Companies Bill 2012


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It is a presentation mainly based on mainly first 3 parts new Company Bill.

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Companies Bill 2012

  1. 1. © Deepak Jijo, 2013
  2. 2. Companies Act,1956 • The Company Act 1956 Came into force from 1st April 1956 • The act was based upon the recommendation of company law committee appointed under the chairmanship of Mr.C.H.Bhava on 25.10.1950. • This 56year old Act is going to repeal by the commencement of Companies Bill 2012. © Deepak Jijo, 2013
  3. 3. Flash Back to Companies Bill © Deepak Jijo, 2013
  4. 4. WHY NEW COMPANIES ACT? Modernization & regulatory harmony in the wake of corporate scandals; (Satyam Saga & Sahara OFCD’s issue) To attract the investors from abroad. Recognition of good corporate practices & technological improvements; Simplification of law by placing related provisions under one clause/section Introduction of new provisions to meet the current economic environment Giving more power to in the hands of shareholders. © Deepak Jijo, 2013
  5. 5. STRUCTURAL COMPARISON Companies Act 1956 13 Parts 750+ Sections 15 Schedules Companies Bill 2011 29 Chapters 470 Clauses (i.e. Sections) 7 Schedules © Deepak Jijo, 2013
  6. 6. New Company Law • Goods corporate governance • Introduction of new KMP concept (CEO/MD/Manager,CS,WTD,CFO) • Makes companies socially responsible • Recognition of keeping Books of accounts in electronic form • Inclusion of One Women Director in the Board for certain Companies • Ceiling on auditors to audit maximum 20 companies • Auditors not to render allied services • Auditors criminal liability • Compulsory rotation of auditors • Stricter anti –corporate fraud norms (SFIO) • Any one person can form company (OPC) • Private company to have upto 200 member (presently 50) • Uniform financial year; i.e. April to March • Appointment of Registered Valuer • Introduction of New provisions in CSR © Deepak Jijo, 2013
  7. 7. © Deepak Jijo, 2013
  8. 8. CEO/MD/Manager Company Secretary Whole-Time Director Chief Financial Officer KMP © Deepak Jijo, 2013
  9. 9. ONE PERSON COMPANY (OPC) Introduction of One Person company akin to UK Companies Act A private Company subscribed by one Individual Name shall affix OPC or one person CompanyName shall affix OPC or one person CompanyName shall affix OPC or one person Company Name shall affix OPC or one person Company © Deepak Jijo, 2013
  10. 10. Corporate Social Responsibility (CSR) Every company having net worth of Rs.500 crore or more, or turnover of Rs.1000 crore or more or a net profit of Rs.5 crore or more during any financial year is required to constitute a Corporate Social Responsibility Committee. Spend at least two per cent of the average net profits of the company made during the three immediately preceding financial years for CSR activities. © Deepak Jijo, 2013
  11. 11. Secretarial audit for bigger companies. Every listed company and a company belonging to other class of companies as may be prescribed shall annex with its Board’s report made in terms of sub- section (3) of section 134, a secretarial audit report given by a company secretary in practice, in such form as may be prescribed. © Deepak Jijo, 2013
  12. 12. AUDITORS •. The Bill provides for mandatory rotation of auditors every five years. Clause 139 (2) prescribes that no listed company shall (a) appoint an individual as auditor for more than one term of five consecutive years and (b) an audit firm as auditor for more than two terms of five consecutive years. Clause 139 (3) empowers members of the company to decide by resolution that the auditing partner and his team (of an audit firm appointed by the company) shall be rotated every year or that audit shall be conducted by more than one auditor. © Deepak Jijo, 2013
  13. 13. Changes Regarding MoA © Deepak Jijo, 2013 Objects clause in the Memorandum of Association of a company not required to be divided into main, ancillary and other objects. Only the objects for which the company is incorporated along with matters considered necessary for its furtherance to be mentioned. The company cannot provide for other object clause.
  14. 14. Changes Regarding AoA © Deepak Jijo, 2013 Articles of Association of the Company may contain provision with respect to entrenchment. Entrenchment provisions provide a more restrictive procedure than passing a special resolution for altering certain provisions in the Articles of Association.
  15. 15. © Deepak Jijo, 2013
  16. 16. © Deepak Jijo, 2013 The Bill clearly provides the manner in which securities can be issued by both public and private company. The Bill governs the issue of all types of securities, as opposed to only shares and debentures in the Companies Act, 1956.
  17. 17. © Deepak Jijo, 2013 Public Company can issue securities Public Offer Private Placement Bonus Issue Rights Issue
  18. 18. © Deepak Jijo, 2013 Private Company can issue securities Private Placement Bonus Issue Rights Issue
  19. 19. Changes in Prospectus © Deepak Jijo, 2013 • The prospectus has to be more detailed. • A Company shall not vary the terms of contract referred to in Prospectus or objects for which it is issued without the approval of shareholders by way of special resolution and providing exit opportunity to the dissenting shareholders.
  20. 20. • SEBI to prescribe class/classes of companies that can file shelf prospectus with the Registrar. • Any person (including group or association) affected by any misleading statement or inclusion or omission of any matter in the prospectus can file any suit or take any action under clause 34 (Criminal liability for misstatement in prospectus), clause 35 (Civil liability for misstatement in prospectus) and clause 36 (Punishment for fraudulently inducing persons to invest money). . © Deepak Jijo, 2013
  21. 21. Changes regarding Allotment • In addition to shares, return of allotment is required to be filed for all type of securities. • Companies may now issue Global Depository Receipts by passing a Special Resolution and subject to such conditions as may be prescribed. © Deepak Jijo, 2013
  22. 22. • The number of persons to which a company may make an offer or invitation of securities to a section of the public otherwise than through issue of a prospectus, by way of private placement basis is 50. • Qualified Institutional Buyers (QIB) not be counted for the purpose of calculating number of persons offered under private placement © Deepak Jijo, 2013
  23. 23. • If a Company, listed or unlisted, makes an offer to allot or invites subscription, or allots, or enters into an agreement to allot, securities to 50 or such higher number the same shall be deemed to be an offer to the public and shall accordingly be governed by the provisions provided in this regard by the Securities And Exchange Board of India(SEBI). © Deepak Jijo, 2013
  24. 24. • Bill to be passed in Rajya Sabha and assent of the President • Rules to be prescribed and notified for implementation of Companies Bill • Preparing the Regulatory bodies with adequate resources and training © Deepak Jijo, 2013
  25. 25. © Deepak Jijo, 2013 By, Deepak Jijo