presentation 4.10.15
TRANSCRIPT
By CS Nishant Javlekar
Presentation
On
The Companies Act, 2013
For
National Seminar on the Companies Act, 2013 & Goods and Service Tax (GST) in India
Jointly organized by
Anand Institute of Business Studies
&
Indian Accounting Association
(Gujarat Branch)
By CS Nishant Javlekar
Disclaimer:
The presentation is based on the best knowledge and information available with the presenter and there is no
any direct or indirect relationship with any of the person or organization to which presenter associated or
having any association, readers/viewers are advice to take professional aid before acting or relying on the
same.
By CS Nishant Javlekar
Comparative Study of the Companies Act, 2013 & 1956
CSR under the Companies Act, 2013
OPC under the Companies Act, 2013
Offences, Prosecution & Penalties Under the Companies Act, 2013
Effect of the Companies Act, 2013 on Financial Reporting
Areas
Covered
By CS Nishant Javlekar
Companies Act, 2013
Companies Act, 1956
Companies Act 2013:
Initial view
• Concise
• Forward looking
• Rule Based
• Uniformity
• Easy navigation
By CS Nishant Javlekar
Companies Law
Rules
Notification
Circular
Act, 2013
Amendment Act, 2015
Order
By CS Nishant Javlekar
Companies Act, 2013
Companies Act, 1956
Companies Act 2013
Present:
• Descriptive
• Forward looking and
then back word
• Rules Based
• No Uniformity
• Anarchy
By CS Nishant Javlekar
New Features
- One Person Company
- Related Party Transaction
- Independent Director
- Resident Director
- Woman Director
- Corporate Social Responsibility
- Class Action Suits
- E- Voting
- Video Conference Meeting
- Quantum of Fines
- Secretarial Standards
- Serious Fraud Investigation Office
- Auditors
By CS Nishant Javlekar
Act 2013 is Reflection Of
By CS Nishant Javlekar
Major Changes
2013
- Types of Companies - OPC
- CSR
- Offence, Penalties and Prosecutions
- Impact on Financial Reporting
By CS Nishant Javlekar
Types of Companies
By CS Nishant Javlekar
Types of Companies Entity Structure
Access to Capital
Members
Control
Liability
Size
Activity
Others
Listed
Un-
listed
One Person
Private
Public
Holding
Subsidiary
Associate
Foreign
Company
Nidhi
Producer
Govt.
Sec. 8 Non Profit
Un-
Limited Limited
Un-
Limited
Dormant
By CS Nishant Javlekar
One Person Company [Sec 2 (62)]
By CS Nishant Javlekar
One Person Company [Sec 2 (62)]
- Only one person as member (except minors)
- Requires nominee (except minors)
- Only a natural person can form / nominate
- Can be incorporated only with 1 Director but can have upto 15 directors
- Member / nominee to be citizen & resident
By CS Nishant Javlekar
One Person Company [Sec 2 (62)]
- One Person can incorporate a single One Person Company and a Nominee can act as such only in 1 OPC
- Compulsory conversion to Pvt. / Public company on meeting certain criteria i.e. increase of paid up 50 lacs or more & turnover of 2 Cr. Or more
- Cannot be formed / converted into Section 8 Company
- Cannot carry out NBFC activities
By CS Nishant Javlekar
One Person Company [Sec 2 (62)]
No requirement of holding AGM / EGM
Ordinary / special resolution need only be communicated by
member to company and entered in minutes book
Where there is only one director, the resolution of Board means communication by the director to the company and such resolution shall be entered in the minutes book
Need not annex cash flow statement to its financials
Annual return can be signed by only one person i.e. Company
secretary, and in absence of company secretary, by the director of the company
By CS Nishant Javlekar
One Person Company [Sec 2 (62)]
- Only one director needs to sign the financial statements
- Board’s report will only include the statement of director(s) on
every qualification, reservation, adverse remark or disclaimer by auditor(s) Financial statements to be filed with the Registrar within 180 days of closure of financial year
- Board meetings: Only one in each half year and gap between two
meetings not to be less than 90 days. (Not applicable in case of one director)
By CS Nishant Javlekar
Corporate Social Responsibility
By CS Nishant Javlekar
Corporate Social Responsibility
- India is the First Country which introduced such provisions
- Recommended by Shri Virappa Moily in 2009 Bill
- Same was recommended in 57 Report of Companies Bill 2011 submitted by Shri Yashvant Sinha, Chairman of the Committee
- Investment in community from where Corporates earn profit, it’s a responsibility of Corporates and not the charity
- Company need to give preference to local areas first
- No Specific Definition of CSR and construe the same with literal meaning of interpretation
By CS Nishant Javlekar
Corporate Social Responsibility
Applicability 135(1) of the Act and
Rule 3 (1) and (2) of the Companies (CSR) Rules,
2014
How Much
Amount?
By CS Nishant Javlekar
Corporate Social Responsibility
- Applicable to even Foreign Companies having its branch or project office in India
- Specific Disclosure in the Board Report and website of the Company
- Company need to frame committee called CSR Committee with 3 Directors including Independent Director and it’s a responsibility of Board and Committee to implement such CSR Policy of the company
- Marathon, Advertisement, Charity, Labour Welfare shall not be treated as CSR
- Company may carry this CSR Activities through Agency or may appoint Staff for the same
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Permitted Activities As per Schedule VII of the Act, 2013
Eradicating Hunger Poverty
Malnutrition Rural Health Care
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Swacha Bharat Kosh Safe Drinking Water
Education Slum Area development
Empowering Women Animal Welfare
By CS Nishant Javlekar
Offences, Prosecution and Penalties under
the Companies Act, 2013
By CS Nishant Javlekar
- Offences by the officers who are in default [Section 2(60)]
Company Secretary
CFO & CEO
Executive Director i.e.
