1. The document presents information on changes brought about by the Companies Act 2013 regarding various areas like raising money, shares and securities, restructuring and revival, accounts and audit, management and meetings, compliance and disclosures, and governance. 2. Key changes include more regulations around raising funds through securities and deposits, new rules for shares and securities, provisions for restructuring sick companies, increased financial reporting and disclosure requirements, expanded duties for directors, and strengthened governance norms. 3. The Companies Act 2013 aims to improve corporate practices and conduct of business through these numerous changes impacting different facets of company operations and management.

1. 1.
Presented by –
Pavan Kumar Vijay

2. 1.
Note: This presentation uses the word “prescribed” in
many slides. It refers to that part of the law, which will be
prescribed later through Rules.

3. INTRODUCTION
The Companies Act 2013 will impact some of below given areas of
corporate behaviour & conduct of business:

4. INTRODUCTION

5. 4.

6. RAISING OF MONEY
Fund Raising
Through
Securities
Through
Deposits
Initial/ Follow on Public
Offers (IPO/FPO)
Private Placement
Only prescribed companies
with a prescribed credit
rating allowed this route
Rights/ Bonus Shares
The Act seeks to regulate raising of money through all types of securities, and not just shares or debentures
The Act also requires all listed companies or companies intending to get listed have to comply with the provisions of
The SEBI Act, 1992

7. RAISING OF MONEY
RAISING OF MONEY
Changes in provisions regarding fund
raising through SECURITIES
6.

8. RAISING OF MONEY
PRIVATE PLACEMENT OFFER
CONDITIONS
PUBLIC OFFER
 To a section of public other
than QIBs and Employees
under ESOP
Comply with provisions of
Companies Act, Securities
Contract Regulation Act, 1956
and SEBI Act, 1992
 To not more than 50 people
or such higher number as
may be prescribed
 Should comply with
prescribed terms &
conditions
 Invitation through private
placement offer letter and
not prospectus
YES
NO
Conditions
fulfilled?

9. RAISING OF MONEY
PROCEDURAL ASPECTS OF PRIVATE
PLACEMENT
Offer to be made by
name and to those
whose name is
recorded by the
company prior to
invitation
Offer to be made
only after
allotments under
any previous offer
have been
completed
Allotment to be
made within 60
days of receipt of
funds
Funds to be
received only
through the
banking channel,
and not as cash

10. 9.
RAISING OF MONEY
Significant changes in the provisions of PROSPECTUS
VARIATION IN
OF
PROSPECTUS OR
WILL BE :
Subject to Special Resolution
Require Mandatory Exit Option to dissenting shareholders
Face restriction on use of amount raised by it for buying,
trading or dealing in equity shares of another company

11. RAISING OF MONEY
ISSUANCE
OF
 The provision will no
more be limited to Public
Financial Institutions,
Public Sector Banks or
Scheduled Banks

12. RAISING OF MONEY
Separate Provisions with respect
to offer of Sale by existing
shareholders
Subject to prescribed conditions,
Global Depository Receipts may be
issued by passing a Special Resolution
under the current scenario Preferential
Guideline is to be followed

13. RAISING OF MONEY
A Company may pay commission to any person
in connection with subscription
of its securities but subject to prescribed
conditions

14. RAISING OF MONEY
Changes in provisions regarding fund
raising through DEPOSITS

15. RAISING OF MONEY
The provisions relating to acceptance of
deposits will not apply to NBFCs. They
will be governed by rules issued by the
Reserve Bank of India.
Only those companies fulfilling the
prescribed conditions and carrying a
prescribed credit rating are eligible to
accept deposits

16. RAISING OF MONEY- By Deposits
Prohibition on accepting deposits from
public, except in the prescribed manner
Accepting deposits from members subject
to approval by shareholders only

17. 16.

