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Companies Bill, 2012
Presented by:
CA. Suresha Balachandran FCA, DISA, ICA
Director,
Sympro Consulting Private Limited
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Structure of the Bill:
Contains 29 Chapters, 470 Clauses(Sections) and 7 Schedules
Substantial part of the Bill will be inthe form of Rules, which will be
prescribed separately
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New Concepts:
One person company
Independent Directors (Sch. IV)
Associate Dormant company
Class Actions
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New Conceptscontinued.
Corporate Social Responsibility(Sch. VII)
Secretarial Audit
National Authority for FinancialReporting
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Incorporation:
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Particulars Companies Act, 1956 Companies Bill, 2012
Maximum number of members
for Pvt. Companies
50 200
Minimum number of members Public Co., - 7
Private Co., - 2
No change. Concept of one person
company introduced
Objects clause of MOA Bifurcated into - Main objects,
incidental or ancillary objects
and other objects
No such bifurcation, the objects
considered necessary for furtherence
of business to be givenRegistered Office Companies to furnish the details
of registered office of the
company by filing eForm 18 at
the time and incorporation and
subsequently whenever there is
a change within 30 days
Within 15 days of incorporation to have
a registered office. Company to furnish
verification details of its registered
office to the Registrar within 30 days of
its incorporation in a prescribed
manner. Any subsequent change to tonotified within 15 days
Commencement of business Applicable only to public
companies
Applicable to all companies having
share capital
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Shares and Share Capital:
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Particulars Companies Act, 1956 Companies Bill, 2012Issue of shares at a discount Sec.79 permits issue of shares at
discount subject to compliance
of conditions
Issue of shares at discount is
prohibited except for sweat equity
shares
Issue of Preference shares for
more than 20 years
Sec.80 prohibits issue of
irredeemable pref. shares and
pref. shares redeemable after 20years
Issue of preference shares for period
exceeding 20 years is permitted for
infrastructure projects
Issue of shares on private
placement
No specific provisions Specific provision introduced
Consolidation and division of
shares
Companies permitted to
consolidate or sub divide its
shares by passing resolution inGeneral Meeting
Consolidation and division which
results in changes in the voting
percentages of shareholders shallrequire approval of the Tribunal
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Board Meeting:
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Particulars Companies Act, 1956 Companies Bill, 2012
First board meeting No specific time stipuated forholding first board meeting
First board meeting of the directors tobe held within 30 days of its
incorporation
Time gap between two meetings Atleast one meeting to be held
in every quarterNot more than 120 days gap between
tow consecutive board meeting
Length of notice No specific length of notice
specified
Notice of not less than 7 days be given,
lesser notice can also be given if an
independent director is a director andattends the board meeting
Meeting through video
conferencing
Permitted and subject to the
rules framed thereunder
Clause 173(2) permits meeing through
video conferencing and other audiot
visual means. Central Govt. may by
notification specify the matters which
shall not be dealt with in a meetingthrugh video conferencing or other
audio visual means
Penalty Every officer who fails to give
notice shall be fined which may
extend to Rs.1,000/-
Every officer who fails to give notice
shall be fined which may extend to
Rs.25,000/-
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General Meeting:
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Particulars Companies Act, 1956 Companies Bill, 2012
Maximum time for holding first
AGM
18 months from incorporation or
9 months from closure of
accounts which ever earlier
9 months from the closure of accounts
Time and day During the busines hours and
on a day that is not a public
holiday
During business hours i.e., between
9AM to 6PM on any day that is not a
National Holiday
Length and mode of notice Private companies are permitted
to specify the length of notice in
Articles and written notice is
mandatory
21 days clear notice to be given by all
companies. Notice may be given in
writing or in electronic form in the
manner prescribed
Consent for shorter notice Consent to be given by allmembers entitled to vote at the
meeting
Consent to be given by not less than95% of the members entitled to vote at
the meeting
Quorum Private Companies - 2 Members
Public Companies - 5 Members
Private Companies - 2 Members
Public Companies -
(a) 5 Members where total number of
members do not exceed 1000.
