{"id":31387,"date":"2020-04-26T16:57:03","date_gmt":"2020-04-26T11:27:03","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=31387"},"modified":"2020-04-26T16:57:05","modified_gmt":"2020-04-26T11:27:05","slug":"mandatory-website-disclosures-a-requirement-under-companies-act-2013-and-sebi","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/mandatory-website-disclosures-a-requirement-under-companies-act-2013-and-sebi\/","title":{"rendered":"Mandatory Website Disclosures- A Requirement under Companies Act 2013 and SEBI"},"content":{"rendered":"

A website can be understood as a collection of publicly available information which is present in a primary single domain. The main purpose of a website is for public use to gain information and knowledge. Websites are used for various purposes. Websites can be managed by a single individual, a group of people and a company. Individuals refer WebPages<\/a><\/strong> to gain maximum information regarding a particular subject matter.<\/p>\n\n\n\n

Websites are used by companies as potential marketing tools. Apart from this companies publish key information regarding their financials, goals, mission and vision statement, the products and services offered by them. They would also publish information regarding the progress of the firm. This would be used by stakeholders, shareholders and public to make decisions. When a company considers to issue its shares in a publicly listed stock exchange<\/a><\/strong> (Initial Public Offering), they would publish such information on their WebPages in order to ensure that they have multiple amount of subscribers to consider investing in their shares. Therefore this is considered compulsory for a company to improve its business. Apart from this, the company also publishes information regarding the changes in the shareholders and directors of the company. All this information is published in the website for the users to make an informed choice to consider the services offered by the company.<\/p>\n\n\n\n

Some monitoring\nbodies and institutions would want mandatory website disclosures from companies.\nDue to the amount of frauds and corporate governance scandals in the past, this\nhas become a practice in many countries to consider publishing information on\nthe website. Monitoring agencies and investors would know the performance of\nthe company based on the information published on the website. More compliance\non the website front is required as these agencies want the companies to follow\ncompliance. Furthermore, when there is a proper procedure or process followed\nby companies, the faith of stakeholders and investors would be restored.\nTherefore there are Mandatory Website Disclosures that are required to be\nfollowed by companies.<\/p>\n\n\n\n

Mandatory\nWebsite Disclosures<\/h2>\n\n\n\n

The Companies\nAct 1956 (Previous Company Law) does not specify any form of Mandatory Website\nDisclosures. According to the Previous Company Law stated that disclosures have\nto be made when it comes to reports of the progress of the company. Such\nreports can the following- Annual General Report of the Company\/ Meetings of\nthe Company and major resolutions that have been decided in the meetings. These\nreports were considered as mandatory website disclosures. <\/p>\n\n\n\n

During the 2008\nrecession, the downfall of Satyam Computers showed that the governance\nframework was not up to the standards prescribed by the Securities Exchange\nBoard of India and the Previous Company Law. The Government of India came out\nwith the requirement to enact a law related to regulation of Companies when it\ncomes to disclosing information on the company affairs. The Companies Act 2013 (Present\nCompany Law) was brought out with a view to prioritise the need for companies\nwhich are listed to disclose more information in their website. This was also\nconsidered that companies have to disclose information to monitoring bodies\nsuch as SEBI and MCA, apart from publishing the mandatory website disclosures.<\/p>\n\n\n\n

This move was\nconsidered to improve the amount of transparency between Directors,\nShareholders and key stakeholders of the company. One of the essential elements\nof corporate governance is in order to maintain the standards of transparency\nin the website. Such standards of transparency must be maintained both at an\ninternal level and an external level. Therefore at an internal level, the\ntransparency would be maintained. At an external level, the transparency\nstandards would be published through the website. Also monitoring agencies\nwould have a report on these standards. Therefore the need of Mandatory Website\nDisclosures was brought out.<\/p>\n\n\n\n

Standards of\nMandatory Website Disclosures<\/h2>\n\n\n\n

Under the\npresent Company law, it is not an obligation to have a website. The present\ncompany law there is a requirement of having a registered office for conducting\ndealings; however it is not mandatory to have a website. However as per the\nregulations under the Securities Exchange Board of India, companies that have\ntheir shares in a recognised stock exchange have to ensure that they have a\nworking website. This website has to be updated on a continuous basis<\/a>. The law\nbehind this is the SEBI (Listing Obligations and Disclosure Requirement)\nregulations.<\/p>\n\n\n\n

