Transcript Companies Bill 2012 - Welcome to ICAI Cochin

Companies Bill 2012
By
Dr P V S Jagan Mohan Rao
M Com, LL B, FCS, FCMA, Ph D &
M A (Astrology)
Chief Finance Officer & Company
Secretary
Ind-Barath Power Infra Ltd -Hyderabad
Past President – The Institute of Company
Secretaries of India – New Delhi
Council Member – The Institute of Cost
Accountants of India - Kolkata
 29 Chapters
 470 Sections
 7 Schedules
 Substantial part of the Bill will be in the form of rules –
will be prescribed
 The Government of India has power to notify different
provisions of the Act at different parts of time
 The bill has 33 new definitions
Financial year
 Financial year can be only April to March
 Only certain companies complying with certain
conditions can have different financial year with the
approval of the NCLT – no restriction under
companies Act, 1956
 Memorandum to have objects and matters required for
the furtherance of such objects. No other objects
 Members in pvt co 200
One person company
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A private company
Subscribed by one person
Memorandum to affix name of nominee
Name shall affix OPC or One Person Company
More flexibility less compliance
Board meeting at least one in half of calendar year
AGM not mandatory
quorum
Annual returns to be filed
Board to give approval
Effective date of resolution
Contracts by one person company with the member
To intimate ROC within 15 days from the date approved by the board
Cost Accountants
 Incorporation of a company
 Internal audit
 Powers and duties of auditors and auditing standards – cl
143
 Report to Central Government – cl 12 of 143
 Central Government to specify audit of items of cost in
respect of certain companies
 Merger and amalgamation of companies
 Appointment of administrator
 Company liquidators and their appointment
 Class action suit
 Appointment of KMPs
 Appointment of CS
 Secretarial audit
 Functions of CS
National Authority for Financial
Reporting
 One chairperson and members not exceeding 15
 Recommendation t CG on accounting and auditing
standards
 Enforcement for the compliances of accounting and
auditing standards
 Overseeing the quality compliances of accounting and
auditing standards
 Special powers have been vested with NAFR
Class action
 Endeavor to protect the rights of deposit holders and
members
 Only specific number or % of members/depositors can
file class action suit
 Right of claiming damages or compensation by
members in case of wrongful conduct of Company
directors, auditors, experts and advisors
 Banking companies are out of the perviw of class
action suit
Corporate Social Responsibility
 Mandatory provision for corporate social responsibility
for specified companies
 Constitution of CSR Committee, recommending and
monitoring CSR Policy
 2% of the average net profits of 3 preceding financial
years to be spent – csr
 Disclosure of CSR Policy on company’s website
Secretarial Audit
 Introduction of the concept of Secretarial Audit
 Mandatory Secretarial Audit for specic class
companies
 Secretarial Audit Report to be part of Board report
 Disclaimer of every reservation or adverse remarks in
the report in the Board Report
 Stringent penalty in case of default
Independent Directors
 Powers, duties and responsibilities and role
Associate company
Holding – subsidiary merger
Registered valuer
Dormant Company and Inactive
Company
Rotation of Auditors
 Compulsory rotation of individual auditors in every 5
years and audit firm in 10 years in listed companies
and certain other classes of companies
 Auditor shall also comply with auditing standards
 Auditor shall not provide directly or indirectly the
specified services to the company its holding and
subsidiary company
 Provision for professional assistance to company
liquidator
 Qualification of president and members of tribunal
 Right to legal representation in Tribunal
 The Bill covers all securities and not only shares and
debentures
 Prospectus has now has more details
 The bill defines private placement
 The company which has varied terms of contract
referred in Prospectus or objects for which it is issued
shall not use any amount raised by it through
prospectus for buying, trading or dealing in equity
securities of any other listed company and shall also
provide exit route to the dissenting shareholders
 Right shares and ESOPS with the approval of members
 Company cannot accept deposits from persons other
than its members and approval of shareholders will be
required for the acceptance of the same. Such deposit
