WEBSITE DISCLOSURES BY COMPANY MANDATORY OR NOT?
In a tech era as today almost all the Companies have a website. Websites often touch upon the areas of objectives, brief idea of business involved, contact details , shares information and so on. But people often ponder what ought to be there in a website and what not. Whether it is mandatory for a company to disclose certain information on the website is what this paper aim to answer.
Disclosures by a company involved in online business
Section 12 of the Companies Act 2013 which provides provisions with respect to registered office , getting its name, address, the Corporate Identity Number , emails and websites printed in the Company Documents read with Rule 26 of the Companies Incorporation Rules,2014 provides for the mandatory Website Disclosures of a Company engaged in online Business. It requires the company which has a website for conducting online business to publish/ disclose its:
- Address of its Registered Office
- The Corporate Identity Number
- Telephone and the Fax Number
- Email Id
- Name of the Person who is to be contacted in case of any grievances with the website
When it comes to a Company engaged in a online business , The Companies Act of 2013 and its Rules together provides for a mandatory website Disclosures to be made by these Companies.
Disclosures required by Private company
- Notice of the General meeting: Section 101 of the Companies Act 2013 provides an option to the Private Companies to issue a notice ‘ Either in writing or through electronic mode’ in not less than 21 days’ time of holding of the General Meeting.
This provision is optional and not mandatory as the provision itself grants permission to the private companies to furnish the notice in written mode rather than mandatorily disclosing the notice on the website.
- Disclosure for Unpaid Dividend: Sec 124(2) of The Companies Act 2013 provides that if a company has a website, to disclose; within a period of Ninety days of making of any transfer to the Unpaid Dividend Account, a Statement containing the names, their last known addresses and the unpaid dividends paid to each person and place on the company’s website or any other website approved by the central government.
- Details of Corporate Social Responsibility : Section 135(4)(a) of Companies Act 2013 read with Rule 9 of the Companies (Corporate Social Responsibility Policy) Rules , 2014 provides that the Board of Directors of the company have to approve the Corporate Social Responsibility Policy of the Company and disclose the contents of such policy in a report will shall be published in Companies website, if any.
- Audit Details on Website: Section 136 of the Companies Act,2013 provides that in case of a private listed company to place its financial statements including consolidated financial statements , if any, and all other documents required to be attached, on the website of the Company.
- Notice of resignation of the director: Section 168 of the Companies Act, read with Rule 15 of the Companies (Appointment and Qualifications of Directors) Rules, 2014 provides that the company shall within thirty days from the date of receipt of notice of resignation from a director ,intimate the registrar and post the information on its website, if any.
Disclosures by Public Limited Company
- Notice for change of Objects: Section 13 of the Companies Act, 2013 read with Rule 32 of the Companies (Incorporation) Rules, 2014 provides that “Where the company has raised money from public through prospectus and has any unutilised amount out of the money so raised, it shall not change the objects for which the money so raised is to be applied unless a special resolution is passed through postal ballot and the notice in respect of the resolution for altering the objects shall be published in the companies website”.
- Variations in the terms of contract or the objects for which the prospectus was issued: Section 27 of the Companies Act, 2013 read with Rule 7 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 provides that “ The advertisement for the notice getting the resolution passed for varying the terms of any contract referred to in the prospectus or altering the objects for which the prospectus was issued shall be in Form PAS-1 and such advertisement shall be published simultaneously with dispatch of Postal Ballot Notices to Shareholders and place the notice on the website of the company, if any”.
- Invitation of deposits from the Public: Section 73 of the Companies Act 2013 read with Rule 4 of the Companies (Acceptance of Deposits) Rules, 2014 provides that every eligible company intending to invite deposits shall issue a circular in the form of an advertisement in Form DPT-1 for the purpose in English language in an English newspaper having country wide circulation and in vernacular language in a vernacular newspaper having wide circulation in the State in which the registered office of the company is situated, and shall also place such circular on the website of the company, if any.
- Closure of register of members or debenture holders or other security holders: Section 91 of the Companies Act 2013 read with Rule 10 of the Companies (Management and Administration) Rules, 2014 provides that “A company closing the register of members or of debenture holders or of other security holders shall give atleast 7 days previous notice and in such manner, as may be specified by SEBI, if such company is listed company or intends to get its securities listed, by advertisement in at least once in a vernacular language newspaper and at least once in English newspaper and publish the notice on the website as may be notified by the Central Government and on the website of the company, if any”.
- Notice and Results of the postal ballot: Section 110 of the Companies Act 2013 read with Rule 22 of the Companies (Management and Administration) Rules, 2014 provides that :
- The notice of the postal ballot shall also be placed on the website of the company forthwith after the notice is sent to the members and such notice shall remain on such website till the last date for receipt of the postal ballots from the members.
- The results shall be declared by placing it, along with the scrutinizer’s report, on the website of the company.
- Vigil mechanism : Section 177 of the Companies Act 2013 provides that every listed company or such class or classes of companies, as may be prescribed, shall establish a vigil mechanism for directors and employees to report genuine concerns in such manner as may be prescribed and the details of establishment of such mechanism shall be disclosed by the company on its website, if any, and in the Board’s report.
- Appointment of Independent Directors: Section 149(6) read with Schedule IV(IV)(4) of the Companies Act, 2013 provides that “The terms and conditions of appointment of independent directors shall also be posted on the company’s website”.
