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Highlights of Companies Bill
August, 21st 2013
                     HIGHLIGHTS OF COMPANIES BILL


WHY A NEW LAW WAS NEEDED?

  The changing national and international economic environment

  Exponential growth of the Indian economy

  Changes in the stakeholders' expectations

  Manifold Increase in Number of Companies

      Year               No. of Companies

      1956               30,000 approx

      2013               11,00,000 approx

  The need of a legal framework was felt to enable the Indian corporate sector to adopt the
  best international practices in a globally competitive manner, fostering a positive
  environment for investment and growth

  Companies Bill 2012 was passed by Lok Sabha on 18th December, 2012 and subsequently,
  was passed by the Rajya Sabha on 8th August, 2013.

  The bill comprises of 29 chapters, 470 Clauses with 7 Schedules as against 658 sections and
  14 Schedules in the Companies Act, 1956

  Substantively a law based on Rules (as may be prescribed).

  In 470 Clauses the word "as may be prescribed" has been used at around 336 places.

NEW CONCEPTS

  New definitions (Accounting Standards, Auditing Standards, Associate Company, Authorized
  Capital, Books of Accounts, Called up Capital, Charge, Chartered Accountant, Chief
  Executive Officer, Chief Financial Officer, Company Limited By Guarantee, Company Limited
  by Shares, Company Liquidator, Contributory, Control, Cost Accountant, Deposit, Expert,
  Financial Institution, Financial Statement, Foreign Company, Free Reserves, Global
  Depository Receipt, Independent Director, Indian Depository Receipt, Interested Director,
  Issued Capital, Key Managerial Personnel, Notification, Official Liquidator, One Person
  Company, Ordinary or Special Resolution, Postal Ballot, Promoter, Public Financial
  Institution, Register of Companies, Related Party, Remuneration, Serious Fraud
  Investigation Office, Small Company, Subscribed Capital, Sweat Equity Shares, Turnover,
  Unlimited Company, Voting Right, Whole Time Director).
Private company to have a maximum of 200 members (earlier limit was upto 50). (Clause 2
(68))

E-Governance ­ maintenance and allowing inspection of documents by companies in
electronic form. (Clause 120)

Vigil mechanism (whistle blowing) introduced. (Clause 177 (10))

In prescribed class or classes of companies, there should be atleast 1 woman director.
(Clause 149 (1))

Restrictions on layers of subsidiaries. (Clause 2 (87))

The Financial Year of any Company can be only from April-March. Existing companies has to
align within 2 years of the commencement of the Act. (Clause 2 (41))

Memorandum not to have `other objects'. (Clause 4 (1))

A person cannot become director in more than 20 companies instead of 15 as provided in
the Companies Act 1956 and out of this 20, he cannot be director of more than 10 public
companies. (Clause 165)

Shareholders to have exit option if money raised has not been utilized. (Clause 27)

A company can make buyback even if it had at any time defaulted in repayment of deposit
or interest payable thereon, redemption of debentures or preference shares or payment of
dividend to any shareholder or repayment of any term loan or interest payable thereon to
any financial institution or bank, provided that default must have been remedied and a
period of 3 years must have lapsed after such default ceased to subsist. (Clause 66 (6))

Concept of CSR introduced. (Clause 135)

Definition of independent Directors introduced. (Clause 149 (5))

Condition and manner for issue of Bonus shares has been introduced. (Clause 63)

New provisions suggested for allowing re-opening of accounts in certain cases with due
safeguards. (Clause 130)

Consolidation of Accounts (Clause 129)

Secretarial Audit Report given by a company secretary in practice is required to be attached
with Boards' report in case of bigger companies. (Clause 204)
    CHAPTERWISE HIGHLIGHTS OF COMPANIES BILL




Chapter   Section    Highlights

I         1-2        PRELIMINARY

                     This Act may be called the Companies Act, 2013 (Clause 1 (1))

                     Some important Definitions

                        Clause 2 (6) "associate company", in relation to another company, means a
                        company in which that other company has a significant influence, but
                        which is not a subsidiary company of the company having such influence
                        and includes a joint venture company.

                        Explanation.--For the purposes of this clause, "significant influence" means
                        control of at least twenty per cent of total share capital, or of
                        business decisions under an agreement.

                         Clause 2 (27) "control", shall include the right to appoint majority of the
                        directors or to control the management or policy decisions exercisable by a
                        person or persons acting individually or in concert, directly or indirectly,
                        including by virtue of their shareholding or management rights or
                        shareholders agreements or voting agreements or in any other manner;

                        Clause 2 (34) "director", means a director appointed to the Board of a
                        company.

