION OF OPPRESSION AND MISMANAGEMENTI : Majority Rule but Minority Protection 183I : Prevention of Oppression and Mismanagement 186 Part J: REVIVAL AND REHABILITATION OF SICK INDUSTRIAL COMPANIESJ : Determination of sickness 193J : Application for revival and rehabilitation 193J : Exclusion of certain time in computing period of limitation 193J : Appointment of interim administrator 193J : Committee of creditors 193J : Order of Tribunal 193J : Appointment of administrator 193J : Powers and duties of company administrator 193J : Scheme of revival and rehabilitation 193J : Sanction of scheme 193J : Scheme to be binding 193J : Implementation of scheme 193J : Winding up of company on report of company administrator 193 These provisions are no longer applicable.