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COMPANIES ACT, 2013. SPECIAL FEATURES. Self Regulation. Forced Compliance. Equal Provisions for Private & Public Co(s). Harmonise with internationally accepted practice. Strict Penal Provisions. SPECIAL FEATURES. 33 new definitions inserted. 3 new schedules inserted:
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COMPANIES ACT, 2013 B A S & Co.
SPECIAL FEATURES • Self Regulation. • Forced Compliance. • Equal Provisions for Private & Public Co(s). • Harmonise with internationally accepted practice. • Strict Penal Provisions. B A S & Co.
SPECIAL FEATURES • 33 new definitions inserted. • 3 new schedules inserted: • Corporate Social Responsibility (CSR). • Code for Independent Directors. • Infrastructure Projects & Facilities. B A S & Co.
MAJOR CHANGES • Level of disclosure enhanced in Annual Return, BOD Report & Directors Responsibility Statement. (Non Financial Information) • Applicability of Corporate Social Responsibility for Companies having net worth of Rs. 500 Cr or more , or turnover of Rs.100 Cr or more or a Net profit 5 Cr shall constitute a CSR Committee. • The Board of every company shall ensure that the company spends in every financial year atleast 2% of the average net profits of the company made during the three immediately preceding financial years in pursuance of its CSR policy. • Appointment of Independent Directors made mandatory for listed Co(s) & specified Co(s). B A S & Co.
MAJOR CHANGES • Appointment of Women Director made mandatory for Specified Co(s). • Duties of Directors defined. • Appointment of at least one resident director mandatory. • Maximum no. of Directors increased from 12 to 15. B A S & Co.
MAJOR CHANGES • Central Government permission is not required for loan to directors/ for entering into related party transaction/ appointment of any director to any office or place of profit. • Maximum no. of Directorship in the company increased from 15 to 20 but in Public co(s) it is restricted to 10 (Transition period of 1 year is provided). • Definition of Key Managerial Personnel and Financial Statement introduced. B A S & Co.
MAJOR CHANGES • Whole time director to vacate office if he is absent for a consecutive period of 12 months even if leave of absence granted. • The provisions related to WTD/MD/manager are now applicable to Private Co(s) also. • Directors are also required to file their resignation to ROC along with detailed reason. • In case of Pvt. Co. also the interested directors can not vote. B A S & Co.
MAJOR CHANGES • Exemption to Pvt. Co(s) for making loan or providing guarantee etc. stands withdrawn. • Without prejudice to the provisions contained in this Act, a company shall unless otherwise prescribed, make investment through not more than two layers of investment companies: • Provided that the provisions of this sub-section shall not affect,— (i) a company from acquiring any other company incorporated in a country outside India if such other company has investment subsidiaries beyond two layers as per the laws of such country; (ii) a subsidiary company from having any investment subsidiary for the purposes of meeting the requirements under any law or under any rule or regulation framed under any law for the time being in force. B A S & Co.
MAJOR CHANGES • Compulsory Rotation of Auditors/Firm of Auditors for listed co (s) & specified Co(s).- shall appoint or re-appoint (a) an individual as auditor for more than one term of five consecutive years; and (b) an audit firm as auditor for more than two terms of five consecutive years: • Restriction made on auditors to provide specified services to the Co. & its Holding/Subsidiary Co. - a transitional period is provided to the auditors. • Applicability of Secretarial Audit for Specified Co(s). • Appointment of Internal Auditor for Specified Co(s). B A S & Co.
MAJOR CHANGES • CG permission is not required for appointment of Cost Auditor. • Introduction of SFIO. • Introduction of NFRA : The Central Government may be notification constitute a National Financial Reporting Authority to provide for matters related to accounting and auditing standards. B A S & Co.
MAJOR CHANGES • Restriction that in each quarter 1 BM to be held is dispensed with but the gap should not exceed 120 days between 2 BMs. • 7 Days BM notice is mandatory. • Secretarial Standard related to BM and GMs made mandatory. • Quorum for General Meeting of Public co(s) depends on the no. of members: 5 Members personally present if the no. of members is 1000, 15 if members is up to 5000,30 if member exceeds 5000. In case of Pvt. Co(s) it is 2 members. B A S & Co.