18. SHARES & SECURITIES
Various changes regarding Shares & Securities
GENERAL CHANGES
Changes regarding
VOTING RIGHTS
Changes regarding
ISSUE OF SHARES

19. SHARES & SECURITIES
C
Act seeks to regulate all
type of securities as
opposed to equity and
debentures only, causing
an

20. SHARES & SECURITIES
VARIATIONS IN
Company can issue shares
with
to other
matters

21. SHARES & SECURITIES – General Changes
OF
Public Companies also
Recognition and
or more
persons regarding transfer of
securities, enabling
SHARES in

22. SHARES & SECURITIES
USE OF
that
comply with
accounting standards
prescribed for such
companies

23. SHARES & SECURITIES
Various changes regarding Shares & Securities
GENERAL CHANGES
Changes regarding
VOTING RIGHTS
Changes regarding
ISSUE OF SHARES

24. SHARES & SECURITIES – Voting Rights
Equitable voting rights for
equity and preference
shareholders with respect to
their paid up capital
On resolutions affecting
rights of both categories
Preference shareholders allowed
to vote on every resolution
placed before shareholders’
meeting
If dividend payable to any
class of preference
shareholders in arrear for
more than 2 years
No classification between
cumulative and
non-cumulative preference
shares
For identification of voting
rights

25. SHARES & SECURITIES
Various changes regarding Shares & Securities
GENERAL CHANGES
Changes regarding
VOTING RIGHTS
Changes regarding
ISSUE OF SHARES

26. SHARES & SECURITIES
Private companies have to comply
with provisions for further issue of
shares that were applicable to public
companies only
New provision for allotment of ESOP, rules
will be provided soon

27. SHARES & SECURITIES
ISSUE OF
Shares cannot be issued at a discount, except
as
which can be issued at a
discount even now

28. SHARES & SECURITIES
OF
RIGHTS SHARES
Company can dispose off only those shares in a Rights
issue that haven’t been subscribed to by shareholders in a
manner advantageous to the company

29. SHARES & SECURITIES
PROHIBITION ON
A company cannot go for a
bonus issue if it has defaulted
in payment of:
 Interest or principal on
fixed deposits or debt
securities issued by it
 Statutory dues of employees
such as contribution to
provident fund, gratuity
and bonus

30. SHARES & SECURITIES
CALCULATION OF
Issue price of shares offered to persons other than existing
shareholders and employees under ESOP shall be computed
on the basis of Registered Valuer’s report

31. 31.

32. 32.
RESTRUCTURING & REVIVAL
Reduction of
Capital
Compromise or
Arrangement
Sick Company
Fast Track
Merger

33. RESTRUCTURING & REVIVAL
Reduction of Capital
accounting treatment
proposed by the company for such reduction conforms with the
accounting standards
if the company is in arrears for payment of
deposits

34. RESTRUCTURING & REVIVAL
Compromise or Arrangement
M
E
E
T
I
N
G
S
Notice of any meeting in this matter
required by the Tribunal to also be
given to the Central Government,
Income Tax Authorities, RBI, SEBI
and CCI
Calling of meeting of members or
creditors now mandatory (after
consent received by postal ballot) for
approval of compromise by persons
representing at least 3/4th of the
value of members of creditors

35. 35.
RESTRUCTURING & REVIVAL
Additional Disclosures in the
notice for
Compromise/Arrangement
Effect on material
interests of the directors
or the debenture
trustees
Valuation Report
Effect on creditors,
KMPs, members,
debenture holders

36. RESTRUCTURING & REVIVAL
Compromise or Arrangement
Abolition of Treasury Stocks
Shares arising out of arrangement
or compromise to be cancelled
and extinguished and not to be
held by the transferee company in
its own or a Trust’s name,
whether on its behalf or on behalf
of a subsidiary or associate
company

37. RESTRUCTURING & REVIVAL
Additional information to be included in affidavit for
the compromise/arrangement application
of company, if
any
consented by at
least 75% secured
creditors

