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Compliance of section 160 of ca, 2013

Ashish Gupta (CS & Legal) (114 Points)

04 June 2014

A Pvt Ltd (APL) is a private limited company having all foreign shareholders. Mr. B, a foreign national, was appointed as Additional Director of APL and needs to be regularized at the forthcoming AGM. My queries in this case are as under:

1. Is Section 160 of the Companies Act, 2013 applicable to private companies as well?

2. If yes, then how will the deposit of Rs. 1 Lac for regularization of Mr. B will be received by APL. As all shareholders and Mr. B are foreigners, will this deposit of Rs. 1 Lac be received through AD with FIRC in place.

3. Is there any other mechanism through which this deposit of Rs. 1 Lac can be received through an Indian person.

Regards,

Ashish Gupta

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11 Replies

RoHaN k (CA & CS) (308 Points)
Replied 04 June 2014

Yes , 160 is applicable to private ltd company also.

But if you are appointing Additional Director , security is not required.

When additional director is appointed as regular director then 160 will come into picture.

though , In my opinion FIRC would suffise.

BRC is other option but FIRC would serve the purpose for 160

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Ashish Gupta (CS & Legal) (114 Points)
Replied 04 June 2014

The Company does not intend to get into the loop of receiving foreign remittance and then refunding the same and bring FEMA compliances into picture.

Is there any other mechanism to ensure compliance of Section 160 in present case, without involing any foreign remittance compliances.

RoHaN k (CA & CS) (308 Points)
Replied 04 June 2014

M not expert at this , but as per my knowledge

FEMA compliance is not so necessary if amount is less than 1 lakh Rs.

If appointment is so certain , the deposit would refunded to director , then it will not be

a complication unless such exchange is deposited with authorised person.and stay their

i.e. not converted into Rs.

I think this will help

P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 04 June 2014

If any member has account in INR in India, the amount can be paid from that account in INR.

Incidentally, legally speaking provisions of Sec.160 should not be applicable to appointment of additional director who is proposed by the Board and not by the candidate himself. Sec.160 should be applicable where the person himself proposes to be elected as a director in general meeting. In case of independent directors and additional directors the proposal is made by the Board. However, DCA had issued a circular in the past stating that this provision will apply to additional director also. Accordingly, companies have been complying with the same. This needs rethinking now.

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Ashish Gupta (CS) (45 Points)
Replied 04 June 2014

I presume that the foreign shareholders and director does not have any account in India or Indian Currency.

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srikanthreddykolli (cs) (21 Points)
Replied 04 June 2014

Check if any Indian member exists. If exists convince him to propose the candidate by depositing 1 lakh which is refunded on appointment. Otherwise make arrangement for foreign member depositing 1 lakh from his fcnr account

Ashish Gupta (CS) (45 Points)
Replied 04 June 2014

No Indian Shareholder and no FCNR Account exists.

Pls advise can any shareholder authorize some indian person who can deposit Rs. 1 Lac on his behalf.

Regards,

Ashish

RoHaN k (CA & CS) (308 Points)
Replied 04 June 2014

I think the deposit to be hold is for the official formality , I again tell you , If appointment is so certain , just authorise some one to deposit it on the name of proposed director , the nature of transaction is not to be dealt with how deposit is to be submited , In my openion crux of matter is deposit should arrive in company on the name of proposed director.

You have been consulted by various learnt professionals here , In my openion you may go with their suggestions or you can authorise some indian fellow to do so.

Vishal (business) (78 Points)
Replied 06 June 2014

One other option could be to transfer 1 share to local person in India and get the deposit cheque from that shareholder.

CS GK Murty (Company Secretary) (225 Points)
Replied 06 June 2014

As per the provisions of Sec.160, in case of regularisation of Additional Director in AGM, no such deposit of Rs. 1 lac is required. It's is applicable to a person to be proposed as Director in the AGM by members.