There are\ncertain rules and regulations under the Companies Act 2013 and SEBI which make\nit crucial for a company to have Mandatory Website Disclosures. The present\nCompany act specifies that it is not mandatory to have a website for disclosing\ninformation. It is evident through a plain reading of the Companies Act 2013\nthat the words website (“if required”) is used. From the above it is not\nessential for a company to have a website.<\/p>\n\n\n\n

Mandatory Website Disclosures- Its Applicability to all Companies<\/h2>\n\n\n\n

Companies are\ndivided into private companies and public companies. However, the mandatory\nwebsite disclosures would not be applicable to all companies. Companies that\nare listed and public would have more obligations to the public. Hence these\ncompanies would have the requirement of disclosing more information on the\naffairs of their business. Some disclosures would be applicable to private\ncompanies, but would not be applicable to public companies.<\/p>\n\n\n\n

Mandatory Website Disclosures that is required under the Companies Act 2013 (Previous Company Law) and SEBI LODR Regulations 2015<\/h2>\n\n\n\n

There are\ncertain mandatory website disclosures that will apply to all forms of\ncompanies.  Some of the rules under the\nCompanies Act 2013 which support mandatory website disclosures are as follows:<\/p>\n\n\n\n

Section 12(3)c\nof the Companies Act- Registered Office<\/h3>\n\n\n\n

The information\npertaining to the registered office such as name, address, telephone, fax,\ncontact details have to be mentioned in every correspondence and letter head of\nthe company. This directly means that if a company has a website, then such\ninformation must be present on the website. This would apply to emails,\nbusiness letters and other modes of correspondence.  The penalty imposed under this is that every\nofficer who has actual knowledge of the default or contravention would pay a\nfine of Rs.1000\/- and if the contravention continues then 1 Lakh.<\/p>\n\n\n\n

Section 13(8) (i) along with Rule 32 and 32(3) Companies (Incorporation) Rules 2014 – Alteration of Objects to Raise money through the use of Prospectus<\/h3>\n\n\n\n

Prospectus is\noffered only to potential investors who want to invest in the shares of a\ncompany. Therefore this regulation would apply only to companies that have\ntheir shares and securities in listed stock exchanges. Special resolution\nrequires a majority vote of the shareholders of the business. Alternation of\nobjects of the company requires a special resolution. Such resolution has to be\npublished in the website of the company.  This is considered as a mandatory website\ndisclosure.<\/p>\n\n\n\n

Section 8 Compliance<\/h3>\n\n\n\n

Conversion of a Section 8 Company<\/a><\/strong> to any other form of Company (Rule 22(1)b of the Companies (Incorporation) rules 2014 along with section 18 of the Companies Act 2013<\/p>\n\n\n\n

A company that is formed as a charity or its objects is not for the purpose of making profit is considered as a section 8 companies.  If the company wants to convert into another form of company, then the application to the regional director<\/strong> along with the notice copy- in Form INC 19 should be published in the website. The is one of the mandatory website disclosure which is carried out by the company, as section 8 company is formed for promotion of charity. On changing the objects of the business it must be published so that stakeholders would know the main purposes of the company. This is considered as a mandatory website disclosure as it involves change in objects.<\/p>\n\n\n\n

Section 73 of the Companies Act 2013 along with Rule 4(3) of the Companies (Acceptance of Deposit) rules 2014 – For Advertising Circulars<\/h3>\n\n\n\n

Deposits can be\naccepted by companies. This is a mode of raising finance by the company. This\nsection would only apply to a public company. Whenever a company invites\ndeposits from the public, such initiation for deposits from the public must be\nuploaded on the website of the company. If the company fails to publish the\ninformation regarding the acceptance of deposits from the public then the\npenalties are stringent. The company would have to repay the deposit back to\nthe investors and on failing to do that would be subjected to a fine of Rs 1\ncrore which can extend to Rs 10 Crore. This is considered as a mandatory\nwebsite disclosure as it involves public money.<\/p>\n\n\n\n

Section 91 of the Companies Act 2013 along with Rule 10(1) Companies (Management and Administration) Rules 2014 – Registers of Holders of Debentures to be closed<\/h3>\n\n\n\n

