Professional Documents
Culture Documents
OF COMPANIES ACT,
1956 WITH COMPANIES
ACT, 2013
Submitted to :
Dr. Karunesh Saxena
Submitted by :
The Miracle Workers
Contents
Introduction
Roles and Responsibilities
Issues of Share Capital
Audit and Auditors
Directors
CSR & Revival and Rehabilitation of Sick
Companies
Differences
Conclusion
Introduction
Terminologies
OPC
CSR
MOA
AOA
ID
WTD
CEO
NCLT
NFRA
SFIO
ROC
The
Companies
Act, 1956
COMPANIES ACT,
1956
13 Parts
15 Schedules
658 Sections
Facts about
the Act
COMPANIES ACT,
2013
470 Sections
29 Chapters
New
33 Definitions
7 Schedules
Facts about the
Act
Comparitive Study :
ACT 1956
ACT 2013
13 Parts
29 Chapters
658 Sections
470 Sections
15 Schedules
7 Schedules
Bringing Flexibility
Self Regulation
Stringent
Punishment
Effective protection
for Society
Healthy Growth
of India Inc.
Efficient
enforcement of law
New Concepts
10
NOVELTIES
Introduction of One Person Company
11
Changes - Incorporation
Penalizing Provisions
ROC empowered to strike off the name of a
Company incorporated with wrong/incorrect
information
Person deliberately furnishing any
false/incorrect information at the time of
incorporation shall be responsible for fraud
under section 447 & stringent punishment
IN
OUT
13
Peerless
The
Influencers
Sesa
Sterlite
Satyam
Pradeep
Overseas
Sahara
14
15
Board
Now
ROLE OF CA
Chartered Accountants included in the definition of expert who has
been assigned specific responsibilities and liabilities under the Act
Appointment as Internal Auditors for companies requiring mandatory
internal audits
Appointment as Liquidator in Winding up proceedings
Immense opportunities for CAs with respect to M&A transactions
CA may act as insolvency practitioner, administrator and also represent
stakeholders before Tribunal
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18
RESPONSIBILITYOF CA
NFRA to have the power to investigate matters of professional or other misconduct committed by any
member or firm of CAs regd under the CA Act
Where auditor contravenes requirements of appointment or rotation, auditor punishable with fine of
minimum of INR 25000 and upto INR 5 Lakh
Where provisions contravend by auditor knowingly or willfully with intention to deceive company or
shareholders or creditors or tax authorities, punishable with imprisonment extending not less than
one year, and fine being minimum INR 1 Lakh and maximum INR 25 Lakh.
Where, in case of audit of a company being conducted by an audit firm, it is proved that the partner
or partners of the audit firm has or have acted in a fraudulent manner, or abetted or colluded in
fraud, in relation to or by, directors or officers, liability under the Act will be that of the partner or
partners concerned of the audit firm and of the firm jointly and severally.
Class action suit may be instituted against the auditor including audit firm of the company for any
improper or misleading statement made in audit report or fraudulent conduct
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19
20
Share Capital
The 2013 Act does not give any cognizance to the existing requirement
of section 90 of the 1956 Act that provided some saving grace to
private companies. Now this section applies equally to the private
companies.
Two kinds of shares capital
New issue of shares capital to be only of two kinds
Voting rights
22
The 2013 act removes the distinction provided by the 1956 act to
vote if the company fails to pay dividend to its cumulative and
non-cumulative preference shares.
The provisions regarding private placement and additional
disclosures in prospectus(these provisions will also help to
strengthen capital markets).
The 2013 act also proposes to re-instate the existing concept of
shares with differential voting rights (Pursuant to this section the
company may face hardship with regards to computation of
proportionate voting rights).
VARIATION IN RIGHTS: If the variation by one class of
shareholders affects the rights of any other class of shareholders,
the consent of three-fourths of such other class of shareholders
shall also be obtained and the provisions of this section shall
apply to such variation.[Section 48(1) of 2013]
PUBLIC OFFER
CONDITIONS
YES
NO
Conditions
fulfilled?
26
4.
The 2013 Act includes a new section that provides for issue of fully
paid-up bonus shares out of its free reserves or the securities premium
account or the capital redemption reserve account, subject to the
compliance with certain conditions such as authorisation by the articles,
approval in the general meeting and so on [section 63 of 2013 Act].
27
7.
The 2013 Act gives cognizance to one of the amendments made in the listing
agreement by SEBI.
A requirement has been imposed in section 66 of 2013 Act, which states that no
an application for reduction of share capital shall be sanctioned by the Tribunal
unless the accounting treatment, for such a reduction is in conformity with the
accounting standards specified in section 133 or any other provision of the 2013
Act and a certificate to that effect by the companys auditor has been filed with
the Tribunal.
the 2013 Act clarifies that no such reduction shall be made if the company is in
arrears in repayment of any deposits accepted by it, either before or after the
commencement of the 2013 Act, or the interest payable thereon.
The 2013 Act provides flexibility in recognising the electronic mode for
notices and voting, which is in line with the MCAs efforts to give
cognisance to use of electronic media as evident from a number of
green initiatives introduced
recently,
maintenance of registers
The Need for
Web Security
29 and
returns at a place other than the registered office.
