Enhanced Disclosure Norms

under

Companies Bill, 2012

National Conference
On

Companies Bill, 2012 - Countdown to New Companies Act

Mumbai, January 11, 2013

Agenda : Chapter-wise enhanced requirements

Prospectus Annual Return RoC Shareholding Return Listed Entities Explanatory Statement for Special Matters AGM Report Boards Report CSR Disclosure Consolidated Statements & Disclosures Related Party Disclosures Managerial Remuneration

Ch. III Prospectus & Allotment of Securities

Matters to be stated in the Prospectus Clause 26 of the Bill Sections 55 60 of the Act

Additional Disclosures : Source of Promoter Contribution in the prescribed manner Name and Address of CFO Project Details like Managements perception of Risk Factor, period of project etc Details of any litigations or legal action pending or taken by Govt. Dept or Statutory Body during the last 5 years against the Promoters of the Company Detailed Fact Sheet, mentioning all basic facts and financials about the Co and other related persons and entities incl. report of subsidiary
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contd

Dropped (major ones): Borrowing Powers and qualifications shares of the Directors Rating from CRISIL or any other rating agency Declaration of refund of issue if minimum subscription (90%) not recd. Particulars of Companies under same management under Sec 370 (1B) of the Present Act Principal terms of loan and assets charged as security Details of material contracts Details of revaluation of assets during last 5 years Any amount of benefit paid or given within 2 preceding yrs or intended to be paid or given to any promoter and officer and consideration for such benefit
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Ch VII Management & Admnn

Annual Return Clause 92 of the Bill Sections 159 162 of the Act
Significant transformation in non financial annual disclosures and reporting by companies as compared to the existing format. Additional Disclosures : Principal business activities, particulars of its holding, subsidiary and associate companies; its promoters, directors, key managerial personnel along with changes therein since the close of the last financial year; Meetings of members or a class thereof, Board and its various committees along with attendance details;

Contd
remuneration of directors and key managerial personnel; Penalties imposed on the company, its directors or officers and details of compounding of offences; Matters related to certification of compliances, disclosures; Details in respect of share held by or on behalf of Foreign Institutional Investors, indicating their name, addresses, countries of incorporation, registration and percentage of shareholding held by them; and such other matters as may be prescribed. Signing 1 director (instead of 2) + CS Listed company In addition to Whole-time CS, AR to be signed by a Company Secretary in Whole time practice. Further class of cos. to which this may apply, may be prescribed

Ch VII Management & Admnn

Return for change in Stake of Promoters & Top 10 shareholders Clause 93 of the Bill New Provision

Listed Entities are required to file a Return in prescribed manner with RoC within 15 days with respect to change in the number of shares held by the :1) Promoters 2) Top 10 shareholders In addition to Stock Exchange requirements. No thresholds..any change would warrant filing .

Ch VII Management & Admnn

Statement to be annexed with General Meeting Notice Clause 102 of the Bill Section 173 of the Act

When any special business is to be transacted in any general meeting, annexed explanatory statement to specify the nature of concern or interest, financial or otherwise, if any ,of :1) Every Director and Manager, if any 2) Every KMP 3) Relatives of (1) and (2) and any other information and facts that may enable the shareholders to understand the meaning, scope and implications of the item of business to take decision thereon For non-disclosure, such person shall be liable to compensate the co. to the extent of such benefit or profit
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Ch VII Management & Admnn

AGM Report Clause 121 of the Bill

New Provision

Listed Entities shall prepare a Report on each AGM incl. confirmation to the effect that the meeting was convened, held and conducted as per the provisions of the Act and the Rules made thereunder. Manner to be prescribed. To be filed with the RoC within 30 days of the conclusion of AGM

Ch IX Accounts of Companies
Financial Statements - Consolidated Accounts Clause 129, 137 of the Bill Sections 210-212, 220 of the Act

Alongwith Financial Statements of the Company, consolidated financial statements to be prepared of all Subsidiaries, Associates, JVs The same shall be : laid at the AGM and be filed with RoC alongwith Holding Cos accounts (137) Also required to attach a separate statement containing salient features of all Subsidiaries, Associates and JVs. Format - prescribed Dropped : Requirement of attaching documents under present section 212 (BS, P&L, DR, AR, statement of Holding Co. interest)
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Ch IX Accounts of Companies
Boards Report Clause 134 of the Bill Sections 215-217 of the Act

Made more extensive. Additional disclosures : Extract of annual return Report of the committee on directors remuneration A declaration by independent directors wherever they are appointed Cl. 149(6) Particulars of loans, guarantees, or investments under Cl. 186 Particulars of contracts or arrangements entered into with Related parties referred under Cl. 188(1) Details about the policy developed on CSR initiatives taken during the year.
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Contd

Explanation or comments on every qualification, reservation made bya) Auditor in his report b) CS in his Secretarial Audit Report Material changes & commitments affecting financial position Statement Risk management Policy Listed Cos Statement indicating manner in which Board has evaluated its annual performance and that of its committees and independent directors Such other as may be prescribed.

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Ch IX Accounts of Companies
Corporate Social responsibility Clause 135 of the Bill New Provision

Applicable to :- Every co. having

Net worth Rs. 500 crore or more, or Turnover of Rs. 1000 crore or more or a Net profit of Rs. 500 crore or more during any financial year

Board of such Co. has to ensure that Co. spends at least 2% of the Avg. Net profits made during the 3 immediately preceding financial years, in every financial yr in pursuance of its CSR Policy In case of failure to do so, it shall report the necessary reasons for not spending the same in their Boards report.
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Related Party Transactions

Related Party Transactions Clause 188 of the Bill Sections 297, 314 of the Act

Definition extended. Scope widened. In addition to existing transactions, following introduced :

Selling or otherwise disposing of, or buying, property of any kind Leasing of property of any kind Appointment of agents for purchase or sale of goods, materials, services or property Appointment of any related party to any office or place of profit Contract for underwriting the subscription of securities or derivatives thereof.

Boards report shall disclose all such transaction in its report with necessary justification.
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Ch XV Compromise & Arrangement

Merger and amalgamation of companies Clause 232 of the Bill Section 394 of the Act In respect of any meeting of any member or creditor called by the Tribunal, the following shall also be circulated : Draft of proposed terms of Scheme adopted by Directors Confirmation that Scheme has been filed with Registrar Report adopted by Directors of the merging companies explaining effect of merger on each class of shareholders, KMPs, Promoters, Non-promoter shareholders laying out in particular Share exchange ratio, specifying any special valuation difficulties Valuation Report of Expert Supplementary accounting statement
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Ch XIII Managerial Personnel

Managerial Remuneration Clause 197 of the Bill Sections 198, 309 of the Act

Every listed company is required to disclose in the Boards Report : the ratio of remuneration of each Director to the median employees remuneration and such other information as may be prescribed

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Thank You

Geetika Anand Talwar

Aditya Birla Group
geetika.anand@adityabirla.com