MAJOR CHANGES • Provisions of postal ballot will be applicable on all co(s). • Concept of whistle blower introduced for listed co(s) and specified co(s) to enable their directors and employees to report genuine concern. • Certain new matters to be transacted at BMs only. (Section 149).e.g. • To Diversify the business of the company. • To grant loans or give guarantee or provide security in respect of loans. B A S & Co.
MAJOR CHANGES • Books of accounts now may be kept in electronic form. • Financial year of the company should be April to March only. • Consolidated financial statements made mandatory if the co has one or more subsidiary company. • Reopening/ recasting of Financial Statements on the application of statutory body. B A S & Co.
MAJOR CHANGES • Concept of Stakeholders relationship committee and Nomination & Remuneration committee introduced for specified co(s). • Function of Company Secretary defined. • Concept of One person Company introduced. • Concept of Small co introduced subject to certain ceiling. • Concept of Class action suit by member introduced. • All types of charge now required to be registered. B A S & Co.
MAJOR CHANGES • Valuation of assets/liability/net worth etc. by Registered valuers only. • No. of Private Co(s) members increased from 50 to 200. • Restriction on acceptance of deposits from public i.e. subject to strict conditions only e.g. SH(s) approval etc. • Role of Information Technology enhanced i.e. holding BM through video conferencing/other audio visual means/E voting etc. (Not for all business) B A S & Co.
MAJOR CHANGES • Investors are entitled to claim dividends t/f to Investor Education & Protection Fund. (IEPF) • Shares in respect of unclaimed dividend is also to be transferred to IEPF. • Transfer of specified sum to reserves before declaration of dividend is now discretionary. B A S & Co.
MAJOR CHANGES • Inter corporate loan/investment now extended to loan & investments to any person also. • A company can’t make investment through two layers of investment co(s). • The limit of political contribution enhanced from 5% to 7.5%. • On Commencement of business, a declaration by directors and confirmation by company is to be filed with ROC. B A S & Co.
MAJOR CHANGES • Scope of Officer in default enhanced. • A defaulter Co. can make buy back of shares subject to the condition that default have been corrected and 3 years has elapsed. • MOA - Requirement to bifurcate object clause into main/ancillary and other objects is dispensed with. • Attachment to forms in pdf form will be replaced by machine readable form, but option has been kept for both pdf and machine readable form. B A S & Co.
ANNUAL RETURN (SECTION 92) Additional Disclosure: • Remuneration of the Directors and KMP. • Penalties imposed on the co. and on its directors/ compounding/ appeal made. • Principal business activities of the company along with particulars of its holding/ subsidiary and associate co(s). • Details of the meetings of members/boards along with attendance details. Note: • In Annual return the information up to the date of closure of F.Y. is required not up to the date of AGM. B A S & Co.
INDEPENDENT DIRECTOR (SECTION-149) • Means a person who & his relative do not have any relation with the company directly or indirectly. • Appointment will be subject to the approval in Shareholding Meeting. • Code for independent directors is given in Schedule IV. • In case of resignation/removal, a new independent director to be appointed with in 180 days. • The liability of independent & non executive directors will be limited. • Appointment is required in case of listed co(s) or such other co(s) as may be specified. (Disputed issue with CSR) B A S & Co.
DIRECTORS REPORT (SECTION 134) • The extract of the annual return. • No. of meetings of Board. • Declaration by independent directors whether they are required to be appointed. • The details about the policy developed and implemented by the company on CSR. B A S & Co.
DIRECTORS REPORT (SECTION 134) • Particulars of contracts or arrangements with related parties. • Particulars of loan, investment and guarantees. • A statement indicating the development and implementation of a risk management policy of the co. Directors responsibility statement: • The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate. B A S & Co.
CORPORATE SOCIAL RESPONSIBILITY(SECTION 135) Responsibility Regarding CSR: • Form a CSR Committee (Minimum 3 directors of which 1 should be independent director) • Appoint an Independent Director • Formulate a CSR Policy • Decide Expenditure on CSR • Minimum expenditure should be 2% of ANP of last three preceding F.Y. • Expenditure should be in vicinity of the Company. • Expenditure should be as per purposes specified in schedule VII. B A S & Co.
KEY MANAGERIAL PERSONNEL(KMP) • Appointment of KMP is mandatory for specified Co(s) only. • Intimation to ROC regarding any change in KMP. • Maintenance of Register of KMP. • KMP includes: • MD, CS,CEO,CFO,WTD,Manager. • Such other officer as may be prescribed. B A S & Co.
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