SECTION WISE COMPARISION OF COMPANIES ACT 2013 AND COMPANIES ACT 1956 COMPANIES ACT 2013 Clause 12!

129 130 131 132 133 133 "oo#s o$ accou ts etc to %e #e&t %' co(&a ' Fi a cial state(e t Re,o&e i - o$ accou ts o cou)ts o) t)i%u al o)*e)s. /olu ta)' )e0isio o$ $i a cial state(e t o) "oa)*s )e&o)t. Co stitutio o$ Natio al Fi a cial )e&o)ti - aut+o)it' Ce t)al -o0e) (e t to &)esc)i%e accou ti - sta *a)*s Fi a cial State(e t4 %oa)*s )e&o)t etc COMPANIES ACT 1956 Sectio 209 211 "oo#s o$ accou t to %e #e&t %' co(&a ' Fo)( a * co te ts o$ %ala ce s+eet a * &)o$it a * loss accou t

210 A 211 13C2 215 216 215

Co stitutio o$ Natio al A*0iso)' co((ittee o accou ti - sta *a)*s Fo)( a * co te t o$ %ala ce s+eet a * &)o$it a * loss accou t Aut+e ticatio o$ %ala ce s+eet a * &)o$it a * loss accou t. P)o$it a * loss accou t to %e a e6e* a * au*ito)s )e&o)t to %e attac+e* to %ala ce s+eet "oa)*7s )e&o)t Ri-+t o$ (e(%e) to co&ies o$ %ala ce s+eet a * au*ito)s )e&o)t T+)ee co&ies o$ %ala ce s+eet etc to %e $ille* 8it+ )e-ist)a) A&&oi t(e t a * )e(u e)atio au*ito)s P)o0isio s as to )esolutio s a&&oi ti - o) )e(o0i - au*ito)s A&&oi t(e t a * )e(u e)atio au*ito)s :uali$icatio a * *is9uali$icatio au*ito)s A&&oi t(e t a * )e(u e)atio au*ito)s Po8e)s a * *uties o$ au*ito)s o$ $o) o$ o$ o$

135 136 135 13! 139 130 131

Co)&o)ate social )es&o si%ilit' Ri-+t o$ (e(%e) to co&ies o$ au*ite* $i a cial state(e t Co&' o$ $i a cial state(e t to %e $ile* 8it+ )e-ist)a). I te) al Au*it A&&oi t(e t o$ au*ito)s Re(o0al )esi- atio o$ au*ito) a * -i0i - o$ s&ecial otice Eli-i%ilit' 49uali$icatio a * *is9uali$icatio o$ au*ito)s Re(u e)atio o$ au*ito)s Po8e)s a * *uties o$ au*ito)s a * au*iti - sta *a)*s. Au*ito) ot to )e *e) ce)tai se)0ices Au*ito) to si- au*it )e&o)ts etc Au*ito)s to atte * -e e)al (eeti Pu is+(e t $o) co t)a0e tio

219 220 223 225 2231I"2 226 223 225

132 133

133 135 136 135

, 229 231 232 233

, Si- atu)e o$ au*it )e&o)t etc Ri-+t o$ au*ito) to atte * -e e)al (eeti Pe alt' $o) o co(&lia ce 8it+ sectio s 225 to 231 Pe alt' $o) o co(&lia ce %' au*ito) 8it+ sectio s 225 a * 229.

13!

Ce t)al -o0e) (e t to s&eci$' au*it o$ ite(s o$ cost i )es&ect o$ ce)tai co(&a ies Po8e) to call $o) i $o)(atio 4 i s&ect %oo#s a * co *uct i 9ui)es

233 "

Au*it o$ accou ts i ce)tai cases

206

209 A 233

I s&ectio o$ %oo#s o$ accou ts4 etc o$ co(&a ies. Po8e) o$ )e-ist)a) to call $o) i $o)(atio o) e6&la atio .

205

Co *uct o$ i s&ectio a * i 9ui)'

209 A

I s&ectio o$ %oo#s o$ accou ts4 etc o$ co(&a ies I s&ectio o$ %oo#s o$ accou ts etc o$ co(&a ies. Sei<u)e o$ *ocu(e ts %' )e-ist)a). Fo)( o$ %ala ce s+eet

20!