                        Clause 2 (40) "Financial Statement" in relation to a company includes,

                        i. a balance sheet as at the end of the financial year,
                        ii. a profit and loss account, or in the case of accompany carrying on any
                            activity not for profit, an income and expenditure account for the
                            financial year;
                        iii cash flow statement for the financial year,
                        iv a statement of changes in equity; and
                        v any explanatory note attached to or forming part of any document
                            referred to in sub-clause (i) to sub-clause (iv);

                        provided that the financial statement with respect to One Person Company,
                        small company and dormant company may not include the cash flow
                        statement.

                     Issue: Cash Flow Statement becomes mandatory.
Clause 2 (41) definition of "Financial Year" modified
  The Financial can mandatorily end on 31st March
  Exception- entities which are holding cos or subsidiary companies of
     foreign companies requiring consolidation outside India with the
     approval of Tribunal.
  Existing companies to align within 2 years

 Clause 2 (43) definition of ``Free Reserves'' modified,
  Share premium account does not form part.
  Credit balance in Statement of Profit & Loss is not free reserve.

 Clause 2 (51) "key managerial personnel", in relation to a company,
 means--
 (i) the Chief Executive Officer or the managing director or the manager;
 (ii) the company secretary;
 (iii) the Chief Financial Officer if the Board of Directors appoints
       him; and
 (iv) such other officer as may be prescribed;

 Clause 2 (57) definition of ``net worth'' modified, it says that only paid up
 capital, share premium and reserves created out of profit will be treated as
 net worth.
  Credit balance in Statement of Profit & Loss has been left out.

 Clause 2 (59) definition of "Officer" modified to include CEO/ CFO or any
 other officer as may be prescribed.

 Clause 2 (60) "officer in default":
 Scope broadened
  Directors aware of the default
  CFO
  KMP's if knowingly commits default

  Clause 2 (77) ``relative'', with reference to any person, means anyone who
 is a related to another, if--
 (i) they are members of a Hindu Undivided Family;
 (ii) they are husband and wife; or
 (iii) one person is related to the other in such manner as may be prescribed

Small Company (Clause no. 2(85)) : means a company,
other than a public company,-
i. paid up share capital of which does not exceed fifty lakh rupees or such
     higher amount as may be prescribed which shall not be more than five
     crore rupees; or
ii. turnover of which as per its last profit and loss account does not exceed
     two crore rupees or such higher amount as may be prescribed which
     shall not be more than twenty crore rupees.
            Provided that nothing in this clause shall apply to :
               (a) a holding company or a subsidiary company;
               (b) a company registered under section 8;
               (c) a company or body corporate governed by any special act.

            subjected to a lesser stringent regulatory framework
II   3-22   INCORPORATION OF COMPANY AND MATTERS INCIDENTAL
            THERETO

               Concept of One Person Company has been introduced and the OPC can be
               formed as private limited company (Clause 3). Certain Privileges Provided
               to OPCs
                The financial statement may not include the cash flow statement
                   [Proviso to Clause 2(40)]
                The annual return to be signed by the company secretary, or where
                   there is no company secretary, by the director of the company.
                No requirement of holding an AGM [Clause 96(1)]
                Inapplicability of the provisions of Section 98 and Sections 100 to 111
                   (both inclusive) [Clause 122(1)]
                Minimum number of directors: 1 [Clause 149(1)]
                Board Meetings- Minimum 1 in each half of a calendar year and the Gap
                   between the two meetings shall not be less than 90 days. Not
                   applicable where there is only one Director. Clause 173 (5)
                Quorum for Board Meetings not applicable where there is only 1
                   director in OPC. (Clause 174)

               The Memorandum of Association shall only state the mandatory objects.
               The Company cannot provide for other object clause (Clause 4).

               After reservation of name for proposed company, if it is found that the
               name was applied for furnishing wrong or incorrect information then
               a) Company not incorporated- Reserved name cancelled and a penalty not
                   exceeding Rs. 100000 shall be levied.
               b) Company incorporated- name to be changed or to make a petition for
                   winding up. (Clause 4(4) and 4(5)).

               Articles of Association may contain provisions with respect to entrenchment
               whereby the specified provisions of the article can be alerted only if the
               more restrictive conditions or procedures as compared to those applicable
               in case of special resolution have been met with. (Clause 5)

               A declaration, in the prescribed form, required to be filed with the Registrar
               at the time of registration of a company that all the requirements of the Act
               in respect of registration and matters precedent or incidental thereto have
               been complied with, will be required to be signed by both - a person
               named in the articles as a director, manager or secretary of the company
               as well as by an advocate, a chartered accountant, cost accountant or
               company secretary in practice, who is engaged in the formation of the
                  company. (Clause 7)

                  If a company has any raised Money from public through prospectus and if
                 there is any unutilised amount out of the money so raised, it shall not
                 change its objects unless a special resolution is passed and other
                 requirements of advertisement and exit opportunity to dissenting
                 shareholders is complied with. (Clause 13)
III   23- 42   PROSPECTUS AND ALLOTMENT OF SECURITIES

                  The Bill governs the issue of all types of securities (Clause 23)

