Event-Based Compliances
Navigating Company Changes with Ease
Event-based compliances are crucial when a company undergoes significant changes, such as altering its objectives, changing directors, or modifying its capital structure. These events require specific filings and adherence to regulatory procedures to ensure compliance with corporate laws. Below is an overview, along with details on the process and documentation for key event-based compliances.
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Event-Based Compliances in a Company
Overview
Event-based compliances refer to the regulatory obligations that arise when specific changes occur within a company. These changes might involve alterations in the company’s
objectives, structure, or governance. Complying with these requirements is vital to maintain the company’s legal standing and avoid penalties.
Key Points
- Ensure timely filing of required forms with the Registrar of Companies (RoC).
- Maintain proper documentation and records for each event.
- Follow the specific procedures outlined in the Companies Act, 2013.
Change in Object Clause
Overview
A change in the object clause of a company’s Memorandum of Association (MoA) alters the company’s primary business activities or objectives. This requires approval from shareholders and filing with the RoC.
Process
1. Board Resolution: Pass a board resolution to propose the change.
2. Shareholders’ Approval: Convene an Extraordinary General Meeting (EGM) to obtain shareholders' consent through a special resolution.
3. Form Filing: File Form MGT-14 with the RoC, including the resolution and altered MoA.
4. Update MoA: Amend the MoA to reflect the new objectives.
Documents Required
- Copy of the board resolution.
- Special resolution passed at the EGM.
- Altered Memorandum of Association.
- Notice of EGM and explanatory statement.
Appointment and Resignation of Directors
Overview
Changes in the board of directors, including appointments or resignations, must be reported to the RoC. This ensures that the company’s directorship details remain up to date.
Process
1. Board Meeting: Conduct a board meeting to pass a resolution for appointment or resignation.
2. Form DIR-12: File Form DIR-12 with the RoC within 30 days of the appointment or resignation.
3. Consent and Resignation Letters: Obtain the consent letter from the appointee or resignation letter from the outgoing director.
Documents Required
- Copy of the board resolution.
- Consent letter or resignation letter from the director.
- Form DIR-2 (Consent to act as a director) for appointments.
- Form DIR-11 (Notice of resignation) for resignations, if applicable.
Change in Name Clause
Overview
A change in the company’s name requires approval from shareholders and the Central Government. This also involves updating all legal documents and records to reflect the new name.
Process
1. Board Resolution: Approve the name change at a board meeting.
2. Name Reservation: Apply for name reservation using Form INC-1.
3. Special Resolution: Obtain approval from shareholders at an EGM.
4. Central Government Approval: File Form MGT-14 and Form INC-24 for approval.
5. Update MoA and AoA: Amend the Memorandum and Articles of Association with the new name.
Documents Required
- Copy of the board resolution.
- Special resolution passed at the EGM.
- Approved name reservation document.
- Altered MoA and AoA with the new name.
Removal of Director
Overview
The removal of a director before the end of their tenure is a significant decision that must be handled according to the Companies Act. It requires shareholder approval and formal filings.
Process
1. Board Meeting: Convene a board meeting to discuss the removal.
2. Notice to Director: Send a notice to the director in question, allowing them an opportunity to be heard.
3. Shareholders’ Approval: Pass an ordinary resolution at a general meeting for removal.
4. Form DIR-12: File Form DIR-12 with the RoC within 30 days of passing the resolution.
Documents Required
- Copy of the board resolution.
- Notice sent to the director.
- Minutes of the general meeting.
- Form DIR-11 (Notice of resignation), if applicable.
Change in Registered Office
Overview
A company may need to change its registered office within the same city, state, or to a different state. Each type of change has specific compliance requirements.
Process
1. Board Resolution: Approve the change of address at a board meeting.
2. Shareholders’ Approval: Obtain consent from shareholders through a special resolution, if the change is from one state to another.
3. Form Filing: File Form INC-22 for a change within the same city or state. For interstate changes, file Form MGT-14 and INC-23.
4. RoC Notification: Notify the RoC of the new address.
Documents Required
- Copy of the board resolution.
- Special resolution (if applicable).
- Proof of new address (e.g., lease deed, utility bill).
- Altered MoA (if changing to a different state).
Change in Share Capital
Overview
Changes in share capital, such as increasing or reducing the capital, issuing new shares, or converting shares, must be approved by shareholders and filed with the RoC.
Process
1. Board Resolution: Pass a resolution for the change in share capital.
2. Shareholders’ Approval: Obtain approval through an ordinary or special resolution, depending on the nature of the change.
3. Form SH-7: File Form SH-7 with the RoC within 30 days of the resolution.
4. Update MoA and AoA: Amend the MoA and AoA to reflect the new share capital structure.
Documents Required
- Copy of the board resolution.
- Special or ordinary resolution passed at the general meeting.
- Altered MoA and AoA.
- Details of new share certificates, if applicable.
Change in Directors
Overview
In addition to appointment and resignation, changes in the board composition, such as re- designation or replacement of directors, also require proper compliance.
Process
1. Board Meeting: Pass a resolution for the change.
2. Form DIR-12: File Form DIR-12 with the RoC within 30 days of the change.
3. Consent and Resignation Letters: Ensure that necessary documents are collected from the directors involved.
Documents Required
- Copy of the board resolution.
- Consent and resignation letters from the directors.
- Form DIR-2 for appointments, if applicable.
Change in LLP Agreement
Overview
Any changes in the LLP agreement, such as changes in partners, capital contributions, or business activities, require filing with the RoC and updating the agreement accordingly.
Process
1. Partners’ Consent: Obtain the consent of all partners for the changes.
2. Amend LLP Agreement: Draft and sign the amended LLP agreement.
3. Form 3: File Form 3 with the RoC, along with the amended agreement, within 30 days of the change.
4. Form 4: File Form 4 if there are changes in partners.
Documents Required
- Copy of the amended LLP agreement.
- Consent letters from partners.
- Form 3 and Form 4 with details of changes.