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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 Slide 2 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 Slide 3 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 Slide 4 Memorandum to have objects and matters required for the furtherance of such objects. No other objects Members in pvt co 200 Slide 5 One person company 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 Slide 6 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 Slide 7 Class action suit Appointment of KMPs Appointment of CS Secretarial audit Functions of CS Slide 8 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 Slide 9 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 Slide 10 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 companys website Slide 11 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 Slide 12 Independent Directors Powers, duties and responsibilities and role Slide 13 Associate company Slide 14 Holding subsidiary merger Slide 15 Registered valuer Slide 16 Dormant Company and Inactive Company Slide 17 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 Slide 18 Provision for professional assistance to company liquidator Qualification of president and members of tribunal Right to legal representation in Tribunal Slide 19 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 Slide 20 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 Slide 21 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 Slide 22 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 Slide 23 Directors report to have additional information including number of meetings of the board, companys 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 Slide 24 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 Slide 25 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 Slide 26 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 Slide 27 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 Slide 28 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 Slide 29 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 Slide 30 NCLT will have 11 technical and judicial persons earlier 2 Central Government establish special courts Slide 31 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 Slide 32 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 Slide 33 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 Slide 34 Reduction of share capital Prohibition on buyback in certain cases Registration of charges Slide 35 AGM Quorum 5 - 1000 15 - > 1000 5000 30 - > 5000 Slide 36 Demand for poll Voting through Electronic means Slide 37 Books of accounts Period 8 years Re opening of accounts Voluntary revision of financial statements Slide 38 Cost Audit Slide 39 Defunct company Dormant company Slide 40 Thank You Slide 41 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 Slide 42 Serious Fraud Investigation Office Clause 212