1. 1 Board Process 7 th February, 2015 © Savithri Parekh

2. Table of Contents:- Board of Directors Meetings Quorum physical meting Vs through video conferencing Circular resolution actions not invalidated due to defect in appointment Constitution of board falling below statutory minimum

3. THE BOARD (Section 149) The Board shall consist of individuals A public company shall have minimum three directors and private company two. All companies may have maximum fifteen directors. However, a company may appoint more than fifteen directors after passing a special resolution.

4. Liability: An independent director shall be held liable only in respect of such acts of omission or commission by a company which had occurred with his knowledge or connivance or for failure to exercise due diligence in such acts {Section149(12)}

5. 5 Board Procedures:- a) Exercise of powers by the Board b) Rules relating to conduct of Board Meetings c) Powers of the Board

6. 6 Board Meetings (a) Notice (b) Gap between Board Meetings (c) First Board Meeting (d) Video conferencing permitted (e) Resolutions to be passed (i) at Board Meeting (ii) by Circulation

7. 7 Continued... (i) Quorum (ii) Related party vs Interested director

8. 8 Committees Audit Committee Nomination and Remuneration Committee Stakeholders & Relationship Committee CSR Committee

9. 9 Powers of the Board (Section 179) Additions in this Section :- (a) Proviso to subsection (1) – Provided that in exercising such power or doing such act or thing, the Board shall be subject to the provisions contained in that behalf in this Act, or in the Memorandum or Articles or in any regulations not inconsistent therewith and duly made thereunder including regulations made by the Company in general meeting. (b) Proviso to subsection(1)- Provided further that the Board shall not exercise any power, or do any act or thing, which is directed or required whether under this Act or by the memorandum or Articles of the Company or otherwise to be exercised or done by the Company in the General Meeting. (c) Subsection (2) - No regulation made by the Company in general meeting shall invalidate any prior Act of the Board which would have been valid if the regulation had not been made.

10. 10 Continued... ( d)Following are the additional powers which the Board can exercise under Section-179, vis-a-vis Section 292 of Companies Act, 1956 : (i)To issue securities including Debentures whether in India or outside India. (ii)To borrow monies (“otherwise then on debentures” has been removed) (iii)To grant loans or give guarantees or provide security in respect of loans. (iv) To approve financial statements and Board's report. (v) To diversify the business of the Company (vi) To approve amalgamation, merger or reconstruction (vii)To takeover a Company, or acquire a controlling or substantial stake in another Company.

11. 11 Continued... (viii) As per the Rule 8 (Chapter XII), following additional powers can be exercised by the Board only at a meeting of the Board (a) to make political contributions; (b) to appoint or remove KMP; (c) to take note of appointment or removal or 1 level below the KMP; (d) to appoint internal auditors or secretarial auditor; (e) to take note of disclosure of Director's interest and shareholding; (f) to buy, sell investments held by the Company (other than trade investments), constituting 5 % or more of the paid-up share capital and free reserves of the investee Company (g) to invite or accept or renew public deposits and related matters (h) to review a change in terms and conditions of public deposits (i) to approve, quarterly, half-yearly, annual financial statements or financial results as the case may be;

12. 12 Restriction on non-cash transactions involving Directors(Section 192) Subsection (i) – No company shall enter into an arrangement by which (a) A Director of the Company or its holding, subsidiary, or associate Company or a person connected with him acquires or is to acquire assets for consideration other than cash from the Company or (b) The Company acquires or is to acquire assets for consideration other than cash from such Directors or person so connected. Unless prior approval for such arrangement is accorded by a resolution of the company in general meeting and if the director or connected person is a director of its holding Company, Approval under this sub- section shall also be required to be obtained by passing a resolution in general meeting of the holding company.

13. 13 PROHIBITION ON FORWARD DEALINGS IN SECURITIES OF COMPANY BY DIRECTOR OR KMP (Sec 194) (1) No director of a Company or any of its KMP shall buy in the Company, or in its holding, subsidiary or associate Company— (a) a right to call for delivery or a right to make delivery at a specified price and within a specified time, of a specified number of relevant shares or a specified amount of relevant debentures; or (b) a right, as he may elect, to call for delivery or to make delivery at a specified price and within a specified time, of a specified number of relevant shares or a specified amount of relevant debentures. (2) If a director or any KMP of the Company contravenes the provisions of sub-section (1), such Director or KMP shall be punishable with imprisonment for a term which may extend to two years or with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees, or with both.

14. 14 Continued... (3) Where a Director or other KMP acquires any securities in contravention of sub-section (1), he shall, subject to the provisions contained in sub-section (2), be liable to surrender the same to the Company and the Company shall not register the securities so acquired in his name in the register, and if they are in dematerialised form, it shall inform the depository not to record such acquisition and such securities, in both the cases, shall continue to remain in the names of the transferors. Explanation.—For the purposes of this section, ‘‘relevant shares’’ and ‘‘relevant debentures’’ mean shares and debentures of the Company in which the concerned person is a whole-time Director or other KMP or shares and debentures of its holding and subsidiary Companies.

15. 15 PROHIBITION ON INSIDER TRADING OF SECURITIES ( 1) No person including any Director or KMP of a company shall enter into insider trading: Provided that nothing contained in this sub-section shall apply to any communication required in the ordinary course of business or profession or employment or under any law. (a) “insider trading” means— (i) an act of subscribing, buying, selling, dealing or agreeing to subscribe, buy, sell or deal in any securities by any Director or KMP or any other officer of a Company either as principal or agent if such Director or KMP or any other officer of the Company is reasonably expected to have access to any non- public price sensitive information in respect of securities of Company; or (ii)an act of counseling about procuring or communicating directly or indirectly any non-public price-sensitive information to any person; (b) “price-sensitive information” means any information which relates, directly or indirectly, to a Company and which if published is likely to materially affect the price of securities of the Company. (2) If any person contravenes the provisions of this section, he shall be punishable with imprisonment for a term which may extend to five years or with fine which shall not be less than five lakh rupees but which may extend to twenty- five crore rupees or three times the amount of profits made out of insider trading, whichever is higher, or with both.

16. Filing of documents Sec 117 Very high penalty Refer to Sec 179(3), relating to matters within Board’s powers Sec 179 (3)(k)

17. THANK YOU