(b) 15 Members where total number of
members are between 1000 - 5000
(c) 30 Members where total number ofmembers are between more than 5000
Statuotry Meeting Public companies to hold
meeting after one month and
before 6 months from the date
of entitlement of
commencement of business and
file statutory report with ROC
No such provision
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Directors:
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Particulars Companies Act, 1956 Companies Bill, 2012
Maximum number of directors 12 15, More than 15 with special resolution
Maximum number of directors 15, excludes private companies, un
limited companies, alternate
directorship and directorship in non-
profit associations
20, out of which not more than 10 can be
public companies. Includes alternate
director. No specific exclusions are
provided for others.
Composition of Board Minimum 2 directors in case of private
and 3 in the case of public companies.
Maximum 12 directors
Certain class of companies to have atleast 1
woman director. Every company to have
atleast one director who has stayed foratleast 182 days in India in previous
calender year. Listed Companies to have
atleast 1/3rd independent directors.
Disclosures in Board Report Sec 217 contains disclosure requirements
of Board report
Additional disclosures proposed by the
bill, namely extract of annual returns,
number of board meetings, CSR initiativesand policy, particulars of loans,
guarantees, investments etc.,
Directors responsibility
statement
Sec 217 (2AA) prescribes the content of
Director's responsibility statement which
contains 4 clauses
Additional clauses proposed by the bill in
respect of "internal financial controls" and
"System to ensure compliance with laws".
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Independent Directors: Independent director means a director other than a MD,
WTD and Nominee Director No pecuniary relationship with company
May be appointed by another 5 years on special resolution
Independent director to give declaration in board meeting
whether he meets the criteria of independence as stipulated An independent director is not entitled to stock option and
receive remuneration by way of fee
Term of office 5 years. Thereafter, may join the board after a
gap of 3 years Independent director shall be held responsible for such acts
of omission or commission by a company which had occurredwith his knowledge, consent and connivance
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Independent Director:
Listed companies 1/3rdIndependent directors Appointment to be approved by shareholders
in GM Existing companies to comply within one year Entitled for remuneration by way of fees for
services rendered as professionals Independent director to hold prescribed
qualification Not to associate with the company eitherdirectly or indirectly in any capacity during thetenure and after 3 years
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Code for Independent Directors:
Schedule IV prescribes code for Independentdirectors and which contain:Guidelines for professional conductRole and functionsDutiesManner of appointment and re appointmentResignation and removal
Schedule provides for a at least one meeting ina year for review and evaluate the performanceof non independent directors, chairperson andboard as a whole
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Restriction - Independent Directors:
Not an employee or partner or proprietor of auditorsor company secretaries or cost auditors to thecompany or its holding or subsidiary company or itsassociate or a legal or consulting firm having or hadtransaction with company or holding or subsidiary
or associate exceeding 10% of gross turnover of thefirm
Not a CEO or director of NGO that receives 25% ormore of its receipts from company or any of its
promoters, directors, subsidiary or holding companyor associate company or an entity holding 2% ormore of the total voting power of company
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Restriction - Independent Directors:
Together with his relatives shall not holdmore than 2% of the share in the
company He should not have been an employee of
the company or holding or subsidiary or
its associate in any three precedingfinancial years
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Directors: Right of any persons other than retiring director to
stand for directorship: Notice in writing shall be given at the registered office not
less than 14 days before the meeting
A sum of Rs. 1 Lakh or such higher amount as may be
prescribed shall be deposited
Alternate director appointment shall be for a director duringhis absence for a period of not less than 3 months from India
No alternate director for independent director unless theproposed director is qualified to be appointed as independentdirector
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Vacation of office by directors:
Absents from all meetings of the board of directors heldduring a period of twelve months with or without seekingleave of absence of the board
Having been appointed a director by virtue of his holding anyoffice or other employment in the holding, subsidiary orassociate company, ceases to hold such office or otheremployment in that company
For contravention, imprisonment for a term which mayextend to one year or fine not less than one lakh rupees to fivelakhs rupees or both
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Resignation by director:
Can resign by giving notice
A director shall forward a copy of his resignation along withdetailed reasons for the resignation to ROC within 30 days
Resigned director is liable for offences which occurred duringhis tenure
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Accounts:
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Particulars Companies Act, 1956 Companies Bill, 2012
Consolidation of accountsConsolidation not mandatory,
balance sheet of subsidiary to be
attached with the holding
company while filing the returns
with ROC
Companies having subsidiaries toprepare consolidated financial
statements in addition to standalone
statements. Subsidiary includes
associates and joint ventures
Certification of accounts Balance sheet and Profit & Loss
Account to be signed by not less
than 2 directors and one of
whom shall be the MD wherethere is one
Financial statements can be signed by
the Chairman alone if so authorised
the Board of Directors
Financial year and extension Financial year not to exceed 15
months. Financial year can end
on date other than 31st March.