This compliance\nmust be followed by all companies. Whenever a company wants to close the\nregister of the debenture holders, then intimation must be given to the SEBI\nregarding such form of closure. Any companies that have its shares listed in a\nstock exchange must do the same. This notification must be given before 7 days\nof closing such register. Such notification must be published in the website of\nthe company. A company that has its shares listed must give the notification is\na local newspaper in English language. \nThe publication in the English Newspaper must also be published on the\nwebsite and be considered as a mandatory website disclosure. Contravention of\nthe above regulation would lead to the company liable for a penalty of 1 lakh\nrupees which can extend to Rs 5 Lakh.<\/p>\n\n\n\n

Also, Read:<\/b> Mandatory Website Disclosures under Companies Act, 2013<\/a><\/mark>.<\/p><\/div>\n\n\n\n

Section 101 of the Companies Act 2013 along with Rule 18(3)(ix) Companies( Management and Administration) Rules 2014- Notice of meetings ( AGM, GM)<\/h3>\n\n\n\n

Such notices of\nmeeting such as the annual general meeting and general meeting have to be\npublished in the website. Apart from publishing in the website, the information\nmust be circulated to all members. Publishing in the website would be\nconsidered as a mode of circulation amongst the members of the company. As per\nthe Secretarial Standards 1- the notice of any such meeting of the company must\nbe published on the official website of the company. Notice means intimation\nthat the meeting is held. The notice must specify the location, time and\naddress of such meeting which is held by the company.    <\/p>\n\n\n\n

Section 108 of the Companies Act 2013 along with Rule 20(3)(xiv) Companies (Management and Administration) Rules 2014- <\/h3>\n\n\n\n

If all members\nare not able to be present for a meeting, there is a possibility of e-voting\nprocess. The information regarding the method of e-voting must be published on\nthe website of the company. Along with this the name of the members, address of\nthe website, telephone number and email id of the individual should be present\non the website. Such information is present to address any form of grievances\nrelated to the voting process through electronic means. The notification must\nbe present till the day of the general meeting. This is as per the Secretary\nStandards- 1. Apart from this the amount of valid votes and invalid votes must\nalso be present on the website. The details of the voting results must be\npublished in a manner according to the law. A report of the voting must also be\npublished for a website and this must be published for two days after the\npublication of the results.<\/p>\n\n\n\n

Section 110 of the Companies Act 2013 along with Rule 22(4) of the Companies( Management and Administration Rules) 2014- Postal Ballot Process<\/h3>\n\n\n\n

This system\nvoting is done by mails.  Such\ninformation regarding the postal ballot process must be published on the\nwebsite and details of such notice must be on the website till the last date of\npostal ballot process. the date, time and place of where the postal ballot\noccurs also must be mentioned in the website. The results of the ballot must\nalso be published in the website of the company. As per Secretary Standard 1\nthis process should be considered and published on the website of the\ncompany.  The results of the postal\nballot process and procedure must be published in the website. This would be\nconsidered as Mandatory Website Disclosures.<\/p>\n\n\n\n

If such notice\ncannot be placed then a special form of notice would be published in the\nEnglish newspaper regarding this.  These\nare mandatory website disclosures for the company.<\/p>\n\n\n\n

Section 124(2) of the Companies Act 2013 along with Regulation 43A of the SEBI LODR regulations- Dividend Distribution by a listed entity and amount of Unpaid Dividend<\/h3>\n\n\n\n

If shareholders\nare not paid the remaining amount of dividend by a company, then this must be\nmentioned in the website of the company. After paying the initial amount of\ndividend the unpaid dividend has to be paid within a period of 90 days.\nInformation regarding the name and address regarding the shareholders must be\nstated on the website.<\/p>\n\n\n\n

A company that is going for an Initial Public Offer<\/a><\/strong> (IPO) has to provide information regarding the IPO on the website. Apart from this it must provide information regarding its dividend distribution policy. This is considered as a mandatory website disclosures as the information is related to the issue of shares to the public.<\/p>\n\n\n\n

Section 135 (4)(a) along with Rule 9 of Companies( Corporate Social Responsbility Policy) Rules-CSR Requirements<\/h3>\n\n\n\n

If the net worth\nand turnover of a company is more than a particular amount, they have to take\npart in corporate social responsibility activities (CSR). Such activities are\ncharitable in nature and have to be mentioned in the report. In the report the\nfollowing have to be mentioned:<\/p>\n\n\n\n