                  Public company can only issue securities by following the provisions related
                  to public offer or Private Placement or by way of bonus or right issue.
                  (Clause 23)

                  A Private company may issue securities only through private placement by
                  complying with the provisions of Part II of Chapter III. (Clause 23)

                  Where a company has varied the terms of contract and has not utilized any
                  amount raised by it, the dissenting Shareholders to have exit option.
                  (Clause 27)

                  The Bill provides provisions for offer of sale by existing shareholders to
                  public. (Clause 28)

                  Any class of companies or companies as the SEBI may provide by
                  regulations may file shelf prospectus. (Clause 31)

                  Deals with Civil liability and where it is proved that a prospectus has been
                  issued with intent to defraud then every person (like directors, promoters,
                  experts etc.) shall be personally liable without any limitation of liability.
                  (Clause 35)

                  Any person (including group or association) who is affected by any
                  misleading statement or inclusion or omission of any matter in the
                  prospectus can file any suit or take any action under clause 35 or 36
                  providing for civil liability for misstatement in prospectus and Punishment
                  for fraudulently inducing persons to invest money. (Clause 37)

                  A person shall also be liable for impersonation, in case he makes multiple
                  applications in different name or in different combination of surnames for
                  acquiring or subscribing the securities of the company. (Clause 38)

                  Return of allotment shall be filed with the Registrar. Clause 39(4)

                  Companies may now issue Global Depository Receipt by passing the special
                  resolution and subject to such conditions as may be prescribed. (Clause 41)
                 Qualified Institutional Buyers shall not be covered under the provisions
                 related to Private Placement

                 If a company, listed or unlisted, makes an offer to more than the
                 prescribed number of persons, whether the payment for the securities has
                 been received or not or whether the company intends to list its securities or
                 not on any recognised stock exchange in or outside India, the same shall
                 be deemed to be an offer to the public and shall accordingly be governed
                 by the provisions provided in this regard by SEBI.

                Any company making any offer or invitation of securities under private
                placement has to allot the securities within 60 days of receipt of application
                money. (Clause 42)
IV   43- 72   SHARE CAPITAL AND DEBENTURES

                 If a company with intent to defraud issues a duplicate certificate of shares,
                 the company shall be punishable with fine which shall not be less than five
                 times the face value of the shares involved in the issue of the duplicate
                 certificate but which may extend to ten times the face value of such shares
                 or rupees ten crores whichever is higher and every officer of the company
                 who is in default shall be liable for action under section 447. (Clause 46)

                 The conditions under which the preference shareholders can vote on every
                 resolution placed before meeting of shareholders has been changed. Now
                 preference shareholders can only exercise such voting rights when
                 dividends payable in respect of a class of preference shares are in arrears
                 for a period of 2 years or more. There is no distinction between cumulative
                 and non cumulative preference shares. (Clause 47)

                 If the variation of one class of shareholders affects the rights of any other
                 class of shareholders the consent of ¾ of that class should also obtained.
                 (Clause 48)

                 Such class of companies as may be prescribed and whose financial
                 statements comply with the accounting standards cannot utilize securities
                 premium for in writing off the preliminary expenses, for providing the
                 premium payable on the redemption of preference shares or of any
                 debentures of the company. (Clause 52)

                 A company cannot issue share at a discount. In case of default penalty
                 shall be levied. [Clause(53)]

                 Company cannot issue shares at discount other than as sweat equity, no
                 provision has been provided for any approval. (Clause 54)

                 a company may issue preference shares redeemable after 20 years for such
                 infrastructure projects as may be specified subject to redemption of
                 specified % of preference shares on annual basis at the option of the
                preference shareholder. The term Infrastructure projects has been defined
                for the purpose of this section as the infrastructure projects specified in
                Schedule VI. (Clause 55)

                Alteration of Share Capital shall be made only after making application to
                the Tribunal and getting approval. (Clause 61)

                Bonus shares can be issued out of ­
                 Free reserves, Securities premium, CRR, not in lieu of dividend,
                   authorized by AOA,
                 recommended by the Board and authorized by general meeting and if
                   no defaults in respect of statutory dues (PF, gratuity and bonus)
                   (Clause 63)

                Apart from existing shareholders, if the company having share capital at
                any time, proposes to increase its subscribed capital by the issue of further
                shares, such shares may also be offered to employees by way of ESOP
                subject to approval of shareholders by way of special resolution. (Clause
                62)

                No reduction of capital shall be allowed if the company is in arrears for
                payment of deposits, accepted either before or after the commencement of
                this Act. Reduction of share capital to be made subject to confirmation by
                the Tribunal. The Tribunal on receiving an application for reduction of share
                capital, shall give notice to the Central Government, Registrar and to the
                SEBI and consider the representations received in this behalf (Clause 66)