Financial year can be extended
upto 18 months by ROC
Financial year to end on 31st March
every year for all companies subject
certain rules to be prescribed. No
explicit provisions regarding extension
of financial year
Financial Statements Balance sheet and Profit & Loss
Account alone were financial
statements
Now financial statement includes
Balance Sheet, Profit & Loss Account
and Cash Flow Statement. Even Private
Companies are required to prepare
Cash Flow Statement
Manner of maintenance of
accounts
Maintenance of accounts in
electronic form permitted
Maintenance of accounts in electric
form permitted
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Filing of reports & returns:
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Particulars Companies Act, 1956 Companies Bill, 2012
Board report Few disclosures requirements Exhaustive disclosures requirements
Duration of Annual Return AR upto the date of Annual
General Meeting
AR upto the date of financial year end
Certification of Annual Return AR to be certified by directors
and Company Secretary of the
Company
AR to be certified by Company
Secretary of the company or Company
Secretary in Practice
Annual Returns in case of ListedCompany
No such provision Listed company to file return to ROCregarding changes in shares held by
promoters and top 10 shareholders
within 15 days of the change
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Secretary & secretarial audit
Mandatory Secretarial Audit for all listed companies andcertain class of companies which are to be prescribed
Board to respond to qualifications contained in Secretarial
Audit by means of explanation inBoards
report
Class or classes of companies as may be prescribed shallhave MD / CEO / WTD, Company Secretary and CFO. Ifnot punishable with fine of Rs.1 lakh to 5 lakh, every
director in default shall be punishable with fine ofRs.50,000/- additionally in continuing offences a fine ofRs.1,000/- per day
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Corporate social responsibility
A committee on CSR to be formed in case of the followingcompanies:
(a) Networth of Rs. 500 Crore or more
(b) Turnvoer of Rs.1,000/- Crore or more
(c) Net profit of Rs.5 Crore or more
Board to ensure that at least 2% of the average net profitsof last 3 years is spent on CSR activities every financial yearelse reason for not spending to be specified in the Boardreport.
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Appointment of First Auditors:
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Particulars Non-Government Companies Government Companies
Board of Directors Appoint first auditors within 30days from the date of
incorporation, else in members
EGM
NA
Members in EGM If no auditors are appointed
then, members who shall within
90 days at an EGM appointauditor
NA
C & AG NA C & AG within 60 days of
incorproation shall appoint
Board of Directors NA Appoint auditor within 30 days if
C&AG fails to appoint
Members in EGM NA If no auditors are appointed then,members who shall within 60 days at
an EGM appoint auditor if Board fails
to appoint
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Auditor appointment & tenure:
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Particulars Firm / LLP of Chartered Accountants Sole Proprietor Chartered Accountant
Tenure of office Companies can appoint auditor for a
maximum term of 10 years
Companies can appoint auditor for a
maximum term of 5 years
Ratification Appointment to be ratified each year by members in AGM
Appointment to be ratified each year bymembers in AGM
New Auditor each year Company can appoint new auditor each
year, there is no bar.
Company can appoint new auditor each
year, there is no bar.
