COMPANIES ACT, 2013

1. COMPANIES ACT, 2013 Presented by CS Vijay Kumar Sharma

2. OVERVIEW Presented By CS Vijay Kumar Sharma

3. Introduction INDIA has seen many regulatory changes in the past. The recently enacted Companies Act, 2013 ('the Act') is a landmark legislation with far-reaching consequences on all companies incorporated in India. With the revised and complex Companies Act 2013, plethora of changes and Amendments has bought vast impact on corporate legal framework of the Country. According to the new regulatory framework, Companies need to rework their norms. Presented By CS Vijay Kumar Sharma

4. OLDvsNEW Presented By CS Vijay Kumar Sharma

5. Introduction of New Concepts Presented By CS Vijay Kumar Sharma

6. MILESTONES IN COMPANIES ACT, 2013 Presented By CS Vijay Kumar Sharma

7. Milestones • 02/12/2004 Constitution of an expert committee under the chairmanship of Dr. J.J. Irani to advice on company law. • 31/05/2005Submission of report to the government by expert committee. • 23/10/2008Introduction of Companies Bill, 2008 in LokSabha to replace existing Companies Act, 1956. Dissolution of 14th LokSabha leads to lapse in Companies Bill, 2008 lapsed. • 03/08/2009Introduction of Companies Bill 2009 in LokSabha by Ministry of Corporate Affairs. • 09/09/2009Bill referred to Parliament’s standing committee on finance (SCF) for examination. Presented By CS Vijay Kumar Sharma

8. 31/08/2010Introduction of report on Companies Bill in LokSabha by SCF. • 14/12/2011Introduction of fresh Companies Bill, 2011 in Parliament. • 05/01/2012Bill referred to Parliament’s standing committee on finance (SCF) after an objection being raised against it in Parliament. Based on SCF’s recommendations, Bill was amended and introduced as Companies Bill 2012 • 18/12/2012Approval of Companies Bill, 2012 in LokSabha however it could not be placed in that session in RajyaSabha. • 08/08/2013Finally, much awaited & needed landmark legislation passed by RajyaSabha in the form on COMPANIES ACT, 2013. A modern & contemporary company law replacing the old & outdated provisions of Companies Act,1956. Bill was immediately sent for consent from the President. Presented By CS Vijay Kumar Sharma

9. 29/08/2013Consent on the bill received by the President. • 12/09/2013MCA notified 98 Sections with effect from 12th September, 2013. • 01/04/2014MCA notified 183 Sections with effect from 01st April, 2014. WITH THIS NOTIFICATION MOST OF ACT BECAME APPLICABLE EXCEPT FOR SOME SECTIONS RELATED TO NCLT, NFRA, AND MERGERS & ACQUISITIONS Presented By CS Vijay Kumar Sharma

10. IMPORTANT DEFINITIONS

11. Associate Company A company in which another company has a significant influence, but which is not a subsidiary company of the company having such influence and includes a joint venture company. Significant influence means Control of:- • At least 20% of total share capital; or • Business decisions under an agreement; Presented By CS Vijay Kumar Sharma

12. Books of Accounts “Books of account” includes records maintained in respect of: • All sums of money received & expended and matters in relation to such transactions; • • All sales & purchases of goods & services; • • The assets & liabilities of the company; • • Costing records as prescribed. Presented By CS Vijay Kumar Sharma

13. Deposit “Deposit” includes any receipt of money by way of deposit or loan or in any other form by a Company, but does not include such categories of amount as may be prescribed in consultation with the RBI. Presented By CS Vijay Kumar Sharma

14. Financial Statement FINANCIAL STATEMENT includes : • BALANCE SHEET as at the end of Financial Year; • PROFIT & LOSS ACCOUNT for the Financial Year; (in case of Non Profit Company; INCOME & EXPENDITURE ACCOUNT for the Financial Year) • CASH FLOW STATEMENT for the Financial Year; (Cash flow not mandatory for One person, Dormant and Small Companies) • STATEMENT of change in Equity, if applicable • Any EXPLANATORY NOTE forming part of any of the items mentioned above. Presented By CS Vijay Kumar Sharma

15. Key Managerial Personnel “Key Managerial Personnel” includes – • The Chief Executive Officer or the managing director or manager; • The Company secretary; • The Whole time director; • The Chief Financial Officer; • such other officer as may be prescribed. Presented By CS Vijay Kumar Sharma