                A company can make buyback even if it had at any time defaulted in
                repayment of deposit or interest payable thereon, redemption of
                debentures or preference shares or payment of dividend to any shareholder
                or repayments of any term loan or interest payable thereon to any financial
                institution or bank, provided that default must have been remedied and a
                period of 3 years must have lapsed after such default ceased to subsist.
                (Clause 66 (6))

               When the company issues prospectus or make an offer or invitation to the
               public or to its members exceeding five hundred for the subscription of its
               debentures, it is required to appoint a debenture trustee. (Clause 71)
V   73- 76   ACCEPTANCE OF DEPOSITS BY COMPANIES

                NBFCs are not covered by the provisions relating to acceptance of deposits
                and they will be governed under rules issued by Reserve Bank of India.
                (Clause 73)

                Company may accept deposit from persons other than its members having
                net worth and turnover of certain amount as prescribed subject to
                complying with necessary conditions and after consultation with RBI.
                (Clause 76)
VI     77- 87     REGISTRATION OF CHARGES

                    All types of charge created would be required to be registered with ROC.
                    (Clause 77)
VII    88- 122    MANAGEMENT AND ADMINISTRATION

                     New particulars to be included in the Annual return under sub-clause (e) to
                     (k). (Clause 92)
                     Every listed company shall file a return in the prescribed form with the
                     Registrar with respect to change in the number of shares held by
                     promoters and top ten shareholders of such company, within 15 days of
                     such change. (Clause 93)

                     First Annual General Meeting of the Company shall be held within the
                     period of 9 months from closure of its first financial year instead of 18
                     months from the date of the Incorporation. AGM can be called on a public
                     holiday. (Clause 96)

                     The Central Government may prescribe the class or classes of companies
                     and manner in which a member may exercise his right to vote by the
                     electronic means. (Clause 108)

                     The resolution requiring special notice has to be moved by such number of
                     members holding not less than 1 % of total voting power or holding shares
                     on which an aggregate sum of not less than one lakh rupees has been
                     paid-up. (Clause 115)

                     Penalty is now prescribed for tampering with the minutes. (Clause 118)

                    Every Listed Public Company is required to prepare a report in the manner
                    as may be prescribed on each AGM including the confirmation that meeting
                    was convened, held and conducted as per the Act and the rules made
                    thereunder. (Clause 121)
VIII   123- 127   DECLARATION AND PAYMENT OF DIVIDEND

                     A company may before the declaration of dividend transfer such & of its
                     profits for that financial year to reserves as it may consider appropriate.
                     This means that % of profits that can be transferred to reserves has been
                     left to the wisdom of the company. (Clause 123)
                      No dividend shall be paid by a company from its reserves other than free
                     reserves. (Clause 123)

                     The Board of Directors of a company may declare interim dividend during
                     any financial year out of the surplus in the Statement of Profit and Loss and
                     out of profits of the financial year in which such interim dividend is sought
                     to be declared.
                     A company cannot declare interim dividend at a rate higher than the
                     average dividends declared by the company during the immediately
                   preceding three financial years, where it has incurred loss during the
                   current financial year up to the end of the quarter immediately preceding
                   the date of declaration of interim dividend. (Clause 123 (3))

                  All shares for which unpaid or unclaimed dividend has been transferred to
                  Investor Education Protection Fund shall also be transferred by the
                  company in the name of Fund along with a statement containing such
                  details as may be prescribed. (Clause 124 (6))
IX   128- 138   ACCOUNTS OF COMPANIES

                   The term Balance Sheet & Profit & Loss Account, has been defined
                   collectively as financial statement under the Act and cash flow statement
                   also forms part of the same. (Clause 2(40))

                   Books of Accounts etc. to be kept by the company- The Books of accounts
                   may be kept in electronic form also.
                   In case of default, the Managing Director, the whole time director in charge
                   of finance, the CFO and any other person charged by the Board with the
                   duty of complying with the provisions of this Clause, they shall be
                   punishable, Even if the default was not done wilfully. (Clause 128)

                   The requirement of attaching the balance sheet, profit & loss account,
                   report of board of directors, auditor report, statement of the holding
                   company's interest in the subsidiary and others reports as was required by
                   section 212 of the Companies Act 1956 has been dispensed with.

                   The benefit given to Private Companies to file their balance sheet & profit
                   and loss account separately has been withdrawn.

                   Along with financial statement, consolidated financial statement of all
                   subsidiaries shall be prepared and shall also be laid before the AGM.
                   Subsidiary shall for the purpose of this requirement include associate
                   company and joint venture. (Clause 129)

                   No re-opening or re-casting of book of accounts of the Company is allowed
                   except under Court's or Tribunal's orders. (Clause 130)

                   Voluntary revision of financial statements or Board's Report can also be
                   made with Tribunal's consent. (Clause 131)

                National Financial Reporting Authority (Clause 132)

                   The name of NACAAS has been changed to National Financial Reporting
                   Authority (NFRA) and authority is to advise on matters related to auditing
                   standard in addition to accounting standards.

