COMPANY LAW AND PRACTICE

AFTERSCHO☻OL
– DEVELOPING CHANGE MAKERS
CENTRE FOR SOCIAL ENTREPRENEURSHIP
PGPSE PROGRAMME –
World’ Most Comprehensive programme in social
entrepreneurship & spiritual entrepreneurship
OPEN FOR ALL FREE FOR ALL

www.afterschoool.tk AFTERSCHO☺OL's
AFTERSCHO☺OL's MATERIAL
MATERIAL 1
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 COMPANY LAW AND PRACTICE

Dr. T.K. Jain.

AFTERSCHO☺OL
Centre for social entrepreneurship
Bikaner M: 9414430763
tkjainbkn@yahoo.co.in
www.afterschool.tk, www.afterschoool.tk

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AFTERSCHO☺OL's MATERIAL
MATERIAL 2
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 Annual accounts of the company

• Every company must keep proper books of account on

accrual basis as per Accounting Standards. Every
company is required to prepare a balance sheet at the
end of financial year‘ and profit and loss account for the
period of financial year‘. In case of company not carrying
on business for profit, it will prepare Income &
Expenditure Account‘ instead of Profit & Loss‘ account.
The duty audited annual accounts should be presented
at the annual general meeting (AGM) of members.
[section 210(1)]

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 Financial year of the company

• A financial year‘ of a company can be less or

more than 12 months, but the financial year‘
cannot be for more than 15 months. The
financial year‘ can be extended to 18 months by
obtaining special permission from Registrar of
Companies. [section 210]. Application for
extending the period of annual accounts upto 18
months should be submitted electronically in e-
form No. 61.
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 Audit of accounts

• A person who is a Chartered Accountant within

the meaning of Chartered Accountants Act can
only be appointed as an auditor. A firm of
Chartered Accountants can be appointed as
auditors, but all partners of the firm must be
Chartered Accountants. The Chartered
Accountant must hold a Certificate of Practice‘
issued by Institute of Chartered Accountants of
India. [section 226(1)].
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 Appointment of CA

• An auditor is appointed at the annual general

meeting. He holds office from conclusion of that
meeting till the conclusion of next annual general
meeting. After his appointment, company must
inform him of his appointment within seven days.
[section 224(1)]. The auditor, in turn, should
inform in writing to the Registrar of Companies
within 30 days from receipt of intimation from the
company, whether he has accepted or refused
to accept the appointment. [section 224(1A)].

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Appointment for one financial year only..

• Appointment of auditor for more than one

financial year at a time is not permissible,
though same person can be re-appointed.

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 Disqualification of CA

• A body corporate [section 226(3)(a)].

• An officer or employee of the company [section
226(3)(b)].
• A person who is in employment of an officer or
employee of the company [section 226(3)(c)].
• A person who is a partner of an officer or
employee of the company [section 226(3)(c)].
• A person who is indebted to company for more
than Rs 1,000 [section 226(3)(d)].
www.afterschoool.tk AFTERSCHO☺OL's MATERIAL 8
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 Disqualification of a CA

• A person who holds any security of the company,

which carries voting rights. [Thus, holding of
security which does not carry any voting right is not
a disqualification. Further, there is no restriction if
security is held in name of wife or other relative].
[section 226(3)(e)].
• If a person is disqualified to be auditor under any of
the aforesaid clause, he will also be disqualified to
be auditor of subsidiary or holding company of that
company or subsidiary of that company‘s holding
company. [section 226(4)]

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 Maximum number of companies to audit

• An auditor has restrictions on number of audits he can

accept. He cannot accept audits beyond prescribed limit
on number of audits. [section 224(1B)]
• Limit on number of audits is 20 companies per Chartered
Accountant, out of which only 10 companies can be
having share capital of Rs 25 lakhs or more. In other
words, an Auditor can audit maximum 10 companies
which are having paid up share capital of Rs 25 lakhs or
more and remaining companies may have paid up capital
less than Rs 25 lakhs. [Explanation I to section 224]. The
restriction does not apply to a private company. [Fourth
proviso to section 224(1B)]. As per ICAI notification dated
8.5.2001, a Chartered Accountant can accept maximum 30
audit assignments including audits of private companies.

