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10 Things You Should Know About The New Companies Act…

10 Things You Should Know About The New Companies Act…. The 57-Year-Old law that dictates the destiny of business in India has just undergone a complete overhaul !! Here’s a 5 minute primer on how it affects you……. CA Hitesh Purohit. If You are an Entrepreneur (or aspiring to be).

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10 Things You Should Know About The New Companies Act…

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  1. 10 Things You Should Know About The New Companies Act… • The 57-Year-Old law that dictates the destiny of business in India has just undergone a complete overhaul !! • Here’s a 5 minute primer on how it affects you…….. CA Hitesh Purohit

  2. If You are an Entrepreneur(or aspiring to be) • Start a Dormant Company… • Set up 1 person Company… • Small is Simpler… • Stay Private with 200 Shareholders… CA Hitesh Purohit

  3. START A DORMANT COMPANY Have a Business plan, a bit of funds and some intellectual property but not ready to run a business??......NO SWEAT!! Register a Company with Dormant Status and the Company is yours till you get time, money and motivation to go ‘Activeeee’ CA Hitesh Purohit

  4. Set up 1 person companyIf your business goes bust….you wont! • Don’t want another shareholder in your company and don’t want to set up a sole proprietorship either?? • SET UP 1 PERSON COMPANY AND BE ITS ONLY SHAREHOLDER… • Your liability would be limited to your investment in the company. CA Hitesh Purohit

  5. Small is simpler • Regulatory compliance, filing multiple forms, holding shareholders and board meetings, takes lot of time and funds for a small business. • The new law substantially unburdens you if you are a small company with turnover not more than Rs. 2 crore and paid up capital of Rs. 50 lakh. . CA Hitesh Purohit

  6. Stay private with 200 shareholders • Now enjoy more capital without going Public… • The maximum number of shareholders allowed in a private company has been revised to 200 from the earlier limit of 50 shareholders. CA Hitesh Purohit

  7. If You are an investor in stocks… • Power for Class Action… • Get out of Dead Investment easily… • Claim Dividend…..or Loose Shares!... • No Dividend as Preference Shareholder?? Get Voting Rights… CA Hitesh Purohit

  8. POWER OF CLASS ACTION • As a shareholder you don’t have to watch haplessly when the company indulges in fraud. • You can now sue the management, auditors, directors& even consultants of the company & seek compensation. CA Hitesh Purohit

  9. Get out of bad investment easily • You invested in a company because you liked its business plan but now, the company is changing that very plan!! • DON’T BE STUCK….. • The company now has to offer to buy out dissenting shareholders like you. Works Well for illiquid shares. CA Hitesh Purohit

  10. NO DIVIDEND??GET VOTING RIGHTS • Preference shares assure dividend to investors, making them safer than equity shares. • If you hold preference shares and the company skips dividend for the two years, you get Voting Rights on issues where your interests are involved. CA Hitesh Purohit

  11. CLAIM DIVIDEND.OR LOOSE SHARES.. • Currently Dividend unclaimed for 7 years is transferred to Investor Education & Protection Funnd. • In future, EVEN SHARES on which dividend remain unclaimed for 7 years will be transferred to the fund. • ONE MORE REASON TO OPT FOR ECS. CA Hitesh Purohit

  12. YOU ARE AN INDEPENDENT DIRECTOR… • Test of Independence…. • Less harrasement… CA Hitesh Purohit

  13. Test of independence • You cannot be related to the promoters or directors of the company. • You and your relatives together cant have financial interest in that company which exceeds 2% of the company’s gross turnover. CA Hitesh Purohit

  14. LESS HARRASEMENT !! • You cannot be held responsible for petty offences of the company like bouncing of cheques . • You are responsible only for wrongdoings that occurred with your consent or connivance. CA Hitesh Purohit

  15. CA Hitesh Purohit

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