Re&o)t o i s&ectio (a*e

209 A

209 Sc+ III

Sea)c+ ; Sei<u)e =e e)al i st)uctio s $o) &)e&a)atio o$ %ala ce s+eet a * state(e t o$ &)o$it a * loss o$ a co(&a '.

233 A Sc+ /I

T>E PRO/ISONS RE?ATIN= TO ACCO@NTS4 A@DIT AND A@DITORS AND T>E IMPORTANT C>AN=ESA ADDITIONS IN T>ESE PRO/ISIONS IN T>E COMPANIES ACT 2013 Co(&a ies Act 1956 209 Books of account to be kept by company - All the books of account shall be kept at the registered office. P)o0isio Maintenance of books of accounts in electronic mode not permitted. Preservation of books and vouchers for yrs period Co(&a ies Act 2013 !lause "2 #"$ provides for electronic maintenance of books of account. !lause "2 #%$ &here investigation is ordered' !( may direct books to be preserved for longer period.

209 A 2"0 2"0 A 2"" 2"2

)nspection of books of accounts' etc. of companies Annual accounts and balancesheet !onstitution of *ational Advisory !ommittee on Accounting +tandards ,orm and contents of balancesheet and profit and loss account Balance-sheet of holding company to include certain particulars as to its subsidiaries

Provided for attachment of accounts of subsidiaries along &ith the holding company accounts. *o provision for consolidation *o provision for -e . opening of accounts / recasting of financial

!lause "29 provides for consolidation of financial statements of company and all its subsidiaries. !lause "00 specifies that reopening can be done if there is

statements

an order in this regard made by the court or tribunal to the effect that the relevant earlier accounts &ere prepared in fraudulent manner or the affairs &ere mismanaged during the relevant period' casting or tribunal shall give notice to the !( and )1 and shall take into consideration' representation' if any made by them. 1he accounts so revised or re casted shall be final.

2"0 2"3 2"% 2"5

,inancial year of holding company and subsidiary -ights of holding company4s representatives and members Authentication of balancesheet and profit and loss account Profit and loss account to be anne6ed and auditors4 report to be attached to balancesheet

1his section applies to all holding companies having one or more subsidiaries as on the date on &hich the ,2 of the holding company ,2 of holding and subsidiary companies must coincide.

7oluntary revision of financial statement or board report &ith 1ribunal8s consent. - *o such provision e6isted.

2"9

Board4s report

+ec 2"9 - :isclosures in Board report a$1he state of company affairs b$Profits proposed to be transferred c$:ividend recommended by board d$Material changes subse;uent to close of ,2

)f the Board feels that the financials or the -eport do not comply &ith the applicable provisions of clause "29 or "03' they may revise the aforesaid in respect of any of the three preceding ,inancial years after obtaining approval of the 1ribunal )t cannot be revised for more than once in one financial year. !( may make separate rules for this. !lause "03 #"$ has stipulated ne& disclosures in B- like *umber of meeting of Board +tatement of declaration by independent directors !ompany8s policy on director appt/remuneration <6planation on every ;ualification by P!+ in his report Particulars of loans' guarantee' investment -elated Party contracts )mplementation of risk management policy Policy developed on corporate social responsibility +tatement of formal evaluation of the performance of the board and its committees )n case of listed

and public companies' as may be prescribed. !lause "03 #%$ provides for additional disclosures )n case of listed company' :irectors have laid do&n internal financial controls and they have been complied &ith :irectors have devised proper systems to ensure compliance &ith the provisions of this act' rules' and that such systems &ere ade;uate and operating effectively. !lause "0% company having net &orth of %00 cr or turnover of "000 cr or net profit of % cr or more during any financial year shall constitute a !+- committee. !ompany to ensure that at least 2= of average net profits of the company during the 0 preceding financial years are spent in every financial year on !+-. !ompany shall give preference to local areas &here it operates' for spending amount earmarked for corporate social responsibility activities if the company fails to spend such amount' the board to report the reasons for the same in its report.

