3. When and how did Bill change to Act
December 2004 – J.J. Irani Committee formed to advise on New
Companies Act
Report Submitted on May 2005 and First Companies Bill was placed
before Lok Sabha in 2008 as Companies Bill 2008
Then came Companies Bill 2009, formation of Standing Committee,
Then companies Bill 2010
Then Companies Bill 2011, again Standing Committee
Then Companies Bill 2012 was placed and approved by Lok Sabha on
18th December 2012 and Rajya Sabha on 08th August 2013
PRESIDENT OF INDIA ON AUGUST 29, 2013 SIGNED THE BILL
AND THUS COMPANIES BILL BECOMES
COMPANIES ACT 2013 (18 OF 2013)
2
4. Why Companies Act 2013?
Better Governance
Tighter and wider disclosure norms
More powers in the hands of Shareholders
Roles of Directors defined
Stringent Audits in place
CSR mandated
Special Courts established
Synchronisation with SEBI and other acts
3
5. Features
COMPANIES ACT 1956
COMPANIES ACT 2013
13 Parts
29 Chapters
658 Sections
470 Sections
15 Schedules
7 Schedules
Some New Concepts in Companies Act 2013
One Person Company
Small/Dormant Company
Clause Action Suit
Key Managerial Person/Secretarial
Audit
Woman/Resident Director
Rotation of Auditors/Internal
Auditor
Independent Directors
NCLT/Special Courts/NFRA
Corporate Social Responsibility
4
6. One person Company (OPC)
Section 2(62) read with section 3 (1)(c) of the
Companies Act 2013 provides for One Person
Company.
One Single Individual (not artifical) can start a
Company.
Shall be registered as Private Limited ending with
OPC Pvt. Ltd.
MOA to mention name of theof OPC
Advantages Successor
Limited Liability
Single Individual
AGM concept not applicable
Exemptions
5
7. Key Managerial Personnel(KMP)
Sec. 2(52) read with sec. 230 of the CA ’13 deals in KMP
Managing Director or CEO or Manager and in their
absence, a WTD
Company Secretary
Chief Financial Officer
Key provisions relating to KMP
Shall be appointed by the Board vide Resolution
Is officer in default
Cannot hold office in more than one company (except MD in 2 co.)
Contravening penalty for Co.- Rs. 1 lakh upto Rs. 5 lakhs for
KMP Rs. 50,000 and Rs. 1000 everyday
6
8. Secretarial Audit
Every Listed Company and company belonging to
such other class shall annex with its Board’s report a
Secretarial Audit Report given by a Practicing
Company Secretary
It is an Independent appraisal of the secretarial
practices, system and procedures.
The Directors shall explain in full any qualification in
their report.
Contravening penalty for Co/any officer or PCS Rs. 1
lakh may go upto Rs.5 lakhs
7
9. Small/Dormant Company
Small Company Sec. 2(85)
A company other than Public company
Having paid-up capital not more than Rs.50,00,000
Turnover not exceeding Rs. 2,00,00,000
Exception: 1. Holding/Subsidiary companies;2.section 8 co.
•
Dormant Company Sec 455.
A company formed and registered for a future project or hold any assets or
IPR without any accounting transaction may apply for “Inactive Company”
status with ROC who will verify the application and give dormant status
certificate
8
10. Auditors
Listed and such other class of companies as may be prescribed –
Rotation of Auditors mandated
Listed company- Individual auditor to retire every five years.
Partnership firm every 10 years.
Other company – To be appointed for a period of five years.
Appointment for every year to be ratified.
Auditors not to provide services such as book keeping, accounting
directly or indirectly to co., its holding and subsidiary too.
Auditing
•
•
Standards
mandatory
along
with
Accounting
Standards
made
Internal Auditor: Mandatory for prescribed Companies
Internal Auditor can be qualified CA, CWA or CS
9
11. Independent, Resident & Woman
Director
Maximum of 15 Directors in the Board
Prescribed class to have 1 woman director
Atleast one director shall be a person who has stayed in India for
a period of not less than 182 days in the previous calendar year.
•First time Independent Director
concept introduced in Companies Act,
although it has been in practice since the year 2000.
•Independent
Director’s to follow code as per Schedule IV of
Companies Act 2013.
10
12. Corporate Social Responsibility
Every Company having
Networth of Rs.500 Crores or more (or)
Turnover of Rs. 1000 Crores or more (or)
Net Profit of Rs. 5 Crores of more
• Shall spend atleast 2% of their avg. Net profit in the past three years
for CSR activities
• Activities Listed in Schedule VII of CA 2013.
• Shall mandatorily have a CSR Committee with minimum of three
directors all of whom must be Independent.
11
13. Class Action Suit
A provision which enables group of shareholders/depositors to file a
combined case against the company to restrain from a particular act
and/or claim damages/compensation for improper conduct,
misleading statements and fraudulent or illegal acts by the company
or its directors.
•
Based on US model. Class Action suit famous in the United States
with companies like Enron paying upto $7.2 Billion as compensation
some went upto $206 Billion over a period of 25 years.
New concept in India let us we hope that it stands the test of time
and gives us a more efficient and transparent company law regime.
12
14. National Company Law Tribunal/
Special Courts
The Company Law Board is replaced by NCLT.
•
•
All pending cases shall be transferred from CLB to NCLT after it is
notified by Central Government
Cases should be completed by NCLT within 3 months
Cases under NCLT
Arbitration & Compromise
Amalgamation & Reconstruction
•
•
BIFR cases
Winding Up
SPECIAL COURTS: All such violations of the Companies Act 1956 shall
be tried by the Special Courts established for the area in which the
registered office of the company is situated
It may follow Code of Criminal Procedure 1973
13
15. National Financial Reporting Authority
An investigation authority to investigate on its own or by orders of
CG
the Company
Professionals misconducts conducted by members/firms
registered under ICAI
•Exclusive powers to make recommendations on auditing & accounting
policies, monitor and enforce Accounting and Auditing Standards.
•Exclusive
authority to investigate into the misconducts and issue
penalty not less than Rs. 10lakhs or 10times the fee w.e.h.
14
16. Quick bites on other provisions
33 New definitions
Financial Year to end only on 31st March every year
Private Limited Company no. of members increased to
200
Associate company, Fraud defined
No more bifurcation of Main object, Ancillary object,
Other object. A Co. cannot give other object clauses.
Maintenance of Accounts in Electronic Form
Scope of Annual Returns huge.
15
17. Quick bites on other provisions
No change in Managerial remuneration limits
Nomination and Remuneration committee, Stake
Holder relationship committee mandated
No stock option for Independent Directors
Courier mode recognised
Cross border amalgamation recognised
Insider Trading Introduced
Secretarial Standards mandated
Registered valuers defined
16