                   The CG may prescribe the standards of accounting or any addendum
                   thereto, as recommended by the ICAI in consultation with and after
  examination of the recommendations made by the NFRA.

  Powers of NFRA includes:
   monitor and enforce the compliance with accounting and auditing
     standards
   oversee the quality of service of the professions associated with
     ensuring compliance with such standards
   have the power to investigate into the matters of professional or other
     misconduct committed by any member or firm of chartered
     accountants and impose penalties of not less than Rs. 1 lakhs in case
     of individuals and Rs. 10 Lakhs in case of firms and debar members/
     firms for a period of 6 months to 10 years.

  Provided that the Appellate Authority constituted under respective Acts
  shall be deemed to the appellate authority against any order made by the
  NFRA and any person aggrieved by any order of the NFRA shall have the
  right to appeal before the appellate authority.

Issues related to Clause 132

  NFRA had jurisdictions over CAs, cost accountants, company secretaries
  and any other profession as may be prescribed.

  Now, this Clause has been amended, NFRA to have jurisdiction over only
  CAs. i.e., Professional misconduct of chartered accountants also comes
  under NFRA.

  Where NFRA initiates an investigation, no other institute or body shall
  initiate or continue any proceedings in such matters of misconduct

  Penalty increased

  Chairperson and members in Full Time Employment with NFRA shall not be
  associated with any audit firm including related consultancy firms during
  the course of their appointment and 2 years after ceasing to hold such
  appointment.

  The Director's report for every company except for One Person Company,
  shall provide various types of additional information like number of
  meetings of the Board, Company's policy on directors' appointment and
  remuneration; explanations or comments by the Board on every
  qualification, reservation or adverse remark or disclaimer made by the
  Company Secretary in his secretarial audit report, particulars of loans,
  guarantees or investments etc. (Clause 134)

  The Directors responsibility statement in case of listed company shall also
  include additional statement related to internal finance control and
  compliance of all applicable laws
               Corporate Social Responsibility (Clause 135)

                  Concept of CSR introduced & Board to have a CSR Committee consisting of
                  three or more directors, out of which at least one director shall be an
                  independent director for companies
                     having networth of Rs. 500 crore or more or
                     turnover of Rs. 1000 crore or more or
                     net profit of Rs. 5 crore or more
                  during any financial year

                 The committee shall recommend the policy for CSR to the Board

                  Board to ensure atleast 2% of average net profits may during 3
                  immediately preceding years spent every year on CSR

                 Certain Class of companies are required to appoint an internal auditor to
                 conduct internal audit of the books of company. Internal Auditor shall be a
                 Chartered Accountant or Cost Accountant or such other professional as
                 may be decided by Board. (Clause 138)
X   139- 148   AUDIT AND AUDITORS

                  Every company shall, at the first annual general meeting, appoint an
                  individual or a firm as an auditor who shall hold office from the conclusion
                  of that meeting till the conclusion of its sixth annual general meeting and
                  thereafter till the conclusion of every sixth meeting.

                  Provisions for compulsory rotation of individual auditors in every five years
                  and of audit firm every 10 years in the listed company & certain other class
                  of companies, as may be prescribed.

                  A transition period of 3 years from the commencement of this Act has been
                  prescribed for the Company existing on or before the commencement of
                  this Act to comply with the provision of the rotation of auditor.

                 The members of a company can resolve for rotation of auditing partner and
                 also for audit to be conducted by more than auditor. (Clause 139)

                  Where a company constitutes an Audit Committee, all appointments
                  including the filling of a casual vacancy of an auditor shall be made after
                  taking into account the recommendations of Audit Committee.

                  appointment is done once for 5 years
                   Ratification done every year
                   confusion between "ratification" and "reappointment" taken as these two
                    expressions to mean the same
                   Mandatory retirement after 5 years in case of individual and 10 years in
                    case of firms
                  ­ no auditor/audit firm/ audit firms having common partners, shall take
 audit for a consecutive term of 5 years after 5 years have been
 completed
 Provision applicable to all listed companies, and companies of such class
 as may be prescribed

A person at the time of appointment or reappointment holding appointment
as auditor of more than twenty companies shall not be eligible for
appointment. (Clause 141 (3) (g))

In case, LLP is appointed as auditor only chartered Accountants is allowed
to act and sign on behalf of the firm. Clause 141(2)

Multidisciplinary partnership is allowed. Proviso to Clause 141(1)

Fraud reporting- A duty has been casted on the auditor, to immediately
report to the central government, any offence involving fraud which is
being or has been committed against the company by officers or
employees of the company, which he believes to be committed during the
course of performance of his duties as an auditor.