DIVIDEND
The existing requirement of the 1956 Act with regard to the transfer of a
specified percentage of profits not exceeding 10% to reserve is no
longer applicable.
Thus companies are now free to transfer any or no amount of profits to
reserves [Section 123 (1) of the 2013 Act].
The 2013 Act also provides that no dividend shall be declared or paid in
case of inadequate profits by a company subject to the Rules yet to be
notified.
The company also cannot declare or pay dividend from its reserves other
than free reserves [Section 123(1) of the 2013 Act].
The company also cannot declare interim dividend, if it has incurred a
loss the current financial year, up to the end of the quarter immediately
preceding the date of declaration of the interim dividend at a rate higher
than the average dividends declared by the company during the
immediately preceding three financial years.
The Need for Web Security
30
31
POINT OF
DISTINCTION
1956
2013
1.Liability of an auditor
Liability increases
substantially.
2.Auditors rotation
No provision of
rotation.
3.Non-audit services
Absence of any
provision.
32
33
34
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35
AUDIT COMMITTEE.VIGIL
MECHANISM
Every listed company or such class of companies shall
establish a vigil mechanism
Whistle
Blower (a
non
mandatory
item as per
Cl 49) is now
made
mandatory,
in the name
of Vigil
Mechanism
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36
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
Prescribed class of companies to compulsorily have at least one woman
director
Independent director defined and specific related provisions laid down.
DEFINITIONS
Director
Board of Directors
Or
Board
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39
MANAGING DIRECTOR
Managing Director
Director
By
Articles
Agreements
Shareholdings
+
Entrusted with substantial powers of management
+
Occupying position of managing director by whatever name
called
40
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41
NUMBER OF DIRECTORSHIPS
(SECTION 165)
Director in maximum 20 companies
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42
APPOINTMENT OF DIRECTOR
(SECTION 152)
Appointment of Managing Director, Whole Time Director or Manager to be
approved by special resolution in a General Meeting
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43
44
PROMOTING WELFARE
INITIATIVES
45
12/1/2014
46
Every year in the Boards Report, details about the policy developed and
implemented by the Company on CSR initiatives taken during the year to be
included
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47
For spending the amount earmarked for CSR activities the Company shall give
preference to the local area and areas around it where it operates.
If a Company fails to provide or spend such amount, the Board to specify reasons
for not spending the amount in its report
Companies require to comply with CSR shall give additional Information by way of
notes to the Statement of Profit and Loss regarding aggregate expenditure incurred
on corporate social responsibility activities.
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48
Name of Company
NTPC Ltd
Infosys Ltd
6,647.37
2 % of Average PAT
408.86
405.43
227.18
208.88
180.36
160.19
152.49
150.37
132.95
49
51
DIFFERENCES BETWEEN
COMPANIES ACT 1956 & COMPANIES BILL 2013
52
Differences between
Companies Act 1956 & Companies Bill-2013
Particulars
Scope
Section
Approval
required
of
A co. cannot enter into the contracts relating to Sale, purchase or supply of any goods or materials;
Sale, purchase or supply of any services;
Underwriting the subscription of any shares,
debentures of a co.
A co. cannot enter into contracts relating to Sale, purchase or supply of any goods or materials;
Selling or disposing of ,or buying, property of any kind;
Leasing of property of any kind;
Availing or rendering of any services;
Appointment of any agents for purchase or sale of
goods, materials, services or property;
Appointment to any office or place of profit in the
company, its subsidiary co. or associate co.;
Underwriting the subscription of any securities or
derivatives thereof , of the co.
53
Differences between
Companies Act 1956 & Companies Bill-2013
Particulars
Specified
persons with
whom contracts
are covered
Exemptions
54
Differences between
Companies Act 1956 & Companies Bill-2013
Particulars
Applicability of
Section
Public Companies
Scope of Section
No Public Co. shall directly or indirectly make any loan including book
debt or give any guarantee or provide any security to its directors or
to any other persons in whom the director is interested.
Exemptions
55
Differences between
Companies Act 1956 & Companies Bill-2013
Particulars
Grounds for
Winding up
reduced
Criteria for winding-up provided by NCLTIf the Co. has, by special resolution, resolved that the co.
be wound up.
A co. may be struck off by RoC for below reasonsSubscribers to the memorandum have not paid the subscription
money within 180 days from the date of incorporation
Co. has failed to commence its business within 1 yr of its
incorporation
Co. is not carrying on any business or operation for 2 immediately
preceding financial yr and has within such period applied for status
of a dormant co.
A Co. may also file application for striking of the name of the Co.
under certain circumstances
56
CONCLUSION
The new Indian Companies Act is a positive step towards modernising Indias
company law and aligning it to global standards. It has given increased decision
making powers to the company .
The introduction of one person companies and small companies should alleviate
some of the administrative burdens that small businesses have to bear, but larger
companies should prepare themselves for further administrative burdens as a
result of changes in the appointment of auditors and directors.
Further clarity will be required as the provisions of the Companies Act come
into force and we will watch with interest as this area of law develops.
57
CONCLUSION (continued)
Contemporary
Business
Oriented
Easy
Understandability
Self Regulatory
Preventive
Investor
Protective
Adaptable
58
IMPACT OF CHANGE
59
60