38. RESTRUCTURING & REVIVAL
Affidavit for Scheme of Corporate Debt Restructuring
(CDR) should include
Safeguards for
secured/
unsecured
Statement if
certifying
that fund
requirements post
CDR will confirm
to liquidity test
for
CDR adopted
for all assets by a
Registered Valuer

39. RESTRUCTURING & REVIVAL
Fast Track Merger
for merger between two or more small
companies or a holding and its wholly owned subsidiary or some other
class of companies
to approve & effect the scheme if the
Official Liquidator and the Registrar to the scheme have no objections

40. RESTRUCTURING & REVIVAL
Fast Track Merger of certain Companies
between Indian companies and foreign
companies incorporated in prescribed jurisdictions
and the scheme must provide for
payment to shareholders of the merging companies in any combination of
cash and depository receipts

41. RESTRUCTURING & REVIVAL
Sick Company
:
Any company, and not just an industrial unit, can be
declared as a sick company

Erosion of 50% of net worth no longer a criteria

Inability to repay 50% or more of secured debts within 30 days
of being served notice by the creditors. Application to declare a
company sick may be moved by:

The company itself, OR

The creditors representing 50% or more of secured
debts

42. 42.

43. ACCOUNTS & AUDIT
Financial Statements
and statement of changes in company’s equity
now to be parts of Financial Statements
i.e. Apr-Mar to be adopted by all the
companies. (Relaxation only to foreign companies and subsidiaries of
overseas companies subject to Tribunal’s approval)
combining
associates and joint ventures
accounts
of
subsidiaries,

44. ACCOUNTS & AUDIT
Re-opening/ Revising Books of Accounts
Allowed subject to Tribunal/ Court’s
directions, which shall also notify
Central Government & Income Tax
Authorities
Can also be done by Tribunal/Court in
case of frauds, mismanagement or
financial irregularities
Revision allowed for up to three preceding
financial years but detailed reasons for
change to be mentioned in the Board’s
report
Change allowed to rectify mistakes or on
change of accounting policy

45. ACCOUNTS & AUDIT
Auditors
To be appointed for a term of 5 years
In case of an audit firm, the auditing partner and team to be
rotated annually, if the shareholders desire

46. ACCOUNTS & AUDIT
Auditor’s Duty
Additional reporting in the
Auditor’s report
1
2
3
Qualification/ reservation or
remark regarding maintenance of
accounts
Remarks on adequacy &
effectiveness of internal financial
controls
Addition disclosures requirements
for certain companies to be
prescribed by the central
government
Reporting to the central
government
Any offence/ fraud committed by
company’s officers noticed during
the course of audit

47. 47.

48. MANAGEMENT & MEETING
The new law brings about changes to aspects of
management of a company and infuses more
accountability
DIRECTORS & KEY
MANAGERIAL
PERSONS
 Requirement for
appointment
 Maximum number
 Condition for
removal
 Extended duties
SHAREHOLDERS’
MEEETING
BOARD
MEEETING
 Quorum
 Notice
 Postal Ballot
 Participation of
Directors
 Number & Timing

49. MANAGEMENT & MEETING

50. MANAGEMENT & MEETING
DIRECTOR’S
A prescribed class of companies required to have:
Managing Director/ CEO/ Manager
Whole Time Director in the absence of
MD/CEO/Manager
Company Secretary
Appointment of such persons to ensure better governance of the
company

51. MANAGEMENT & MEETING
DIRECTORS
A company can have maximum 15 directors on the board instead of
12 earlier
Any increase beyond 15 will require
the approval of shareholders by way
of Special Resolution
No need for the central government’s approval for
increase in number of directors

52. MANAGEMENT & MEETING
DUTIES OF A DIRECTOR
To act in accordance with the Articles of Association
To act in good faith to promote the objects of the company in the best
interests of its members, shareholders, employees, community and
environment
To exercise duties with due and reasonable care, skill and diligence
To avoid getting involved in situations in which he may have a direct/
indirect interest that conflicts or may conflict with the interest of the
company
To not achieve or attempt to achieve any undue gain or advantage to
himself or his relatives/ partners or associates
To not assign his office (any such assignment will be void)