The Auditor shall also comply with auditing standards. The Central
Government will prescribe the standards of auditing or any addendum
thereto, as recommended by the ICAI, in consultation with and after
examination of the recommendations made by the NFRA. (Clause 143)

Auditor of the company shall not provide directly or indirectly the specified
services to the company, its holding and subsidiary company. (Clause 144)

The Auditor unless otherwise exempted by the company shall attend any
general meeting by himself or through his representative. (Clause 146)

Auditors not to provide non-audit services (Clause 144)
Following services not to be provided
 accounting and book keeping services;
 internal audit;
 design and implementation of any financial information system;
 actuarial services;
 investment advisory services;
 investment banking services;
 rendering of outsourced financial services;
 management services; and
 any other kind of services as may be prescribed
 not to the company, holding company, or subsidiary directly or
    indirectly
 indirectly includes through relative, connected or associated person, or
    other entity over which individual has significant influence or control, or
    whose name or trade mark or brand is used by the individual
                Clause 147




                   In case the auditor contravenes the provisions related to his powers &
                   duties, provide services given under Clause 144 then in addition to
                   punishment provided in the section, he shall be required to refund the
                   remuneration received by him from the company and shall be liable to pay
                   the damages to the company or to any person for the loss arising out of
                   misleading or incorrect information.

                   It is specifically provided that partner or partners of the audit firm and the
                   firm shall be jointly and severally responsible for the liability, whether civil
                   or criminal as provided in this Act or in any other law for the time being in
                   force.

                    If it is proved that the partner or partners of the audit firm has or have
                   acted in a fraudulent manner or abetted or colluded in any fraud by, or in
                   relation to or by, the company or its directors or officers, and they shall
                   also be punishable in the manner provided in Clause 447.

                Cost Audit (Clause 148)

                   Instead of company pertaining to any class of companies engaged in
                   production, processing, manufacturing or mining activities, the central
                   government can only direct cost audit to be conducted in such class of
                   companies engaged in the production of such goods or providing such
                   services , which have the prescribed networth or turnover and who has
                   been directed to include the particulars relating to the utilization of material
                   or labour or to other items of cost as may be prescribed in their books of
                   account .

                  No approval is required of central government for the appointment of cost
                  auditor to conduct the cost audit
XI   149- 172   APPOINTMENT AND QUALIFICATIONS OF DIRECTORS

                   In prescribed class or classes of companies, there should be atleast 1
                   woman director. (Clause 149)

                   There is a provision for compulsory rotation of individual auditors in every
                   five years and of audit firm every 10 years in the listed company & certain
                   other class of companies, as may be prescribed.

                   Out of all the Directors, atleast one director shall be a person who has
                   stayed in India for a total period of not less than one hundred and eighty-
                   two days in the previous calendar year.

                   The maximum limit of directors in the Company has been increased to 15
                   with a power to add more directors upon passing of Special Resolution.
                   (Clause 149 (1))
                    A person cannot become directors in more than 20 companies and out of
                    this 20, he cannot be director of more than 10 public companies. (Clause
                    165)

                    A transitional period of 1 year is provided to persons acting as director to
                    comply with the requirement of maximum number of directorship and they
                    have to intimate their choice to each of company where they wish to
                    continue as director and also to the Registrar.

                   Independent Directors- Defined in Clause 149 (5)
                     Qualifications as may be prescribed
                      Term upto 5 consecutive years prospectively but not for more than two
                     consecutive terms
                     Reappointment by Special Resolution
                     Cooling off period for three years

                    The Bill provides provision for limiting the liability of Independent Director
                    and non executive director not being promoter or key managerial
                    personnel. (Clause 149)

                    Panel of ID's to be maintained by a body/institute notified by the CG
                    facilitating appointment of Independent Directors. (Clause 150)

                    Listed company may have one director by small shareholders. (Clause 151)

                    The company and the independent directors shall abide by the provisions
                    of (Code of Conduct) specified in Schedule IV of the bill.

                    Every listed public company shall have at least one-third of the total
                    number of directors as independent directors. Companies existing as on
                    date of commencement of this Act have been provided a transition period
                    of 1 year for the compliance of this provision. (Clause 163)

                 Resignation of Director (Clause 168)

                   The Bill prescribes the duties of the directors towards the company

                    Directors are required to mandatorily forward their resignation along with
                    detailed reason for resignation also to the Registrar within 30 days of
                    resignation in prescribed manner.

