Single Member Companies Rules, 2003

Q. Discuss the following in terms of Single Member Companies Rules, 2003:

(i)         ‘Nominee Director’ and ‘Alternate Nominee Director’.

Ans: Nominee Director and alternate Nominee Director:

Nominee Director means an individual nominated by a single member to act as director in case of his death. Alternate Nominee Director means a individual nominated by a single member to act as nominee director in case of non-availability of nominee director. At the time of incorporation a nomination has to be filed with the registrar in the form as set out in Form S1 indicating at least two individuals to act as nominee director and alternate nominee director. The nomination is also filed where the membership of a single member company is transferred to a new member.

(ii) Actions that a nominee director is required to take upon death of the single member.

Ans: Actions to be taken by Nominee Director, upon the death of Single Member:

Nominee Director shall take the following actions:

1. Manage the affairs of the company in case of death of single member till the transfer of the shares of the company to legal heirs of the single member.

2. Inform the registrar concerned of the death of the single member, provide particulars of the legal heirs and in case of any impediment report the circumstances seeking the directions in the form as set out in Form S3 within 7 days of the death of the single member.

3. Transfer the shares to legal heirs of the single member.

4. Call the general meeting of the members to elect the directors.

(iii) Can the sole director become the company secretary?

Ans: Prohibition by sole director to become company secretary:

The single! Member! Companies! Rules, 2003 prohibit sole director to become company secretary.

(i) Audit Committee frequently discusses the issues relating to accounts and audit in its meetings. Who else are required to attend such meetings?   

(ii) Audit Committee is also required to hold two exclusive meetings at least once a year. Identify with whom those meetings are held and who are excluded to attend the meetings.              

(iii) After the recent changes in the Code of Corporate Governance, one more committee of the board of directors is to be constituted in addition to the Audit Committee. Name the other committee.