Disclosures by Listed Companies
- Regulation 46 of Securities And Exchange Board Of India (Listing Obligations And Disclosure Requirements) Regulations, 2015 provides that a listed entity shall maintain a functional website containing the basic information about the listed entity. They are:
- details of its business;
- terms and conditions of appointment of independent directors;
- composition of various committees of board of directors;
- code of conduct of board of directors and senior management personnel;
- details of establishment of vigil mechanism/ Whistle Blower policy;
- criteria of making payments to non-executive directors , if the same has not been disclosed in annual report;
- policy on dealing with related party transactions;
- policy for determining ‘material’ subsidiaries;
- details of familiarization programmes imparted to independent directors including the following details:-
- number of programmes attended by independent directors (during the year and on a cumulative basis till date),
- number of hours spent by independent directors in such programmes (during the year and on cumulative basis till date), and
- other relevant details
- the email address for grievance redressal and other relevant details;
- contact information of the designated officials of the listed entity who are responsible for assisting and handling investor grievances;
- financial information including:
- notice of meeting of the board of directors where financial results shall be discussed;
- financial results, on conclusion of the meeting of the board of directors where the financial results were approved;
- complete copy of the annual report including balance sheet, profit and loss account, directors report, corporate governance report etc;
- shareholding pattern;
- details of agreements entered into with the media companies and/or their associates, etc;
- schedule of analyst or institutional investor meet and presentations made by the listed entity to analysts or institutional investors simultaneously with submission to stock exchange;
- new name and the old name of the listed entity for a continuous period of one year, from the date of the last name change;
- items in sub-regulation (1) of regulation 47 .
- With effect from October 1, 2018, all credit ratings obtained by the entity for all its outstanding instruments, updated immediately as and when there is any revision in any of the ratings.
- separate audited financial statements of each subsidiary of the listed entity in respect of a relevant financial year, uploaded at least 21 days prior to the date of the annual general meeting which has been called to inter alia consider accounts of that financial year.
- Regulation 34 of Securities and Exchange Board Of India (Listing Obligations and Disclosure Requirements) Regulations, 2015: The listed entity shall submit to the stock exchange and publish on its website-
(a) a copy of the annual report sent to the shareholders along with the notice of the annual general meeting not later than the day of commencement of dispatch to its shareholders;
(b) in the event of any changes to the annual report, the revised copy along with the details of and explanation for the changes shall be sent not later than 48 hours after the annual general meeting.
- Policy on dealing with related party transactions: Regulation 23 of Securities And Exchange Board Of India (Listing Obligations And Disclosure Requirements) Regulations, 2015 provides that the listed entity shall submit within 30 days from the date of publication of its standalone and consolidated financial results for the half year, disclosures of related party transactions on a consolidated basis, in the format specified in the relevant accounting standards for annual results to the stock exchanges and publish the same on its website.
- Disclosure of events or information : Regulation 30 of Securities and Exchange Board Of India (Listing Obligations And Disclosure Requirements) Regulations, 2015 provides that:
- The listed entity shall frame a policy for determination of materiality, based on criteria specified in this sub-regulation, duly approved by its board of directors, which shall be disclosed on its website.
- The board of directors of the listed entity shall authorize one or more Key Managerial Personnel for the purpose of determining materiality of an event or information and for the purpose of making disclosures to stock exchange(s) under this regulation and the contact details of such personnel shall be also disclosed to the stock exchange(s) and as well as on the listed entity’s website.
- The listed entity shall disclose on its website all such events or information which has been disclosed to stock exchange(s) under this regulation , and such disclosures shall be hosted on the website of the listed entity for a minimum period of five years and thereafter as per the archival policy of the listed entity, as disclosed on its website.
- Dividend Distribution Policy : Regulation 43A of Securities and Exchange Board Of India (Listing Obligations And Disclosure Requirements) Regulations, 2015 provides that
- The listed entities other than top five hundred listed entities based on market capitalization may disclose their dividend distribution policies on a voluntary basis in their annual reports and on their websites.
- The listed entity proposes to declare dividend on the basis of parameters in addition to clauses (a) to (e) or proposes to change such additional parameters or the dividend distribution policy contained in any of the parameters, it shall disclose such changes along with the rationale for the same in its annual report and on its website.
Code of Fair disclosure: Regulation 8 of the SEBI ( Prohibition of Insider Trading) Regulations, 2015 provides that the board of directors of every company, whose securities are listed on a stock exchange, shall formulate and publish on its official website, a code of practices and procedures for fair disclosure of unpublished price sensitive information.
The Companies Act of 2013 and its rules do not mandate the companies for disclosure of the information on their websites. The provisions emphasize on the words ‘if any’ , which in itself signifies that the laws do not require mandatory compliance . However, when it comes to a Listed Company, the Securities And Exchange Board Of India (Listing Obligations And Disclosure Requirements) Regulations, 2015 and the SEBI ( Prohibition of Insider Trading) Regulations, 2015 mandates the Website Disclosures to be made by these Companies. In a Digital era as today, websites are very much required for the corporate world. The Government should bring amendments to the Companies Act,2013 and bring about changes to mandate the use of website, which is essential for any company may it be listed or not as this eases the business of the Companies , reduces cumbersome paper works and safeguard the Environment .
Ramaiah College of Law