A Brief Overview of Section 117 (3) of CA, 2013

RESOLUTIONS AND AGREEMENTS TO BE FILED AS PER SECTION 117 SUB SECTION (3)

CS D HEM SENTHIL RAJ AND CS K VINOTH

Preamble:

The Companies Act, 2013 read with the rules imposes both on public and private limited to register certain set of      resolutions with the Registrar of Companies within 30 days of passing the resolution in Board/General Meeting as                   an attachment with the e-form MGT – 14 as the case may be.

Here we have reproduced the content of both CA, 2013 and the respective rules for the purpose of better understanding.

RESOLUTIONS AND AGREEMENTS TO BE FILED AS PER SECTION 117 SUB SECTION (3)

a)	Special Resolutions
b)	Resolutions which have been agreed to by all the members of a company, but which, if not so agreed to, would not have been effective for their purpose unless they had been passed as special resolutions;
c)	Any resolution of the Board of Directors of a Company or agreement executed by a Company, relating to the appointment, re-appointment or renewal of the appointment, or variation of the terms of appointment, of a managing director;
d)	Resolutions or agreements which have been agreed to by any class of members but which, if not so agreed to, would not have been effective for their propose unless they had been passed by a specified majority or otherwise in some particular manner; and all resolutions or agreements which effectively bind such class of members though not agreed to by all those members;
e)	Resolutions passed by a Company according consent to the exercise by its Board of Directors of any of the power under clause (a) and clause (c) if subsection (1) of Section 180.
f)	Resolutions requiring a Company to be wound up voluntarily passed in pursuance of section 304.
g)	Resolutions passed in pursuance of sub section (3) of section 179; and
h)	Any other resolution or agreement as may be prescribed and placed in the public domain.

Items as prescribed under Section 179 sub section (3):

a)	To make calls on shareholders in respect of money unpaid on their shares;
b)	To authorize 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.

Any other matters as prescribed under Chapter 11 – Meeting of Board and its powers – Section 179 - Rule 8:

1)	To make political contributions;
2)	To appoint or remove key managerial personnel (KMP);
3)	To take note of appointment (s) or removal(s) of one level below the Key Management Personnel;
4)	To appoint internal auditors and secretarial auditor;
5)	To take note of the disclosure of director’s interest and shareholding.
6)	To buy, sell investments held by the company (other than trade investments), constituting five percent or more of the paid up share capital and free reserves of the investee company;
7)	To invite or accept or renew public deposits and related matters;
8)	To review or change the terms and conditions of public deposit;
9)	To approve quarterly, half yearly and annual financial statements or financial results as the case may be.

Items as prescribed under Section 180 sub section (1) clause (a) & (c):

a)	To sell, lease or otherwise dispose of the whole or substantially the whole of the undertaking of the company or where the company owns more than one undertaking, of the whole or substantially the whole of any of such undertakings.
c)	To borrow money, where the money to be borrowed, together with the money already borrowed by the company will exceed aggregate of its paid up share capital and free reserves, apart from temporary loans obtained from the company’s bankers in the ordinary course of business:

Note:

 Under the erstwhile Companies Act, 1956, companies have passed an ordinary resolution for creation of charge on the assets of the company and for borrowing powers of the company. However it is mandatory that all the companies need to pass a special resolution seeking the approval of the members either at General Meeting/Postal Ballot for getting approval under Section 180(1) (c) (borrowing powers) and 180 (1)(a) under the Companies Act, 2013. However, in case of sale of the whole or substantially the whole of an undertaking of a company as specified under sub-clause (a) of sub-section (1) of section 180 can be done only by way of a postal ballot read with Postal Ballot Rules under Chapter VII of the CA, 2013.

Note: Postal Ballot is applicable only to the public limited companies that are having more than 200 members.

HIDDEN IMPLICATIONS:

We have also listed out some of the hidden implications of the section for your ready reference:

1. Subsidiaries of a Listed Company (Filing Consolidated Results with the Stock Exchange) are also required to file the      board resolutions with ROC whenever they are approving their Quarterly/Half-yearly and Annual financial statement      as the case may be in their board. 

2. Now every companies are required to place their Organisational Chart in their board for the purpose of declaring/    approving the Personnel who can be categorized under One Level below the Key Managerial Personnel.

3. Appointment (s) or removal(s) of one level below the Key Managerial Personnel are required to be placed in the board meeting/ensuing board meeting after their appointment or removal as the case may be and the same is required to be filed with the ROC. However, we are not required to file the board resolution of declaring the Personnel who are coming under one level below the Key Managerial Personnel by the Board.

4. Taking in to record of new director disclosure of interest & shareholding and any change in the Directors Disclosures are required to be filed with the Registrar of Companies.

5. Companies are not required to file the board resolution for appointment of Independent Director for an initial period of first five years and subsequent approval by the Members in the General Meeting. [However for the purpose of better compliance, it is advisable to file E-Form MGT14 for such appointment of Independent Directors in order to intimate the Registrar of Companies.]

6. Companies are not required to file the board resolution for appointment or for filling up the casual vacancy in the office of Statutory Auditor and Cost Auditor.

7. In case of Internal Auditor or Secretarial Auditor, if there is any change or casual vacancy arising in the office of Internal Auditor or Secretarial Auditor, the same needs to be approved by the board, and such board resolution needs to be filed in E-form MGT14 with the ROC.

BY

CS K VINOTH

CS D HEM SENTHIL RAJ