Written consent and eligibility
before appointment
A written consent of the auditor for
appointment and a certificate that the
appointment, if made is in accordance
with conditions prescribed and a
certificate to the effect that auditorsatisfies the criteria for appointment
A written consent of the auditor for
appointment and a certificate that the
appointment, if made is in accordance
with conditions prescribed and a
certificate to the effect that auditorsatisfies the criteria for appointment
Appointment afer 5 / 10 years
as the case may be
Cannot be appointed as auditor for a
period of years after the completion
Cannot be appointed as auditor for a
period of years after the completion
Intimation to ROC Company to intimate ROC within 15
days of the meeting in which the auditor
is appointed
Company to intimate ROC within 15 days
of the meeting in which the auditor is
appointed
Removal and resignation ofauditor Auditor so appointed as above can beremoved or the auditor can resign even
though the appointment is for a maxium
10 years
Auditor so appointed as above can beremoved or the auditor can resign even
though the appointment is for a maxium 5
years
Auditor and General Meeting Auditor himself or through a authorised
representative (who shall also be
qualified to be auditor) shall attend
General Meeting unless exempted by the
company
Auditor himself or through a authorised
representative (who shall also be qualified
to be auditor) shall attend General
Meeting unless exempted by the company
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Internal Audit:
Certain classes or description of companies as maybe prescribed shall be required to appoint aninternal auditor
The internal auditor could be:
Chartered AccountantCost AccountantSuch other professional as may be decided byboard
CG will specify the rules, intervals and reporting ofinternal audit
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One person company (OPC):
Only one person as a member and director OPC shall be a private company The words one person company to be
mentioned in brackets below the name of
the company OPC to maintain minutes of BM & GM No transfer of shares in OPC
Subscriber to intimate ROC name of theperson who shall become member of thecompany in the event of his death orincapacity
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National Financial Reporting Authority:
CG to constitute NFRA provision foraccounting & auditing standards
NFRA replaces NACAS
Recommend to CG on formulation andlaying accounting and auditing standards
Monitor and enforce AS & Audit Standards
Oversee the quality of services ofprofessionals and suggest measures forimprovement
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Powers of NFRA:
Powers of a Civil Court Order for discovery and production of books
of accounts at any place
Summon and enforce attendance of personsand examine on oath
Inspection of books at any place
Power to investigate suo moto or onreference by CG in professional or othermisconduct of CAs
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Powers of NFRA contd.,
Powers to levy penalty and punishCAs
iffound guilty
Penalty Rs.1 Lakh to Rs.5 Lakh & may extend
to 5 times the fees in case of individual CAand minimum of Rs.10 Lakh and mayextend upto 10 times the fees in case of firmof CAs
Debar CA from practice for 6 months to 10years
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Associate:
A company in which other company hassignificant influence, but which is not asubsidiary and includes joint venture
company Significant influence means control of at
least 20% of total share capital or ofbusiness decisions under an agreement.
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Dormant company:
A company registered under new law for a future project orto hold asset or IPR with no significant accountingtransaction such company or an inactive company maymake application to ROC for the status of dormantcompany
Inactive means no business or operation carried on or notmade any significant accounting transactions during last 2FY and has not filed AR & Financial Statement for last 2FY
Significant accounting transaction excludes fee paymentto ROC, payment to fulfill any law requirement, allotmentof shares and payment for maintenance of office andrecords
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Class Actions: Members or depositors or any class can make application
to Tribunal, in their opinion management or conduct of
the affairs are conducted which are prejudicial to theinterest of the company
To claim damages / compensation / demand any othersuitable action from or against:
Auditor including audit firm for any improper ormisleading statement made in audit report or for anyfraudulent, unlawful or wrongful act or conduct
Any expert / advisor / consultant / any other person forany incorrect or misleading statement made to thecompany or for any fraudulent , unlawful or wrongful actor conduct or any likely act or conduct on his part
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Schedules in Companies Bill, 2012:
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Schedule Reference Relates to
Schedule - I Format of Memorandum & Articles
Schedule - II Depreciation
Schedule - III
Format of Balance sheet & Statement of
Profit & LossSchedule - IV Code for Independent Directors
Schedule - V Managerial Remuneration
Schedule - VI Definition of Infrastructure Projects
Schedule - VII CSR Activities
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This material prepared by the presenter and not of the company, Sympro Consulting Pvt. Ltd. is intended to provide generalinformation on a particular subject or subjects and are not an exhaustive treatment of such subject(s).Further, the views andopinions expressed herein are the subjective views and opinions of presenter based on such parameters and analyses which in
its opinion are relevant to the subject.
Accordingly, the information in this material is not intended to constitute accounting, tax, legal, investment, consulting, orother professional advice or services. The information is not intended to be relied upon as the sole basis for any decisionwhich may affect you or your business. Before making any decision or taking any action that might affect your personalfinances or business, you should consult a qualified professional adviser, neither the presenter/company shall be responsiblefor any loss whatsoever sustained by any person who relies on this material.
This material is intended only for the use of the entity/person to whom it is addressed and the others authorized to receive iton their behalf. The recipient is strictly prohibited from further circulation of this material.
2013 Sympro Consulting Private Limited
Thank You
Contact : Suresha Balachandran, Phone: +919845742590, 080-41203899, Email: [email protected]