can only be accepted subject to complying with
neccesary conditions
 Offer for sale by members
 Shelf prospectus – will be prescribed by SEBI
 Criminal liability for misstatements in prospectus
 civil liability for misstatements in prospectus
 GDR Issues
 Books of accounts can be in electronic form
 Financial statements have been defined
 Along with financial statement, consolidated financial
statements of all subsidiaries and company will be
prepared and shall also be laid before the annual
general meeting. Subsidiary shall for the purpose of
this requirement include associate company and joint
venture
 No provision for extension of financial year
 Directors report to have additional information
including number of meetings of the board, company’s
policy on directors appointment, explanations to
auditors report
 Directors responsibility statement to include
additional issues – compliance with laws et c
 Corporate social responsibility committee
 3 or more directors – at least one independent director
 NBFCs will be governed by rules by RBI
 Every listed company shall file with ROC a return in
the prescribed form with the with respect to Change in
Shareholding of promoters and top 10 shareholders –
15 days
 Postal ballet will be applicable to all companies
 Restrictions on interim dividend. Average dividend – 3
preceding financial year – loss during the year up to
last quarter
 Financial statements defined
 Provision for re opening or recasting of the books of
accounts of a company
 National Advisory Committee on Accounting
Standards has been changed to National Financial
Reporting Authority
 Provisions for CSR
 Auditors compulsory rotation – individual 5 years –
firm 10 years
 Bill provides – auditors to comply with the auditing
standards
 Auditor shall not provide specified services to the
company directly or indirectly, to the company,
holding or subsidiary
 Joint and several responsibility
 In specified companies at least one women director
 At least one director should have stayed in India at
least for not less than 182 days
 Every listed company - One third of total no of
directors as independent director
 The bill provides for limiting the liability of
independent director and non executive director not
being promoter or key managerial personnel
 A person can be director in 20 companies (earlier 15) –
including 10 in public cos
 Provision for vigil mechanism
 Stakeholders relationship committee – 1000
shareholders/deposit holders and any other security
holders – chairman non executive director
 Loan to director – Central Government permission
dispensedwith
 Inter corporate loans and investments includes the
same a person also
 No approval of central government is required for –
related party transactions
 No approval of the central government is required to
appoint a director or any other person to office or
place of profit in the co or subsidiary
 NCLT will have 11 technical and judicial persons –
earlier 2
 Central Government – establish special courts
 Types of companies
 Affidavit by subscribers and directors
 Objects clause in MoA
 Duration of name reservation – 60days – in the act
itself
 Registered office at incorporation – from15 th day –
state at the time of incorporation – verification in 30
days. Address for communication to be provided until
the address is provided
 Commencement of business by public co – only
declaration is to be filed within 180 days
 Conversion of public co into pvt or opc – tribunal
 Contents of prospectus – stated in the section itself –
earlier in a schedule
 Sections to be administered by SEBI
 Private placement
 Application of premium
 Issue of shares at discount – only in case of sweat
equity
 Bonus shares
 Sweat equity – not to subsidiaries incorporated outside
India
 Reduction of share capital
 Prohibition on buyback in certain cases
 Registration of charges
 AGM
 Quorum
 5 - 1000
 15 - > 1000 – 5000
 30 - > 5000
 Demand for poll
 Voting through Electronic means
 Books of accounts
 Period – 8 years
 Re opening of accounts
 Voluntary revision of financial statements
 Cost Audit
 Defunct company
 Dormant company
Thank You
Special Courts
 By notification by Central Government
 Establish or designate
 Speedy trial of offences under this Act
 As many special courts as may be possible
 Single Judge
 With the concurrence of Chief Justice of the High Court
 Qualifications.. Holding office of a Sessions Judge or
Additional Sessions Judge
 All appeals from special court shall lie to the High Court
Serious Fraud Investigation Office
 Clause 212