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 Report of the board of directors

• Annual accounts will be accompanied by report

of board of directors
• Signing of report of Board of Directors -
Report of Board of Directors has to be approved
in the meeting of Board. The Board can
authorise any director to sign the report on its
behalf. Usually, Chairman of the company or
Chairman of the meeting or Managing Director is
authorised to sign the report of Board of
Directors.
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 Corporate governance report

• Compliance Report on Corporate Governance -

Detailed compliance report on corporate governance
should be given [clause 49VI(i) of Listing
Agreement]. Non-compliance of any mandatory
requirement with reasons and extent of deviation
should be specifically highlighted. In addition to
disclosures as specified in clause 49 of Listing
Agreement, disclosures should be made in
Directors‘ Report in the section on Corporate
Governance‘, if company intends to pay minimum
remuneration to the managerial personnel in case of
inadequacy of profits [See Part II, Section II of
Schedule XIII to Companies Act]
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 Compliance certificate by CS

• Compliance certificate regarding

corporate governance - Compliance
Certificate from auditors/practising
company secretary regarding compliance
of conditions of Corporate Governance.
This certificate should be annexed to
Directors‘ Report [clause 49VII(1) of
Listing Agreement]

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 Declaration of managerial remuneration

• Disclosure of remuneration to non-

executive directors - Disclosure of
remuneration to non-executive directors
and pecuniary relationships or
transactions with company, as required in
clause 49(IVE) of listing agreement.

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 Declaration by CEO

• Affirmation about compliance to code

of conduct - Declaration by CEO in
Annual Report that Board Members and
senior management have affirmed their
compliance to Code of Conduct laid down
by Board [clause 49I(D) of Listing
Agreement].

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 abc Ltd. was registered with a nominal capital of
Rs.20,00,000 in equity shares of Rs.100 each. 10,000 of
these shares were issued to the public at a premium of
Rs.20 per share, payable as to Rs.20 on
application, Rs.45 on allotment including premium, Rs.25
on first call and the balance on final call. Applications
were received for 13,000 shares and allotment was made
pro rata to the applicants of 12 000 shares Money over-
paid on application was employed on account of sums
due on allotment. Jay holding 200 shares paid the whole
of the amount due on first call along with the allotment
but failed to pay final call. Deep holding 300 shares failed
to pay the two calls and Joshi holding 400 shares failed
to pay the final call. All theshares were forefeited and 200
shares each of Jay & Deep were issued to Ravi for Rs. 90
as fully paid. Journalise.
www.afterschoool.tk AFTERSCHO☺OL's MATERIAL 16
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 Solution…

• Bank Dr. Allotment A/c dr. 450000

• To share application To capital 250000
• (260000) To premium on share 200000
• Application Dr. Bank d.r 415000
• To Bank To allotment 41000
• (20000 – return) To first call adv. 5000
• Application First call dr. 250000
• To capital To capital 250000
• (200000) Call in advance dr.
• Appliation To first call 5000
• To allotment Bank ac. Dr.237500
• (Rs. 40000) To first call 237500

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 Solution… continued…

• Final call ac/ dr. • Bank ac. Dr. 36000

• To sh. capital 300000 • Share forefeiture 4000
• Bank ac dr. 273000 • To capital 40000
• To final call 273000 • Share forefeiture 19000
• Share capital ac dr. • To capital reserve 19000
90000
• To share appl. 18000
• to share allotment 22500
• To share first call 5000
• To share forefeiture
44500

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 About AFTERSCHO☺OL

• PGPSE - World’s most comprehensive

programme on social entrepreneurship –
after class 12th
• Flexible – fast changing to meet the
requirements
• Admission open throughout the year
• Complete support from beginning to the
end – from idea generation to making the
project viable.
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 Branches of AFTERSCHO☺OL

• PGPSE programme is open all over the

world as free online programme.
• Those who complete PSPSE have the
freedom to start branches of
AFTERSCHO☺OL
• A few branches have already started -
one such branch is at KOTA (Rajasthan).

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 Workshop on social entrepreneurship

• We conduct workshop on social

entrepreneurship – all over India and out
of India also - in school, college, club,
association or any such place - just send
us a call and we will come to conduct the
workshop on social entrepreeurship.
• These workshops are great moments of
learning, sharing, and commitments.

www.afterschoool.tk AFTERSCHO☺OL's MATERIAL 21

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 FREE ONLINE PROGRAMME

• AFTERSCHO☺OL is absolutely free

programme available online – any person can
join it. The programme has four components :
• 1. case studies – writing and analysing – using
latest tools of management
• 2. articles / reports writing & presentation of
them in conferences / seminars
• 3. Study material / books / ebooks / audio / audio
visual material to support the study
• 4. business plan preparation and presentations
of those plans in conferences / seminars

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 100% placement / entrepreneurship

• AFTERSCHO☺OL has the record of

100% placement / entrepreneurship till
date
• Be assured of a bright career – if you join
AFTERSCHO☺OL

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 Pursue professional courses along with
PGPSE

• AFTERSCHO☺OL permits you to pursue

distance education based professional /
vocational courses and gives you support
for that also. Many students are doing CA
/ CS/ ICWA / CMA / FRM / CFP / CFA and
other courses along with PGPSE.
• Come and join AFTERSCHO☺OL

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