53. MANAGEMENT & MEETING
EXPRESS DUTIES OF DIRECTORS
Bring accountability in the
functioning of director
Ease of finding the case of
negligence by directors

54. MANAGEMENT & MEETING
Shareholders Meeting

55. MANAGEMENT & MEETING
QUORUM shall now be considered as:
QUORUM
(No. of Members
personally Present)
NUMBER OF MEMBERS AS ON
THE DATE OF MEETING
5
≤ 1000
15
1000 < number ≤ 5000
30
≥ 5000
A higher quorum, as compared to the earlier requirement, will
ensure greater participation by shareholders

56. MANAGEMENT & MEETING
POSTAL BALLOT
Provision now applicable to all companies
whether listed or not
Apart from the prescribed resolutions, any other
resolution can be passed by postal ballot except
that of ordinary business or that where a
director /auditor has right to be heard

57. MANAGEMENT & MEETING
Board Meeting

58. 59.
MANAGEMENT & MEETING
BOARD MEETING- SOME NEW PROVISIONS
1
2
Notice of the
Meeting
Participation
of Directors
 In person, or
 Minimum 7 days
notice
 To be given to all
directors, whether in
India or not
 Can be sent through
any means: hand
delivery, post or
electronically
 By video
conferencing, or
 Any other audiovisual means capable
of recording,
recognizing and
storing the
participation of
director with date &
time
3
Number & Timing
of Meetings
 At least 4 meetings in
a year
 Not necessary to be
held in every quarter
 Time gap of not
more than 120 days
between two
meetings
Meeting at shorter notice allowed, subject to attendance by at least one independent director
or subsequent ratification of decision by all directors

59. 60.

60. COMPLIANCE & DISCLOSURES
Enactment of the Companies Act 2013 will bring:
Increased compliances and
disclosures
Stringent penalties for
contravention of law

61. COMPLIANCE & DISCLOSURES
Enhanced disclosures have been
mandated in:
Annual Return
Director’s Report
62.

62. COMPLIANCE & DISCLOSURES
Additional disclosures required in the Annual
Return of a company
Details regarding:
PRINCIPAL BUSINESS ACTIVITIES
of the company, its subsidiary, holding and
associates
PROMOTERS and KMPs
of the company & changes regarding them
since closure of last financial year

63. COMPLIANCE & DISCLOSURES
PENALTIES
imposed on the company, directors &
officers and the compounding of
offences
FIIs’
shareholding, their names, addresses &
other details

64. COMPLIANCE & DISCLOSURES
Additional Disclosures in the Director’s Report of
the Company
Company’s policy and selection criteria for
appointment of directors
Details of Loans, Guarantees and
Investments u/s 186

65. COMPLIANCE & DISCLOSURES
Contracts & arrangements with related
parties & justification
CSR policy and reason failure to spend 2%
on CSR, if applicable
Remuneration policy for Directors and
KMPs and ratio of each director’s
remuneration to employees’ median
remuneration

66. COMPLIANCE & DISCLOSURES
Other Compliances
 A Return on change in shareholding of promoters and
top ten shareholders to be filed with Registrar within 15 days of
such change
 A Report on every Annual General Meeting and inclusion
of confirmation that meeting was convened, held and conducted as
per the Act and Rules there under.

67. COMPLIANCE & DISCLOSURES
The increased
disclosures
will improve the
manner in which
annual general
meetings are held
and lead
to more
transparency

68. 69.