16. Relative Relative means anyone who is related to another, if – • • They are members of HUF • • Spouse • • Father/ Step-father • • Mother/ Step-mother • • Son/Step-son • • Son’s wife • • Daughter • • Daughter’s Husband • • Brother/ Step-brother • • Sister/ Step-sister Presented By CS Vijay Kumar Sharma

17. Small Company Private company having: • • Paid up share capital upto Rs.50 Lacs; or • • Turnover upto Rs. 2 Crores; •However small company excludes any holding/ subsidiary company or any company registered under section 8. Presented By CS Vijay Kumar Sharma

18. Subsidiary Company Subsidiary company means – • • A company in which the holding company : (a) Controls the composition of the board of directors; or (b) Exercises or controls more than one half of the total share capital (Equity + convertible preference) either at its own or together with one or more of its subsidiary companies. • • Companies shall not have layers of subsidiaries beyond two levels. Presented By CS Vijay Kumar Sharma

19. Turnover Turnover means the aggregate value of the realization of amount made from the sale, supply, or distribution of goods or on account of services rendered, or both, by the company during the financial year. Presented By CS Vijay Kumar Sharma

20. IMMEDIATE COMPLIANCES

21. Company’s Stationery As per companies Act 2013, companies are required to get its name, address of its registered office and the Corporate Identity Number along with telephone number, fax number (if any) e-mail and website addresses(if any) printed in all its business letters, billheads, letter papers and in all its notices and other official publications from 01/04/2014. Presented By CS Vijay Kumar Sharma

22. Director’s • Every Company is required to have minimum one resident director. Resident means “director who stayed in India for 182 days or more in previous calendar year” • For existing companies, company should fulfill the requirement of the resident director within one year. Presented By CS Vijay Kumar Sharma

23. A person is allowed to hold directorship in 20 co. only, out of which not more than 10 could be public companies including private ltd companies. if the person is the director in more than the above mentioned limit then he has to resign from the other companies in the excess of above limit within one year from the commencement of the act. Presented By CS Vijay Kumar Sharma

24. Director’s of the company has to mention their name, address & DIN (Director Identification Number) with their signature on all the documents certified by them. Presented By CS Vijay Kumar Sharma

25. Treatment of Application Money • Companies are time bound to allot the shares within a period of sixty (60) days from the date of receiving application. If they fail to allot the shares within prescribed duration then the entire amount should be repaid by companies within 15 days to the respective applicants. In the light of above provisions our view are if there are p[ending application money in the company as on 31/03/2014, than company should allot the shares before 30/06/2014 or repay that application money before 15/07/20104 Presented By CS Vijay Kumar Sharma

26. Pending Deposit • All the companies who had taken Deposit, shall file the return to ROC with 3 months. • Repayment of loan to its shareholders, within one year from the date of commencement of this act. In respect to the above provision amount taken by the company from all individual (Except Director) including its shareholder will also cover in the definition of deposit Presented By CS Vijay Kumar Sharma

27. Publication of Capital If company specifies its authorised capital at the time of issue of Notice, Advertisement or other official publication like Business letter, Billhead or Letter paper of a company, so it shall also mention its subscribed capital and paid-up capital in the same manner as the authorised capital. Presented By CS Vijay Kumar Sharma

28. Disclosure of Director’s Interest • Mandatory in first meeting in which the participating as director. • There after every first meeting of board in every financial year. • If there are any change in disclosure first meeting of board after such change. • In the meeting in which contract or arrangement discussing director will disclose his interest and will not participates in the meeting. • If director interested after the contract will disclose first board meeting after he become interested. Presented By CS Vijay Kumar Sharma

29. COMPANY FORMATION Presented By CS Vijay Kumar Sharma

30. Types of Companies Presented By CS Vijay Kumar Sharma

31. Key Features • Maximum number of members in a private companies can be 200, except for OPC. • Object clause of memorandum are classified as: Main object Matter considered necessary in furtherance thereof(Ancillary Objects) “Concept of other objects has been removed” • Reservation of proposed name for the company is valid for 60 days from date of application. EARLIER “it was 60 days from date of approval” Presented By CS Vijay Kumar Sharma

