CS Chandni Gupta
The Companies Act, 2013, became effective from 01st April, 2014. After the commencement of this Act, numerous resolutions are required to be filed in e-form MGT-14 with the Registrar. Though the requirement to file e-form MGT-14 was applicable to all companies but after coming ample of amendments the list of resolutions for filing of e-form MGT-14 has been reduced to certain extent for certain companies. Private companies got numerous exemptions comparatively Listed/Public companies.
This Article is an attempt to reach out to the conclusive list of resolutions together with amendments for which e-form MGT-14 is required to file.
|117||All companies||As per section 117 (1) e-form MGT-14 is required to be filed for the matters which has been specified in sub-section (3) of section 117 are as enumerated:
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 purpose 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 powers under clause (a) and clause (c) of sub-section (1) of section 180;
clause (a) of section 180 (1):
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.
clause (c) of section 180 (1):
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.
For above purposes mentioned above in section 180 (1), if the company has taken approval of board then it has to file e-form MGT-14.
Important Note: The Companies (Amendment) Bill, 2016, which has been introduced in the Lok Sabha dated 16th March, 2016 to further amend the Companies Act, 2013, yet not effective, has proposed that clause e of sub-section 3 of section 117 shall be omitted.
Therefore, after the effectiveness of Companies (Amendment) Bill, 2016, no need to file e-form MGT-14 for the purpose of consent taken by its Board of Directors under section 180 (1) (a) & (c).
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
Note: The Companies (Amendment) Bill, 2016 has proposed in clause (g), of sub-section (3) of section 117 in the proviso, the word “and” shall be omitted and the following proviso shall be inserted, namely:—
Provided further that nothing contained in this clause shall apply to a banking company in respect of a resolution passed to grant loans, or give guarantee or provide security in respect of loans under clause (f) of sub-section (3) of section 179 in the ordinary course of its business; and
h) any other resolution or agreement as may be prescribed and placed in the public domain.
|179(3)||Listed/Public Companies||The Board of Directors of a company shall exercise the following powers on behalf of the company by means of resolutions passed at meetings of the Board, for which MGT-14 is required to be filed, Namely–
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. (here, any other matter means, matters which has been specified under Rule 8 of Companies (Meetings of Board and its Powers) Rules,2014)
Note: The Private Companies got exemption w.e.f 05/06/2015 vide MCA Notification from the requirement to file e-form MGT-14 for the matters specified under section 179(3) read with rule 8 of Companies (Meetings of Board and its Powers) Rules,2014.
|Rule 8 Companies (Meetings of Board and its Powers) Rules,2014||Listed/Public Companies||In addition to the powers specified under sub-section (3) of section 179 of the Act, the following powers shall also be exercised by the Board of Directors, for which e-form MGT-14 is required to be file:
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.
The strike-out matters mentioned above has been omitted from the requirement of filing e-form MGT-14 vide MCA notification w.e.f 18/03/2015, applicable to all companies.
Language of the notification, dated 18/03/2015:
In the Companies (Meetings of Board and its powers) Rules, 2014, in rule 8, Item numbers (3), (5), (6), (7), (8) and (9) and the entries relating thereto shall be omitted.
Further, Private companies exempted for filing of e-form MGT-14 to all the above mentioned items specified under Rule 8 as per MCA vide notification dated 05/06/2015.
Language of the notification, dated 05/06/2015:
Chapter VII, clause (g) of sub-section (3) of section 117 shall not apply.
Inclusive list of some items for which Special Resolution is required to be passed are as enumerated–
|Sections of Companies Act, 2013||Particulars|
|5||Entrenchment of articles|
|12(5)||Change of the registered office outside the limit of the city/town/village where the registered office is situated|
|13(1)||Alteration in Memorandum of Association except in case of change in name, registered office or object clause|
|13 (1) read with section 12||Alteration in memorandum for change in registered office|
|13 (1) read with section 4||Alteration in memorandum for change in name|
|13 (1) read with sub section (9)||Alteration in object clause|
|14(1)||Alteration of Articles|
|14(1) read with 13(1)||Conversion from public to private company|
|14(1) read with 13(1)||Conversion from private to public company|
|54(1)||Issue of sweat equity shares|
|62(1)(b)||Issue of further shares to employees under a scheme of employees’ stock option|
|62(1)(c)||Issue further shares to persons (whether or not including existing shareholders or employees)|
|67(3)(b)||Approval of scheme for providing financial assistance for purchase of its own shares|
|68(2)(b)||Purchase the company’s own shares or specified securities|
|71(1)||Issue of debentures with an option to convert such debentures into shares|
|149(1)||Appointment of more than fifteen directors|
|149(9)||Reappointment of Independent director after a term of 5 consecutive years|
|165(2)||Lesser number of directorships|
|248(2)||Application to Registrar to remove name of company from register of companies|
|371(3)(a)||To adopt table F in schedule I|
|27(1)||Variation in terms of Contract referred to in the prospectus or objects for which the prospectus was issued|
|94(1)||Registers and returns to be kept at a place other than where registered office is situated|
|140(1)||Removal of auditor before the expiry of his term|
|180(1)(a)||Sell, lease or otherwise disposal of the whole, or substantially the whole, of the undertaking|
|180(1)(c)||Moneys to be borrowed including moneys already borrowed exceed sum of paid up capital and free reserves|
|185(1)(a)(ii)||Approval of scheme to give any loan to a managing director or a wholetime director.
Note: After notification of Companies Amendment bill, 2016, this section will be 185(3)(a)(ii)
|186(3)||Inter corporate loans and investments or guarantee or security in excess of the prescribed limits|
|13(8)||Change in objects of the company in case company has unutilised amount of money raised through issue of prospectus|
|41||Issue of Global Depository Receipts in any foreign country|
|180(1)(d)||Remit or give time for repayment of any debt due from a director|
|180(1)(b)||Invest otherwise in trust securities the amount of compensation received by it as a result of any merger or amalgamation|
Consequences for not filing MGT-14:
Sub-section(2) of section 117-
If a company fails to file the resolution or the agreement under subsection (1) of section 117 in respect of matters specified in sub-section (3), before the expiry of the period specified under section 403 with additional fee, the company shall be punishable with fine which shall not be less than five lakh rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default, including liquidator of the company, if any, shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.
The Companies (Amendment) Bill, 2016 proposed some amendments in Sub-section(2) of section 117- are as follows:
In section 117 of the principal Act,—
in sub-section (2),—
for the words “not be less than five lakh rupees”, the words “not be less than one lakh rupees” shall be substituted;
for the words “one lakh rupees”, the words “fifty thousand rupees” shall be substituted;
Disclaimer: Due diligence has been done to ensure accuracy and correctness of this article. The Author is not responsible for any harm, penalty that may be caused on the basis of the above article.
Author: CS Chandni Gupta, can be contacted at [email protected]