                   The notice for removal of director can only be given by prescribed number
                   of members or members holding prescribed number of shares or voting
                   power.
XII   173- 195   MEETINGS OF BOARD AND ITS POWERS

                    Atleast 4 meeting should be held each year. There is no requirement of
                    holding the meeting every quarter; the only requirement is that not more
than 120 days shall elapse between two consecutive meetings. (Clause 173
(1))

The Bill provides that Director can participate in the Board meeting through
video conferencing or other audio visual mode as may be prescribed.
(Clause 173 (2))
Notice of not less than seven days in writing is required to call a board
meeting and notice of meeting to all directors shall be given, whether he is
in India or outside India by hand delivery or by post or by electronic
means. (Clause 173 (3))

The participation of director at Board meeting through video conferencing
or by other electronic means shall be counted for the purpose of Quorum.
(Clause 174)

Every Listed Company and such other company as may be prescribed shall
form Audit Committee comprised of minimum 3 directors with majority of
the Independent Directors and majority of members of committee shall be
person with ability to read and understand financial statement.
 Vigil mechanism to be established in the prescribed manner by every
    listed company or such class or classes of companies, as may be
    prescribed. (Clause 177)

Every listed company and prescribed class or classes of companies, shall
constitute the Nomination and Remuneration Committee consisting of three
or more non-executive directors out of which not less than one half shall be
independent directors.

Every company which consists of more than one thousand shareholders,
debenture-holders, deposit-holders and any other security holders at any
time during a financial year shall constitute a Stakeholders Relationship
Committee consisting of a chairperson who shall be a non-executive
director and such other members as may be decided by the Board. (Clause
178)

The limits for political contribution by company have been changed. The
contribution shall not exceed 7.5%. of the average net profits of the
Company during the three immediately preceding financial years. (Clause
182)

Disclosure of interest by every director has been made mandatory. The
disclosure shall be made at the first meeting of the Board in which he
participates as a director and thereafter at the first meeting of the Board in
every financial year or whenever there is any change in the disclosures
already made.

In case of private company also, an interested director cannot vote or take
part in the discussion relating to any matter in which he is interested.
                     (Clause 184)

                     The requirement of permission of CG for giving loan to Director has been
                     dispensed with. (Clause 185)

                     Inter corporate investments not to be made through more than 2 layers of
                     investment companies. (Clause 186)

                     No approval of CG is required for entering into any related party
                     transactions and for appointment of any director or any other person to
                     any office or place of profit in the company or its subsidiary. (Clause 188)

                     A company shall not enter into any arrangement by which a director of the
                     company or of its holding company or any person connected with him can
                     acquire assets for the consideration other than cash from the company &
                     vice versa without the approval of company in general meeting. (Clause
                     192)
                     Forward dealing in securities of company by director and key managerial
                     personnel is prohibited. Penalty in case of contravention will be
                     imprisonment for 2 years and fine from Rs. 2 lakhs to Rs. 5 lakhs. (Clause
                     194)

                    Insider trading of the securities in the company is prohibited. (Clause 195)
XIII   196- 205   APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL

                     Independent director not entitled to stock option and may receive
                     remuneration only by way of fees or commission.

                     Where a company is required to re-state its financial statement due to
                     fraud or non-compliance with any requirement under this Act and the rules
                     made thereunder, the company shall recover from any past or present
                     managing director or whole-time director or manager who, during the
                     period for which the financial statements are required to be re-stated, the
                     remuneration received (including stock option) arisen due to such
                     statement or non-compliance in excess of what would have been paid to
                     the managing director, whole-time director or manager under such re-
                     stated financial statements. (Clause 197)

                     Every company belonging to such class or description of companies as may
                     be prescribed shall have Managing Director, or Chief Executive Officer or
                     Manager and in their absence, a whole-time director and Company
                     Secretary.
                     Same person shall not be the Chairperson and MD or CEO at the same
                     time. (unless articles provide). (Clause 203)

                     Secretarial Audit compliance report in case of certain class of companies to
                     be annexed with the Board's report. (Clause 204)
XIV   206- 229   INSPECTION, INQUIRY AND INVESTIGATION

                    The Central Government will establish Serious Fraud Investigation Office
                    (SFIO) for investigation of frauds relating to a company. Till the time SFIO
                    is not established, SFIO set up by Central Government to be used for the
                    purpose of this section (Clause 211)

                    Investigation report filed by SFIO with the court for framing of charges
                    shall be treated as a Report filed by a Police Officer. SFIO shall have the
                    power to arrest. (Clause 212)

                   In the process of the Investigation, Inquiry or inspection if any person
                   a) destroy, mutilates or falsifies or conceals or tamper or unauthorized
                       removes or is a party to that or any document relating to the property,
                       assets or affairs of the Company or body corporate or
                   b) makes or is a party to the making of any false entry in the document
                       concerning the company or body corporate or
                   c) provides any false information which he knows to be false then he shall
                       be liable to punishment for imprisonment for a term from 6 months to
                       10 years and shall also be liable to fine which shall not be less than the
                       amount involved in fraud but which may extent upto 3 times of the
                       amount of fraud. (Clause 229)
XV    230- 240   COMPROMISES, ARRANGEMENTS AND AMALGAMATIONS

                    No compromise or arrangement shall be sanctioned by the Tribunal unless
                    a certificate by the company's auditor has been filed with the Tribunal to
                    the effect that the accounting treatment, if any, proposed in the scheme of
                    compromise or arrangement is in conformity with the accounting standards
                    prescribed under Clause 133. (Clause 230)