69. GOVERNANCE
Considering the fact that Corporate Governance forms the main
thrust of the Companies Act, various provisions have been
modified or added relating to:
Unpaid Dividend
Internal
Audit
Restrictions on
Board
Forward Dealing
Loan &
Investment
Related Party
Transaction

70. GOVERNANCE
Unpaid Dividend
Every company to list names of
shareholders, their addresses and
dividend unpaid to them on the
company’s website within 30 days
of transferring funds to unpaid
dividend account
Shares on which unpaid dividend
or other amount have been
transferred to IPEF, are to be
transferred in the name of IPEF

71. GOVERNANCE
Forward Dealings
Forward dealings in securities of
the company by key managerial
personnel now prohibited
as listed companies
already governed by insider
trading laws

72. GOVERNANCE
Internal Audit
Prescribed companies to appoint
internal auditor being a chartered
accountant or a cost accountant or
any other prescribed professional
Such professional to carry out
internal audit functions and ensure
establishment of internal financial
control system

73. GOVERNANCE
Loan and Investment by any Company
Loans & advances to any company or person allowed
only if there is a specific purpose for the use of such
loans/advances
Company in default of repayment of deposits
or interest thereon not allowed to give loans/deposits
Capital market intermediaries not allowed
to accept inter-corporate loans or deposits above a
prescribed limit

74. 75.
GOVERNANCE
NBFCs in the business of acquiring shares & securities
exempt from these provisions in respect of such acquisition
Companies restricted from making investment through
more than 2 layers of investment companies. The provision
will not effect:
Indian company acquiring an overseas company
that has more than two layers of investment
subsidiaries
A subsidiary company with
investment subsidiary for the purpose of
compliance to a law in force

75. GOVERNANCE
Restrictions on the Board
Private companies will now also be required to take
permission of shareholders through special resolution for
following matters:
Borrow money in excess of paid capital and capital
reserves
Remit or give time for a payment due from
director
Sell/lease or dispose whole or substantially whole
of the undertaking

76. 77.
GOVERNANCE
Restrictions on the Board
An undertaking has now been defined under the law. An
undertaking under the Act means an undertaking:
That generates at least 20% of the
company’s income
In which the company’s investment exceed
20% of its networth as per the last audited
Balance Sheet

77. 78.

78. NEW CONCEPTS
Constitution of CSR Committee by a company
having any of the following:
NET WORTH
of Rs 500 crore
or more
TURNOVER
of Rs 1,000
crore or more
NET PROFIT
of Rs 5 crore
or more

79. NEW CONCEPTS
Companies to spend on
CSR activities at least 2%
of the average net profit
of the preceding 3
financial years.
Reasons in case of failure
to be disclosed in the
Board report

80. NEW CONCEPTS
1.
Who can seek registration as a Dormant
Company:
 A future project
 Holding an asset
 Holding Intellectual Property
2.
 Not been carrying out any business or operation
 Not made any significant accounting transaction during last 2 financial years
 Not filed financial statements and annual returns during last 2 financial years

81. NEW CONCEPTS
Dormant Company, which
otherwise
has very few compliance
requirements, can become
an
active company by applying
to the Registrar of
Companies

82. NEW CONCEPTS
Who can file
a class
action?
Any class of members or depositors
When can it
be filed?
If they believe that the conduct of the
company’s affairs by its management:
Is prejudicial to the interests of :
The company
Any class of members
Any class of depositors

83. NEW CONCEPTS
ORDERS THAT CAN BE SOUGHT
Declaration of a resolution altering
MOA/AOA as void if passed with
suppression of material
information/ misstatement
Restrain the company from an act
contrary to the provisions of the
Companies Act
Restrain the company from any
action contrary to the resolution
passed by members
Restrain the company from an act
ultra vires the AOA or MOA
Restrain the company from
breaching any provision of AOA or
MOA
Claim any damages/ compensation
or demand any other suitable
action in cases of wrongful/
fraudulent/ unlawful act by
directors/ auditors/experts

84. NEW CONCEPTS
SFIO:
To operate as MCA’s premier agency
for investigating frauds related to
companies
To consist of experts from specified
fields and other officers as prescribed

85. NEW CONCEPTS
The central government may also refer
cases where investigation into affairs of
a company is needed to the SFIO
In such a case, no other investigating
agency of the state or central government
will proceed with the concerned
investigation

86. 33.
Pavan Kumar Vijay