Professional Documents
Culture Documents
Background
2009 Bill withdrawn due to numerous amendments
2011
2012
2013
2013
658 Sections
15 Schedules
98 Sections have been notified
470 Sections
7 Schedules
The Draft rules have been placed for comments from investors on the Ministry of Corporate Affairs website.
quorum
Definition of a listed company A company with any of its securities listed on any recognised stock exchange Uniform Financial year 1st April to 31st March Definitions:
Small Company Widening of definition of Officer in Default to include KMP
Incorporation
Definition of Private Company Object clause of Memorandum of Association Only single head objects No segregation into Main Objects, Ancillary/ Incidental objects & Other objects Certificate of Commencement of Business Compliance consequent to name change Companies with Charitable Objects
Charges to be registered
All charges on the companys property, assets or undertaking require
registration
No exemption from registration of pledges. Earlier registration was required only for following:
Securing debenture issue Immovable property Movable property not being pledge Calls made but not paid Goodwill, patent, licence under a patent, trademark or copyright or licence under a copyright Uncalled share capital Book debts Floating charge on undertaking Ship or share in a ship
Auditors
5 years tenure for auditors appointed at AGM Automatic reappointment of existing auditor at AGM where no auditor is appointed/ reappointed Annual rotation of audit partner and his team where members so resolve. Listed companies & Prescribed class of companieso An individual as auditor- max 1 term of 5 consecutive years o Audit firm as auditor- max 2 terms of 5 consecutive years Auditor unless otherwise exempted by the company shall attend any general meeting by himself or through his authorised representative.
Accounts
ACT 1956 Consolidation of Accounts not ACT 2013 Consolidation of Accounts mandatory
mandatory
Financial statements can be signed by: Chairperson alone with Board authorization
QIB
Through a Private Placement Offer letter Intimate ROC of offer within 30 days of Circulation of Private placement offer letter Allotment must be made within 60 days of receipt of Application money If unable to allot, application money to be returned within 15 days of completion of 60 days If unable to return application money within 15 days, pay the applicant interest @12%p.a. from expiry of 60th day On allotment, file with ROC a return of allotment.
o Composition of committee
o Reasons for failure to provide or spend such amount
Constitution:
Chairperson a person having expertise in accounts, auditing, finance or law appointed by the CG Maximum 15 other members- full time and/ or part time.
DIRECTORS
Key Highlights
Minimum no of directors retained Max no of directors increased to 15 (against the earlier 12) No of directorships increased to 20 (earlier 15 public ltd companies) Every company to have at least one director who has stayed in India for at least 182 days in the previous calendar year CEO/ CFO defined Prescribed class of companies to compulsorily have at least one woman director Independent director defined and specific related provisions laid down Prescribed class of companies to compulsorily have CEO/ CFO and CS
Duties of Director
For the first time duties of directors have been laid down includes
independent directors
Must act in good faith, to exercise duties with care, skill and judgment and shall act in the best interest of the company, employees, community and environment. Contravention of this provision entails fine under the Act.
Insider Trading
Directors/ KMP shall not enter into insider trading Insider trading defined act of subscribing, buying, selling, dealing or agreeing to subscribe to the securities of the company by any director if he/ she has access to non-public sensitive information OR an act of counseling about procuring or communicating non-public price-sensitive information to any person Price sensitive information any information which published could materially affect the price of the securities of the company Loose ends not defining non-public/ materially affect the price of the securities
MEETINGS
AGM Notice
Where any business to be transacted affects any other company, where the extent of shareholding every promoter, director, manager, KMP is not less than two per cent of the paid up share capital of that company shall be set out in the explanatory statement to the notice. Quorum five (public co), 15 (1000-5000), 30 (>5000) personally
Signing of Annual Return : (i) A director and the Company Secretary, or where there is no Company Secretary, by a Company Secretary in whole-time practice. (ii) in addition to the above, the annual return, filed by a listed company or by a company having such paid-up capital and turnover as may be prescribed, shall be certified by a company secretary in practice that the annual return discloses the facts correctly and adequately and that the Company has complied with all the provisions
of the Act.
