Form MGT 14 – Why? Dear Friends, Ever since the Companies Act 2013 (CA 2013) started to take birth on and from 12th September, 2013, we are finding a lot of challenges in the path of compliance. One big challenge has been posed by Form MGT 14. As of now, there are 25 different types of resolutions, as mentioned below, for which the Form MGT 14 has to be filed. The simple “Question” is – Why? Form 23, which existed under the Companies Act 1956 (CA 1956) has been compared to Form MGT 14 by the MCA. Whereas, Form 23 under CA 1956 was required to be filed under erstwhile section 192 of the CA 1956, Form MGT 14 is required to be filed under Section 117, 179 and rules. Section 192 of CA 1956 was a compact section with about 8 types of resolutions of which the From 23 was required to be filed. The press release of the MCA dated 08th August, 2013, after the passage of the Companies Bill 2012 by the parliament, mentions, inter alia, the following; “The salient features of the new Companies law are: Business friendly corporate Regulation/ pro-business initiatives”; The 25 different types of resolutions for which MGT 14 has to be filed, in fact creates instances of duplicity of work rather than making it business friendly. It is difficult to comprehend the rationale behind filing MGT 14 for appointments of persons in one level below KMP. What is level for this purpose is difficult to determine. KMPs, say CEO, CFO and CS may not necessarily belong to a particular level and as such which level would be one level below KMP? In addition to these confusions, the objective is also difficult to comprehend. A private company may have to borrow money several times in a year and it has to file MGT 14 every time. Is it business friendly? Even small companies are not exempt. Resolutions and information related to buy back, mergers, acquisitions, appointment of directors, appointment of KMPs are also filed in some other forms and as such the need for MGT 14 is difficult to understand. It is adding a financial burden to companies and adding complexity to business environment and as such needs a serious review. Unfortunately, the recent amendment bill has also overlooked this issue. This is not the end of it. More categories of resolutions may be added through rules. RESOLUTIONS FOR WHICH FORM MGT 14 HAS TO BE FILED; 1. Special resolutions; 2. 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; 3. 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; 4. 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; 5. 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; 6. Resolutions requiring a company to be wound up voluntarily passed in pursuance of section 304; 7. to make calls on shareholders in respect of money unpaid on their shares; 8. to authorise buy-back of securities under section 68; 9. to issue securities, including debentures, whether in or outside India; 10. to borrow monies; 11. to invest the funds of the company; 12. to grant loans or give guarantee or provide security in respect of loans; 13. to approve financial statement and the Board’s report; 14. to diversify the business of the company; 15. to approve amalgamation, merger or reconstruction; 16. to take over a company or acquire a controlling or substantial stake in another company; further prescribed: 17. to make political contributions; 18. to appoint or remove key managerial personnel (KMP); 19. to take note of appointment(s) or removal(s) of one level below the Key Management Personnel; 20. to appoint internal auditors and secretarial auditor; 21. to take note of the disclosure of director’s interest and shareholding; 22. 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; 23. to invite or accept or renew public deposits and related matters; 24. to review or change the terms and conditions of public deposit; 25. to approve quarterly, half yearly and annual financial statements or financial results as the case may be; more may be prescribed from time to time;
Posted on: Wed, 31 Dec 2014 11:34:28 +0000