+ec 2"9 #2AA$ - :isclosures re;uired in four fronts . a$ Applicable accounting standards follo&ed. b$ 1rue and fair vie& of the financials. c$ :etecting and preventing fraud. d$ Accounts on a going concern basis. !+- obligation clause did not e6ist.

2"

2"9

Penalty for improper issue' circulation or publication of balance-sheet or profit and loss account -ight of member to copies of balance-sheet and auditors4 report 1hree copies of balance-sheet' etc.' to be filed &ith -egistrar :uty of officer to make disclosure of payments' etc. !onstruction of references to documents anne6ed to accounts !ertain companies to publish statement in the ,orm in 1able , in +chedule ) Appointment and remuneration of auditors.

220 22" 222 220 223

<very member' every debenture trustee and all person &ho are entitled to receive the notice of (M have the right to receive copies of accounts. 1he company shall file 0 copies of annual accounts &ith the registrar.

*o provision internal Audit

for

compulsory

!lause "0 -prescribed companies to have an )nternal Auditor to conduct )A' &ho can be a !A or )!>A or such other professional

-otation of +tatutory Auditors.- *o such provision e6isted.

as may be decided by the Board. !( may prescribe rules for conduct and report of )A. !lause "09#2$ ?isted and other prescribed companies not to appoint or reappoint an individual auditor for more than one term of five years and an audit firm for more than t&o terms of five consecutive years. Members of a company may resolve to rotate the audit partner every year to resolve to conduct audit by more than one auditor. Provisions relating to voluntary rotation of auditing partner #in case of an audit firm$ modified to provide that members may rotate the partner @at such interval as may be resolved by members8 instead of @<very year8 proposed in the clause earlier. 1he limit in respect of ma6imum number of companies in &hich a person may be appointed as auditor has been proposed as t&enty !ompanies. 1here has to be a gap of % yrs for re-appointment after every cessation. ,urther in case of an Audit firm' no other firm &hich has a common partner to the other audit firm can be appointed as +tatutory Auditors. Members can approve rotation of audit partners and also appointment of Aoint auditors !lause "09#"$-Audit firm or an individual including an ??P to be appointed for % yrs. i.e. to hold office upto the date of the si6th A(M. Appointment of auditors for five years shall be subAect to ratification by members at every Annual (eneral Meeting. !lause "09#"0$ -e6isting auditors continue to be the auditors of the company in such a scenario. !lause "09# $-!asual vacancy to be filled up by the Board &ithin 00 days. )f due to resignation' then by the !ompany in its meeting &ithin 0 m from the date of

Board recommended the reappointment of retiring auditors and retiring auditors could be reappointed at the A(M

+ec 223-Auditors could be appointed to hold office only upto the date of the ne6t A(M and could be reappointed there.

+ection 223#0$ Provided that if no Auditor &as appointed/reappointed at the A(M' the !entral (overnment could fill up the vacancy. +ection 223#5$ .!asual vacancy to be filled up by the Board. )f due to resignation' then by the members in their meeting.

-ecommendations of Audit !ommittee for appointment of auditors *o such provision e6isted.

Auditor8s duties &hen they resign *o such provision or re;uirement e6isted.

+ection 223#9$ Provided for removal of auditors before the e6piry of their term' only &ith the prior approval of the !entral (overnment. :uties of auditor/secretarial auditor/cost auditor to report fraud to the !(.- no such provisions e6isted 223 A 22% 225 Auditor not to be appointed e6cept &ith the approval of the company by special resolution in certain cases. Provisions as to resolutions for appointing or removing auditors. Cualifications and dis;ualifications of auditors.

recommendation of the Board and such auditor to hold office only upto the date of the ne6t A(M. !lause "09#"$ .all the appointment of statutory auditors including in case of casual vacancy shall be made after considering the recommendations of the Audit !ommittee' &here there is one. -etiring auditor to file a statement &ith the -B! as &ell as the !ompany' &ithin 00 days of resignation' indicating reasons and other facts that may be relevant &ith regard to his resignation !lause "30#%$ provides that the 1ribunal may' by order' direct the company to change its auditors on being satisfied that the auditors has acted in a fraudulent manner or abetted or colluded in any fraud. !lause "30 #"2$ Auditors/!>A/!+ to inform the fraud to the !( &ithin prescribed time and manner and the same shall not be construed as breach of duty.