a. Loan to MD/WTD
As a part of contract of services extended to all its employees; or Pursuant to scheme approved by members by special resolution b. A Company which in the ordinary course of its business provides loans or gives guarantees or securities for the due repayment of any loan and in respect of such loans an interest is charged at a rate not less than the bank rate declared by RBI
+ Securities premium
Combines sections 297 and 314 both the sections dealt with 2 different scenarios
Definition of related party widened
Purview of related party transaction widened sale, purchase, leasing of property included
Arms length transaction defined CG approval replaced with prior approval of shareholders for prescribed class of companies Related party contracts to be explained in the Boards report along with justification for the contract
No Company shall enter into any contract or arrangement, except with the consent of the Board, with a related party with respect to: sale, purchase or supply of any goods or materials; Selling or otherwise disposing of, or buying, property of any kind;
Board Committees1. Audit Committee: Section 177 -Applicable in case of Listed Companies and such other class of Companies as may be prescribed -Minimum of 3 directors with independent directors forming a majority -Majority of members including its Chairperson shall be persons with
2. Nomination and Remuneration Committee -Section 178 -Mandatory in the case of listed companies and such other class or
classes of companies as may be prescribed. -The Committee shall formulate the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy, relating to the remuneration for the directors, key managerial personnel and other employees -It shall consist of three or more non-executive director(s) out of which not less than one half shall be independent directors.
3. Stakeholders Relationship Committee: Where the combined membership of the shareholders, debenture holders, deposit holders and any other security holders is more than one thousand at any time during the financial year, the company shall constitute a Stakeholders Relationship Committee. It shall consider and resolve the grievances of security holders of the company.
Certain criteria for winding-up deleted like minimum number of members falling below prescribed limit, non commencement of business for 1 year etc.
Additional ground providing for winding-up:On an application made by the Registrar or any other person authorized by CG by notification under this Act, the tribunal is of the opinion that: The affairs of the company have been conducted in a fraudulent manner or Company was formed for fraudulent and unlawful purpose or The persons concerned in the formation or management of its affairs have been guilty of fraud, misfeasance or misconduct in connection therewith.
incorporation
Subscribers to the memorandum have not paid the subscription
2 immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company.
Thank you
IFMR Rural Channels and Services Private Limited IITM Research Park | A1 | 10th Floor | Kanagam Village | Taramani | Chennai 600 113 | Tamil Nadu | India http://ruralchannels.ifmr.co.in/
Small Company
Small company means a company other than a public company i. paid-up share capital of which does not exceed Fifty Lakh or such higher amount as may be prescribed not exceeding Five Crore; or i. turnover of which as per its last profit and loss account does not exceed Two Crore or such higher amount as may be prescribed not exceeding Twenty Crore. Exemptions:
Holding company or subsidiary company Company registered under section 8 Company or body corporate governed under Special Act
Private Company
Definition: A company having minimum paid-up share capital of one lakh rupees or such higher number as maybe prescribed and which by its articles; Restricts the right to transfer its shares; Except in case of One Person Company, limits the number of its members to two hundred; Prohibits any invitation to public to subscribe for any securities of the company Silent about acceptance of deposits
A company not covered above may invite, accept or renew deposits from MEMBERS subject to:
Passing resolution at general meeting Compliance with RBI rules Terms of security and repayment of deposit and interest agreed upon between company and members
Fulfilment of following conditions: Circular to members with financial position of company, credit rating obtained, amount due towards deposits previously accepted, other prescribed matters Filing a copy of circular with the statements with Registrar within 30 days before issue of circular
Commencement of Business
PARTICULARS APPLICABILITY ACT 1956 Only to PUBLIC companies ACT 2013 To all Companies having SHARE CAPITAL
Applicable companies not to commence business until: A declaration is filed by a director that every subscriber has paid the value of shares subscribed by him The paid up capital of the private company is not less than Rs. 100,000 Company has filed a verification of registered office address
ACT 1956
Can be incorporated for the following objectives: Art Science Religion Charity Any other useful object
ACT 2013
Additionally for the following Sports Education Research Social welfare Environment Protection
O B J E C T S
If license is revoked
Company maybe wound up OR Amalgamated with another Clause 8 company with similar objects