MD, WTD
Board of Directors
PENATLIES
By CS Nishant Javlekar
- Investigation of Offences by Serious Fraud Investigation office
(SFIO) [Sec 212]
Action by SFIO
Report by Registrar
Speical Resolution by
Members
Report of CG or SG
In public interest
By CS Nishant Javlekar
The Act Define Cognizable Nature and termed as fraud and bail cannot be granted
without special reason to be in writing which are:
i. Furnishing of any false or incorrect particulars or suppression of material
particulars either before or after incorporation of a company
ii. Criminal liability for mis-statement in prospectus
iii. Fraudulently inducing persons to invest money
iv. Personation for acquisition of securities.
v. Issue of Duplicate share certificate with intent to defraud
vi. Transfer of shares by the depository or participant with a view to defraud a
person
vii. Concealment and misrepresentation in respect of reduction of share capital
viii. Failure to furnish information called by the registrar or where the business of the
company is being carried on for a fraudulent or unlaw purpose
ix. Furnishing false statement, mutilation, destruction of documents
x. Fraudulent application for removal of names of companies from the register
xi. Fraudulent conduct of business
xii. Furnishing false statement
By CS Nishant Javlekar
INVESTIGATION INTO THE AFFAIRS OF THE COMPANY IN OTHER CASES (SECTION 213)
Eligeblity 100 Members or 1/10 of voting power having share cap or 1/5 not having
share cap
Investigation
if report from investigating agency about fraud every
officer in default will be punisable
By CS Nishant Javlekar
You are not offender, unless you are caught.
By CS Nishant Javlekar
Punishment of Offences
Sr. No.
Crime Punishment
Imprisonment Fine
1 Fraud Sec 447 6 months but may extend to 10 years
Not less than amount involved but may extend to 3 times of
the amount
2 False Statement 448 Same as above Same as above
3 False Evidence 449 Minimum 3 years or upto 7 years
Extend to 10 lacs
4 No specific penalty 10,000 Rs. and for continuous offence 1000 Rs for every day
5 Specific provisions contains their own structure of Imprisonments and fines
By CS Nishant Javlekar
COMPUNDING OF OFFENCES (SECTION 441)
- This is a beneficial measure and provides a silver lining for settlement of
offences out of court and takes away the need for prosecution by the central
government.
- Any offence punishable with fine only is compoundable in accordance with the
procedure laid down in the new act.
- An offence is compoundable by the Tribunal where the maximum amount of
fine which may be imposed does not exceed Rs. 5 lakh.
- However the specified sum should not exceed the maximum amount of fine
which may be imposed for the offence. Any additional fee already paid is
deductible from the sum payable under compounding facility.
By CS Nishant Javlekar
Effect of the Companies Act, 2013 on
Financial Reporting
By CS Nishant Javlekar
Sr. No.
Particulars Companies Act, 2013
Companies Act, 1956
Effect
1 Definition
Books & paper and Books or Papers
Section 2 (12)
Section 2 (8)
- Allow to maintain records in electronic form
Books of Account
Section 2 (13) Section 209 - No change
Financial Statement
Section 2 (40)
Not defined - Includes BS, P & L, Cash Flow Statement, Statement changes in Equity and Explanatory Notes. (Cash flow exempt for OPC, Small and Dormant Company)
Financial Year
Section 2 (41) Section 2 (17) - Concept of uniform financial year of 1
st April to 31
st March has been made
mandatory
Provisions relating to Accounts
Section 128 to 137
Section 209 to 223 - Company may keep its books or other papers in electronic form
- Inspection in respect of subsidiary only by person authorised by the Board
- Central Government may kept longer period of Books of accounts for
By CS Nishant Javlekar
investigation - Consolidation is mandatory under
Companies Act, 2013 where there Company has subsidiary or associates or Joint venture
- Sec 130 new provisions allow for re-opening of financials of the Company by order of the court or tribunal due to fraud or mismanagement
- Sec 131 new provisions allow for revision in financial statement and board report of 3 preceding financial years for the compliance with present Act with previous approval of tribunal by BoD
2 Schedule III VI - Same as revised scheduled VI except it contains instructions regarding consolidation of accounts
3 Constitution of National Financial Reporting Authority
Section 132 210A - National Advisory Committee on Accounting Standards now named as National Financial Reporting Authority
- Body with quasi judiciary power
By CS Nishant Javlekar
4 Depreciation Section 123(2) provides that the depreciation shall be calculated as per the provisions of schedule II.
As per Section 350 of the Act the amount of depreciation to be deducted in pursuance of clause (k) of sub-section (4) of section 349 shall be the amount of depreciation on assets as shown by the books of the company at the end of the financial year expiring at the commencement of this Act or immediately thereafter and at the end of each subsequent financial year at the rate specified in Schedule XIV
- Depreciation to be based on useful life & residual value
- Useful lives of various tangible assets prescribed
- Residual Value not more than 5% of the original cost of the asset
- From the date Schedule II becomes effective carrying amount of the asset shall be depreciated over the remaining useful life of the asset
- “The useful life of an asset” is the period over which an asset is expected to be available for use by an entity, or the number of production or similar units expected to be obtained from the asset by the entity
By CS Nishant Javlekar
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By CS Nishant Javlekar