+ection 225#0$ . ??P &as not to be treated as a Body !orporate for the limited purpose of this section and hence could be appointed as an Auditor. Auditor not to render certain services*o such provision e6isted.

!lause "3" >here a firm including an ??P is appointed as an auditor of a company' only the partners &ho are chartered accountants shall be authoriDed to act and sign on behalf of the firm. !lause "33-auditor not to render directly or indirectly the follo&ing services to the company' its holding company or its subsidiaries' or associate companyE Accounting and book keeping serviceF )nternal auditF :esign and implementation of any financial information systemF Actuarial servicesF )nvestment advisory servicesF )nvestment banking servicesF -endering of outsourced financial servicesF Management servicesF and Any other kind of consultancy

services. Provisions relating to restrictions on non-audit services modified to provide that such restrictions shall not apply to associate companies and further to provide for transitional period for complying &ith such provisions. 229 22 229 200 20" Po&ers and duties of auditors. Audit of accounts of branch office of company. +ignature of audit report' etc. -eading and inspection of auditor4s report. -ight of auditor to attend general meeting. -ight of auditors to access books of accounts' to obtain information and e6planations' to attend meeting' to be heard at meetings etc.

+ection 20"Provides for all notices of and other communication relating to general meeting of a company to be for&arded to the Auditor. 1he Auditor &as thus entitled to but not obliged to attend any general meeting.

!lause "35Provides that auditor shall' unless other&ise e6empted by the !ompany' attend any general meeting' either by himself or through his AuthoriDed representative &ho is ;ualified to be an auditor.

202 200

Penalty for non-compliance by auditor &ith sections 22% and 20". Penalty for non-compliance by auditor &ith sections 229 and 229.

Penalties &ere provided for violation of section 229 #dealing &ith po&ers and duties of auditors$ and section 229 #:ealing &ith signature of audit -eport$. penalties of fine upto -s. "0000.

Penalties significantly enhancedfine not less than 2%000 but e6tendable to -s. % lakhs. )mprisonment upto one year and fine in case there is an intention to deceive the company' its shareholders or creditors. Provisions relating to e6tent of criminal liability of auditors particularly in case of partners of an audit firm revie&ed to bring clarity. ,urther' to ensure that the liability in respect of damages paid by auditor' as per the order of the !ourt' #in case of conviction under !lause "39$ is promptly used for payment to affected parties including ta6 authorities' !entral (overnment has been empo&ered to specify any statutory body/authority for such purpose

200 A

Po&er of !entral (overnment to direct special audit in certain cases.

200 B

Audit of cost certain cases.

accounts

in

>hen the !( finds that the affairs of the company are not managed in accordance &ith sound business principles' are likely to cause serious inAuries or damage to the interest of trade etc' the special audit may be ordered by !( &ithout providing an opportunity of being heard. 1he company is compulsorily re;uired to maintain cost records

203

Po&er of -egistrar to call for information or e6planation.

as per sec 209 and !( has issued a direction to the company to conduct a cost audit. Calli - i $o)(atio o &e)usal o$ *ocu(e ts , 1he company has to file a document &ith registrar -egistrar is satisfied that some information or e6planation is re;uired may call for such information or e6planation. Calli i $o)(atio o )ecei0i - a co(&lai t B A person files a complaint &ith the registrar that the business is being carried out a$to defraud its creditors b$for a fraudulent or unla&ful purpose. 1he registrar &ill issue sho& cause notice if complaint is supported by evidence. Application shall be made by the registrar to the Magistrate of first class or presidency magistrate Po&ers of magistrate to enter and search the places &here books are kept and seiDe books as registrar considers necessary. Po&er of registrar to take copies and place identification marks on books and papers.

203 A

+eiDure of -egistrar. -

documents

by