companies bill, 2012 presentation from sympro consulting pvt. ltd

8/10/2019 Companies Bill, 2012 Presentation From Sympro Consulting Pvt. Ltd.

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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

Sympro Consulting Private Limited 2


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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:


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:


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:



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:



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:



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:



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:



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:


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:


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:


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]

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