Transcript IMPORTANT CHANGES IN NEW COMPANIES BILL, 2012

Key Managerial Personnel (KMP) - Concept
Old Act
New Bill
 Director Sec 2(13)
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 Manager Sec 2(24)
 Managing
Director
Sec
2(26)
 Secretary - Sec 2(45)
 Secretary in WTP Sec
2(45A)
 Officer in default - Sec
2(31)
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CEO - Cl. 2 (18)
CFO - Cl. 2 (19)
Company Secretary - Cl. 2 (24)
CS in Practice - Cl.2 (25)
Director
Independent Director - Cl.2 (47) /
Interested Director Cl. 2(49)
KMP – Cl. 2 (51)
Manager - Cl. 2 (53)
Managing Director - Cl. 2 (54)
Officer in Default - Cl. 2 (60)
Key Managerial Personnel (KMP)
 As per the amended 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 whole-time director;
(iv) The Chief Financial Officer; and
(v) Such other officer as may be prescribed;
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 As per Clause203
(1) Every company belonging to such class or classes of
companies as may be prescribed shall have the following
whole-time key managerial personnel,—
(i) managing director, or Chief Executive Officer or manager
and in their absence, a whole-time director;
(ii) company secretary; and
(iii) Chief Financial Officer :
(2) Every whole-time key managerial personnel of a company
shall be appointed by means of a resolution of the Board
containing the terms and conditions of the appointment
including the remuneration.
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(3) A whole-time key managerial personnel shall not hold office in
more than one company except in its subsidiary company at the
same time
(4) If the office of any whole-time key managerial personnel is
vacated, the resulting vacancy shall be filled-up by the Board at a
meeting of the Board within a period of six months from the date of
such vacancy.
PENALTY
 On company – one lakh rupees which may extend to five lakh
rupees.
 On every director and KMP who is in default – 50,000 rupees and
1,000 rupees per day if contravention continues.
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Change - KMP
From segregated responsible
heads/officer /centres
you have one focal point - KMP
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Secretarial Audit – New Concept
Old Act
 Accounts Audit
New Bill
 Accounting Standards
 Auditing Standards
 Cost Audit
 Cost Audit
 Compliance Certificate
 Secretarial Audit
 Others
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 Accounting Standards
 Secretarial Standards
& Ors
Introduction of Secretarial Audit
 Clause 204 – Secretarial Audit for bigger companies
(1)
Every listed company and a company belonging to other class of companies
as may be prescribed shall annex with its Board’s report made in terms of
sub-section (3) of section 134, a secretarial audit report, given by a company
secretary in practice, in such form as may be prescribed.
 Qualification or observation or other remarks to be highlighted
 PENALTY
If a company or any officer of the company or the company secretary in
practice, contravenes the provisions of this section, the company, then they
shall be punishable with fine which shall not be less than one lakh rupees but
which may extend to five lakh rupees
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Introduction of Secretarial Audit
 Clause 204 – Secretarial Audit for bigger companies
(1)
Every listed company and a company belonging to other class of companies
as may be prescribed shall annex with its Board’s report made in terms of
sub-section (3) of section 134, a secretarial audit report, given by a company
secretary in practice, in such form as may be prescribed.
 Qualification or observation or other remarks to be highlighted
 PENALTY
If a company or any officer of the company or the company secretary in
practice, contravenes the provisions of this section, the company, then they
shall be punishable with fine which shall not be less than one lakh rupees but
which may extend to five lakh rupees
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Class Action Suits
 Clause 245
(1) It is provided that specified number of members or specified
number of depositors may file an application before the Tribunal on
behalf of the members and depositors, if they are of the opinion that
the management or control of the affairs of the company are being
conducted in a manner prejudicial to the interests of the company or its
members or creditors. The order passed by the Tribunal shall be
binding on the company and all its members and depositors.
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 Application can be filled for seeking all or any of the following
orders, namely:—
To restrain the Company
from:
• committing an act which is
ultra vires the articles or
memorandum of the company;
•committing breach of any
provision of the company’s
memorandum or articles;
•acting on such resolution;
•taking action contrary to any
resolution passed by the
members;
•doing an act which is contrary
to the provisions of this Act or
any other law for the time being
in force;
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•to claim damages or compensation
or demand any other suitable action
from or against—
(i) the company or its directors
for any fraudulent, unlawful or
wrongful act
(ii) the auditor including audit firm
of the company for any
improper or misleading
statement of particulars
(iii) any expert or advisor or
consultant or any other person
for any incorrect or misleading
statement
• to seek any other remedy as the
Tribunal may deem fit.
 The provision of (2) states that
where the members or depositors seek any damages or
compensation or demand any other suitable action
from or against an audit firm, the liability shall be of the
firm as well as of each partner who was involved in making
any improper or misleading statement of particulars in the
audit report, or who acted in a fraudulent, unlawful or
wrongful manner.
 The requisite number of members (3)
A minimum of 100 shareholders or a percentage that
may be prescribed can get together and file a CAS for a
company that has share-capital, whereas the number is 1/5
for a company without share capital.
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 Any order passed by the Tribunal shall be binding on the
company and all its members, depositors and auditor
including audit firm or expert or consultant or advisor or any
other person associated with the company.
 PENALTY
 On company – not be less than five lakh rupees but which
may extend to twenty-five lakh rupees.
 On any officer who is in default – imprisonment for a term
which may extend to three years and with fine which shall
not be less than twenty-five thousand rupees but which may
extend to one lakh rupees.
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Sweat Equity
 As per the Companies Bill , 2012 Shares, other than sweat
equity, cannot be issued at a discount.
 As per Clause 2(88) –
“sweat equity shares” means such equity shares as are
issued by a company to its directors or employees at a
discount or for consideration, other than cash, for providing
their know-how or making available rights in the nature of
intellectual property rights or value additions, by whatever
name called.
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 Clause 54 - Issue of Sweat Equity Shares
(1)
A company may issue sweat equity shares of a class of
shares already issued, if the following conditions are
fulfilled, namely:—
(a) the issue is authorized by a special resolution passed by the
company;
(b) the resolution specifies the number of shares, the current
market price, consideration, if any, and the class or classes of
directors or employees to whom such equity shares are to be
issued;
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(c) not less than one year has, at the date of such issue, elapsed since
the date on which the company had commenced business; and
(d) where the equity shares of the company are listed on a recognized
stock exchange, the sweat equity shares are issued in accordance
with the regulations made by the Securities and Exchange Board in
this behalf and if they are not so listed, the sweat equity shares are
issued in accordance with such rules as may be prescribed.
(2) The rights, limitations, restrictions and provisions as are for the
time being applicable to equity shares shall be applicable to the
sweat equity shares issued under this section and the holders of such
shares shall rank pari passu with other equity shareholders.