32. Penalty will be imposed if wrong information is provided to obtain name for the company. • Proof of relation is required, If the name applied contains name of some other person with whom promoter has a close blood relation. • NOC is required, If the name applied contains name of some other person with whom promoter has no blood relation. Presented By CS Vijay Kumar Sharma

33. Every subscriber of MOA and person named as first director shall provide an affidavit in Form INC-9 in respect to following points: • That he is not convicted of any offence in promotion, formation or management of the company. • That he is not found guilty of any fraud in last 5 years. • That all the documents filed for registration of company are correct and complete to the best of his knowledge and belief. Presented By CS Vijay Kumar Sharma

34. Signature of every subscriber of MOA shall be witnessed. • Duly filled FORM NO. INC-10 along with photograph attested by Banker/Notary. • It is mandatory to furnish the address & ID proof of the person who has witnessed the signature. Presented By CS Vijay Kumar Sharma

35. Documents required by each subscriber of MOA of the company Address proof- (Any One)Bank Statement\Electricity Bill\Telephone Bill\Mobile Bill (Proof should not be more than 2 months old)Identity proofPan card (Mandatory); ANDany one of the followingVoter-ID\Passport\Driving License\UIN(Adhaar Card)*For NRI & Foreign nationals, only passport is required & mandatory as well. Presented By CS Vijay Kumar Sharma

36. ONE PERSON COMPANY Presented By CS Vijay Kumar Sharma

37. OPC shall be incorporated & operated by only one person who is resident of India. • OPC should have a nominee whose name shall be mentioned in memorandum. • One person cannot be a member or nominee of more than one OPC. • No Minor shall become a member or nominee or hold shares in OPC. • OPC shall not carry out any non-banking financial investment activities. Presented By CS Vijay Kumar Sharma

38. OPC shall not be incorporated or converted into section 8 companies • Wherever the name OPC is printed, affixed or engraved, the word "One Person Company" shall be mentioned in the brackets, just below the name. • Member of OPC shall be considered as the first director of the company. • Company shall obtain consent from nominee in Form INC-3 and shall file the same with ROC in relevant forms. • OPC shall hold minimum two board meetings in every calendar year Presented By CS Vijay Kumar Sharma

39. A private limited company can also be converted into OPC. • OPC should be converted into a private or public company with-in six months in case its Paid-up share capital exceeds fifty lakh rupees or Average annual turnover exceeds two crore rupees (In any other case it cannot be converted into private or public company before completion of 2 years of its incorporation) Presented By CS Vijay Kumar Sharma

40. DORMANT COMPANY Presented By CS Vijay Kumar Sharma

41. Any company formed or registered to hold assets and intellectual properties and there are no other transaction other than “Significant Accounting Transaction” during The last two (2) Financial year Or Since Incorporation May make an Application to ROC in Form MSC-1 for obtaining the status of Dormant Company Presented By CS Vijay Kumar Sharma

42. =============================================“ Significant accounting transactions” means any transaction as mentioned below ==================================================== • Payment of fees by a company to the Registrar. • Payments made by company to fulfill the requirements of this act or any other law. • Allotment of shares to fulfill the requirements of this act. • Payments for maintenance of company’s office and records. Presented By CS Vijay Kumar Sharma

43. Company can make application in form no.Misc-1 • Roc can suomoto also convert the company as dormant if company has not filed the annual account since 2 or more years. • Dormant company shall file required documents with the ROC and pay prescribed annual fees. • If company not fulfill the conditions of this section registrar will strike off the company Presented By CS Vijay Kumar Sharma

44. Documentation/ Procedure

45. Registered office Presented By CS Vijay Kumar Sharma

46. Provision related to Registered Office • At the time of incorporation only address of correspondence till its registered office established. • Company should have its registered office on or before 15th day of its incorporation. • If not furnish verification of registered office or change of its registered office Rs. 1000/- per day penalty maximum upto 1 lacs. Presented By CS Vijay Kumar Sharma

47. Conversion Presented By CS Vijay Kumar Sharma

48. New Provision Approval of Tribunal is required EARLIER Power was with Central government Presented By CS Vijay Kumar Sharma

49. CAPITAL FUND RAISBY CO. Presented By CS Vijay Kumar Sharma

50. Sources • Share Capital • Equity share capital • Preference share capital • Debentures • Borrowings • Deposits