Companies Act, 2013: Management, Meetings, Dividends and Accounts
Scope
This domain covers company management, meetings, dividends and accounts. The exam tests board composition, meeting timelines, member resolutions, distribution rules and financial reporting.
Board and management
The board manages the company. A public company needs at least three directors, a private company two and an OPC one; at least one woman director is required for prescribed classes. Directors need DIN, and s 164 disqualifications include unsound mind, undischarged insolvency, certain convictions and non-payment of calls. Board meetings must be held at least four times a year, with a maximum gap of 120 days. Audit, nomination and remuneration, and stakeholder committees apply to prescribed companies.
Meetings
The first AGM must be held within nine months of the first financial year's close; later AGMs within six months of the year's close, with a maximum gap of 15 months. Notice of 21 clear days is required, though shorter notice is possible with consent. Ordinary resolutions need a simple majority; special resolutions need at least 75% of votes cast. EGMs are convened for urgent matters.
Dividends and accounts
Dividend may be declared from profits of the year or undistributed profits, subject to depreciation and prescribed rules; it cannot be paid out of capital. The board recommends and members declare, but members cannot usually exceed the recommendation. Unpaid dividend goes to the Unpaid Dividend Account and later to the IEPF. Financial statements must give a true and fair view and are audited; CSR spending applies to companies meeting the s 135 thresholds.
Worked example
A company's financial year ends on 31 March 2024. Its first AGM was already held in 2023. The 2024 AGM must be held by 30 September 2024. If the company issues notice on 12 September for a 30 September meeting, the notice is short of 21 clear days; it may still be valid only if the required percentage of members consents to shorter notice.
Traps
The 120-day gap applies between board meetings, not AGMs. A special resolution is not merely a board resolution. Dividend is not a debt until declared. The AGM deadline can be extended by the Registrar in special cases, not by the board.