please advise on this schedule XIII of the Companies Act

This query is : Resolved

Rohan (Querist)
Follow

30 May 2011 Dear Professionals

What will be the procedure if the company failed to take a Central government's approval and also failed to pass a special resolution for appointments of Directors who are below 25 years and above 70 years respectively. Can the company show Back dated resolution in this case for both the appointments. Please guide

Jayashree S Iyer

Jayashree S Iyer (Expert)
Follow

31 May 2011 The normal procedure would be to go for compounding of offence under Section 621A of the Companies Act, 1956.

If backdated resolution could be managed, then you can go for condonation of delay under Section 637B of the Companies Act 1956.

Rohan

Rohan (Querist)
Follow

31 May 2011 Hello Jayashree Mam

if backdated special resolution is passed and approval from Shareholders is managed then as per the Schedule XIII of The Companies Act, 1956 it to be filed with ROC, whether the section 637B is applicable in this case as if Special Resolution is passed and approval from shareholders is managed then there is no need of Central Government's approval. Please advise whether we have to submit this resolution to Central Government also or only to ROC.
Also please advise whether there are any additional fees to file it with ROC for delay in submission of the same.

Upgrade to CAclubindia Pro. Subscribe Now!

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
Follow

10 August 2024 ### **Schedule XIII of the Companies Act, 1956: Appointments of Directors**

**Background:**
Schedule XIII of the Companies Act, 1956, deals with the conditions for the appointment and remuneration of directors, especially those who are not covered under the standard provisions or are exceptions, such as directors below 25 years or above 70 years.

### **Scenario:**

1. **Failure to Obtain Central Government Approval or Pass Special Resolution:**
If a company appoints directors who are below 25 years or above 70 years without obtaining the Central Government's approval or passing a special resolution as required under Schedule XIII, it faces non-compliance issues.

2. **Backdated Special Resolution:**
- **Legality:** Passing a backdated special resolution is generally not permissible. Resolutions cannot be backdated as they should reflect the true date on which they were actually passed.
- **Approval Process:** If you pass a resolution to correct the situation, it should be dated the actual date of passing and not backdated.

3. **Approval from Shareholders and Filing with ROC:**
- **Schedule XIII Compliance:** If you missed obtaining Central Government approval or passing the required special resolution, you need to take corrective steps.
- **Central Government Approval:** Schedule XIII requires specific procedures and approvals, especially if you have not followed the required procedures. Even if a special resolution is passed, it does not necessarily negate the requirement for prior approval from the Central Government.
- **Filing with ROC:** You must file the special resolution with the Registrar of Companies (ROC). If there was a delay in filing, you must pay the additional fees for late submission.

4. **Section 637B Applicability:**
- **General Applicability:** Section 637B of the Companies Act, 1956 provides for certain relaxations and exemptions, but it does not automatically apply to all cases of non-compliance with Schedule XIII. It is used for specific relaxation where the central government’s prior approval is not required under certain conditions.
- **Specific Case:** If you are unable to obtain the Central Government's approval in the past, the relaxation under Section 637B may not apply, and you might still need to file with the Central Government if required by the specific provisions of Schedule XIII.

### **Steps to Address the Issue:**

1. **Corrective Resolution:**
- **Pass a Resolution:** Pass a proper special resolution as soon as possible. Ensure it is done in compliance with all applicable requirements.
- **File with ROC:** Submit the resolution to the ROC along with any necessary filings. The resolution should be dated on the actual date it was passed.

2. **Central Government Approval:**
- **Determine Necessity:** Check whether you need to obtain retroactive approval from the Central Government. It is advisable to consult with legal experts to understand if you can obtain a waiver or retrospective approval.

3. **Fees and Penalties:**
- **Additional Fees:** If there was a delay in filing, the ROC will typically levy additional fees based on the duration of the delay. Ensure that all outstanding fees are paid to avoid further penalties.

4. **Consult Professionals:**
- **Legal Advice:** It is crucial to consult with a legal professional or company secretary who can provide guidance on navigating the regulatory requirements and obtaining any necessary approvals.

### **Summary:**

- **Backdated Resolutions:** Cannot be used. Pass the resolution with the correct date and file accordingly.
- **Approval Requirement:** Ensure compliance with both the ROC and, if necessary, the Central Government’s requirements.
- **Fees:** Pay any additional fees for delayed filings as stipulated by the ROC.

**Note:** The Companies Act, 1956 has since been replaced by the Companies Act, 2013, and the procedures may differ under the new Act. Ensure that you are referring to the correct legislation based on the date of the appointment and current legal requirements.