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  • Can AGM (Annual General Meeting) be held at a place situated outside the limit of city, town or village in which the registered office is situated?

    AGM of an unlisted company may be held at any place in India if consent is given in writing or by electronic mode by all the members in advance. However, AGM cannot be held outside India.

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  • Is there a time period to issue share certificate to the shareholders?

    The company should issue and deliver the share certificates within a period of two months from the date of incorporation of the proposed company.

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  • What should be the first financial year of the newly incorporated company?

    The first financial year of a company means a period beginning from the date of incorporation and ending on 31 March of the following year.  However, if the company is incorporated on or after 1 January of the year, the financial year will be from the date of incorporation till 31 March of the following financial year.  For example, if a company is incorporate on 1 February 2019, the first financial year will be 1 February 2019 to 31 March 2020.

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  • Within what time should the first board meeting be held?

    The first board meeting should be held within 30 days from the date of incorporation.

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  • When should the first auditors be appointed for a newly incorporated entity?

    The first auditors should be appointed by the board within 30 days of incorporation of the company.  In case of failure by the board to appoint auditors, the auditors shall be appointed by the shareholders in general meeting within 90 days from the expiry of the 30 days period

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  • What should be the quorum for board meetings?

    Quorum for the board meeting for an Indian subsidiary is two directors. In case of physical board meeting, two directors should be present in person.

    Board meeting may also be held through an audio-visual means (for example, video conference) subject to compliance with conditions such as recording of the meeting, roll call, minutes of the meeting capturing the VC details, etc.  There are restrictions with respect to matters which can be approved in a meeting held through this mode.

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  • What is an Annual General Meeting (AGM)? When should a company convene its first AGM?

    Every company shall in each year hold in addition to any other meetings, a general meeting of its shareholders as its annual general meeting for adoption of audited financial statements, declaration of final dividend, etc

    The first AGM of a company should be held within a period nine-month from the date of close of first financial year.

    In any other case, within a period of six months from the date of closing of the financial year.

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  • What is the tenure of an auditor? What is the tenure of the first auditor?

    An individual can serve as an auditor for a term of five consecutive years. A firm can serve two terms of five consecutive years each, i.e., a total of 10 years as an auditor.

    Every company shall, at the first annual general meeting, appoint an individual or a firm as an auditor who shall hold office from the conclusion of that meeting till the conclusion of its sixth annual general meeting.

    For more information, click here.

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  • Is there any cooling period for the existing auditors after the expiry of their term?

    An individual auditor who has completed his term of five years shall not be eligible for re-appointment as auditor in the company for five years from the completion term of five years.

    An auditor firm who has completed their two terms of five years shall not be eligible for re-appointment as auditor in the company for next five years from the completion of 10 year.

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  • Can one person simultaneously provide accounting and auditing services?

    The statutory auditor of a company cannot provide following services to the company or its holding company or subsidiary company:

    • Accounting or book keeping services
    • Internal audit
    • Design and implementation of any financial information system
    • Actuarial services
    • Investment advisory services
    • Investment banking services
    • Outsourced financial services
    • Management services
    • Other services prescribed under the rules

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  • Who is responsible to distribute the corporate benefits to IDR holders?

    On the receipt of dividend or other corporate action on the IDRs, the Domestic Depository shall distribute the corporate benefits to the IDR holders in proportion to their holdings of IDRs.

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  • What are Indian depository receipts (IDR)?

    An IDR is an instrument denominated in Indian Rupees in the form of a depository receipt created by a Domestic Depository (custodian of securities registered with the Securities and Exchange Board of India) against the underlying equity shares of issuing company to enable foreign companies to raise funds from the Indian securities Markets.

    For more information, click here.

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  • What is Foreign Portfolio Investment?

    Foreign Portfolio Investment (FPI) is an investment by a foreign investor in a group of assets such as stocks, bonds, cash equivalents.

    For more information, click here.

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  • What are the requirements for investing in IDRs?

    Following are some of the requirements for investing in IDRs:

    • IDRs can be purchased by any person who is resident in India as defined under FEMA
    • Minimum application amount in an IDR issue shall be INR. 20,000
    • Investments by Indian companies in IDRs shall not exceed the investment limits, if any, prescribed for them under applicable laws
    • In every issue of IDR -
      • At least 50% of the IDRs issued shall be subscribed to by QIBs;
      • The balance 50% shall be available for subscription by no institutional and retail

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  • How is IDR holder informed about the duration of fungibility window?

    IDR holders can look for such announcements made by the company in leading English and Hindi national daily newspapers with wide circulation as well as the websites of the stock exchanges.

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  • What is fungibility window?

    Fungibility window is the time period specified by the issuer company during which IDR holders can apply for conversion/ redemption of IDRs into underlying equity shares.

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  • Can an IDR holder appoint any nominee in case of death?

    Yes, an IDR holder can at any time nominate a person to whom his IDRs shall vest in the event of his death.

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  • Whether the draft prospectus for IDRs to be filled with SEBI?

    Yes. Foreign issuer is required to file the draft prospectus with SEBI while complying with the requirements of SEBI (ICDR) Regulations, 2009. Any changes specified by SEBI shall be incorporated in the final prospectus to be filed with Registrar of Companies

    For more information, click here

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  • Whether any listing permission required for issuance of IDRs?

    Yes, the issuer company is required to obtain in-principle listing permission from all the recognized stock exchanges in which the issuer proposes to get its IDRs listed.

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  • Whether the IDRs required to be listed in any stock exchanges of India?

    Yes, The IDRs are required to be listed in at least one stock exchange in India having nationwide terminals.

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