                    Separate provisions have been provided for the merger or amalgamation
                    between two small companies or between a holding company and a wholly
                    owned subsidiary company. (Clause 233)

                    Provision for cross border amalgamations between Indian Companies and
                    companies incorporated in the jurisdictions of such countries as may be
                    notified from time to time by the Central Government. (Clause 234)

                   Specific provision for purchase of minority shares in case an acquirer or
                   person acting in concert with the acquirer become holder of 90% or more
                   of the issued capital of the company, either directly or by virtue of any
                   amalgamation, share exchange, conversion of securities or any other
                   reason. (Clause 236)
XVI   241- 246   PREVENTION OF OPPRESSION AND MISMANAGEMENT

                 (Clause 245 Class Action Suits)

                    The Bill provides for class action by specified number of Members or
                      Depositors against the company except the banking company, which is
                      prevalent in developed countries.
                      Penalty for failing to comply with an order passed by Tribunal

                     Company ­ Rs. 5 lakhs to Rs. 25 lakhs,
                     Officer ­ Rs. 25000 to Rs. 10 lakhs, Imprisonment 3 years
XVII    247        REGISTERED VALUERS

                     Where any valuation is required to be made of any property, stocks,
                     shares, debentures, securities or goodwill or any other assets (herein
                     referred to as the assets) or net worth of a company or its liabilities under
                     the provision of this Act , it shall be valued by a person having such
                     qualifications and experience and registered as a valuer in such manner, on
                     such terms and conditions as may be prescribed and appointed by the
                     audit committee or in its absence by the Board of Directors of that
                     company.
XVIII   248- 252   REMOVAL OF NAMES OF COMPANIES FROM THE REGISTER OF
                   COMPANIES

                      Registrar has the power to remove the name of a company from its record
                      under certain circumstances. (Clause 248 (5))

                     In case of a company regulated under a Special Act, approval of the
                     regulatory body constituted or established under that Act shall also be
                     obtained (Clause 248 (2))
XIX     253- 269   REVIVAL AND REHABILITATION OF SICK COMPANIES

                     Any company can be declared as sick. (Clause 253 (1))
XX      270- 365   WINDING UP

                      There are only two modes of winding up. (270 (1))
                      (i) By the Tribunal; or
                      (ii) Voluntary

                      New grounds of winding up by Tribunal are incorporated. (271 (1))

                      The minimum amount of indebtedness raised from Rs. 500 to Rs. 1.00
                      lakh. (271 (2a))
XXI     366- 378   PART I.--Companies authorized to register under this Act
                   PART II.--Winding up of unregistered companies
XXII    379- 393   COMPANIES INCORPORATED OUTSIDE INDIA

                      Service of documents on foreign company now can be served through any
                      electronic mode. (Clause 383)
                      The foreign offices are also required to comply with the provisions of
                      winding up. (Clause 391)
XXIII   394- 395   GOVERNMENT COMPANIES
XXIV    396- 404   REGISTRATION OFFICES AND FEES
XXV         405            COMPANIES TO FURNISH INFORMATION OR STATISTICS

                              In case a company furnishes incorrect information on order by the Central
                             Government, then penalty shall be levied. (Clause 405)
XXVI        406            NIDHI

                             Definition of Nidhi has been prescribed.
XXVII       407- 434       NATIONAL COMPANY LAW TRIBUNAL AND APPELLATE TRIBUNAL
XXVIII      435- 446       SPECIAL COURTS

                           For providing speedy trial offences, Central Government may by notification
                           establish as may Special Courts as may be necessary.
XXIX        447- 470       MISCELLANEOUS

                             Specific provisions related to any act of fraud. (Clause 447)
            SCHEDULE I     SECTIONS 4 AND 5
            SCHEDULE II    USEFUL LIVES TO COMPUTE DEPRECIATION
            SCHEDULE III   GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE SHEET AND
                           STATEMENT OF PROFIT AND LOSS OF A COMPANY
            SCHEDULE IV    CODE FOR INDEPENDENT DIRECTORS
            SCHEDULE V     CONDITIONS TO BE FULFILLED FOR THE APPOINTMENT OF A MANGING OR
                           WHOLE TIME DIRECTOR OR A MANAGER WITHOUT THE APPROVAL OF THE
                           CENTRAL GOVERNMENT
            SCHEDULE VI    SECTION 55 AND 186 RELATED TO INFRASTRUCTURE PROJECTS
            SCHEDULE VII   CORPORATE SOCIAL RESPONSIBILITY

       Disclaimer: This document is based on the Companies Bill 2012. The Institute of
       Chartered Accountants of India does not own the responsibility for any error or
       omission. The users are advised to cross check with the original bill before acting
       upon this document.
 
 
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