Companies Act Current Affairs - 2020

IRCTC Revenue doubles; 14% increase in profits

The earnings from internet ticketing services of IRCTC (Indian Railway Catering and Tourism Corporation) increased by 80.8% between the period April, 2019 and September, 2019. The earnings in the four-month period is Rs 199.3 crores. It was Rs 199.3 crore before April, 2019. The revenue has almost doubled.

IRCTC is an exclusive e-ticketing partner of the Indian Railways. This is the first time IRCTC is releasing its revenue after it entered the stock market in October, 14, 2019. Also, the sector has earned huge success in India’s path of Digitization.

Audit report

The report was released by IRCTC after its audit by the Serva Associates, Charted Accountant, New Delhi. The audit was conducted through the concerned auditor under Section 139 of Companies Act, 2013

Section 139 of Companies Act, 2013

  • The section deals with the appointment of auditors
  • The section under the act allows the public sector companies and other private companies to appoint auditors at the first annual meeting.

IRCTC

The IRCTC is one of the Miniratna companies of India. It is a subsidiary of the Indian Railways.

A Miniratna status is provided to the Public Sector Undertakings that satisfy the following criteria

  • The PSU should have continuously made profit in the last 3 years or it should have earned Rs 30 crore profit in one year

Government relaxes norms for shares with differential voting rights

Union Ministry of Corporate Affairs (MCA) has amended provisions relating to issue of shares with Differential Voting Rights (DVRs) provisions under Companies Act. This move is aimed at enabling promoters of Indian companies to retain control of their companies in their pursuit for growth and creation of long-term value for shareholders, even as they raise equity capital from global investors.

Key changes made are

The existing cap of 26 % of total post issue paid up equity share capital raised to 74 % of total voting power in respect of shares with DVRs of a company.

The earlier requirement of distributable profits for 3 years for a company to be eligible to issue shares with DVR now has been removed.

Alongside above two changes, time period within which Employee Stock Options (ESOPs) can be issued by Startups recognized by Department for Promotion of Industry & Internal Trade (DPIIT) to promoters or Directors holding more than 10% of equity shares, has been increased from current 5 years to 10 years from date of their incorporation.

Background

Promoters/founders who are instrumental in starting up company often lose control of firm when they dilute their stakes to raise multiple rounds of funding. Differential Voting Rights do not follow common rule of one share-one vote. DVRs enable promoters to retain control over company even after many new investors come in, by allowing shares with superior voting rights or lower or fractional voting rights to public investors.