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New concepts companies act 2013


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New Concepts introduced in the Companies Act 2013

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New concepts companies act 2013

  1. 1. Your Legal Team New Concepts Introduced in the Companies Act, 2013
  2. 2. Index Associate Company One Person Company( OPC) Independe nt Director Women Director Class Action CSR Secretarial Audit Registered Valuer Private Placement Your Legal Team
  3. 3. Associate Company Company A Having significant influence *includes joint venture company * doesn’t include subsidiary company Company B Note: significant influence” means control of at least twenty per cent of total share capital, or of business decisions under an agreement; Your Legal Team
  4. 4. Associate Company Related Party Annual Return Financial Statements Non Cash Transactions Register of Director Shareholding • Will be considered as Related Party under the new Act • Should specify details of associate companies • Consolidated Financial Statements shall include associate company financials also • Ordinary Resolution required, if Director of Associate company wants to purchase assets from Company • Details of securities held by directors and Key Managerial Personnel (KMP) in associate co. should be entered in the Register. Your Legal Team
  5. 5. One Person Company  Company having one person as Member Your Legal Team
  6. 6. One Person Company Legalize Sole Proprietorship To be formed as a Private Company Minimum1 director Single Member to subscribe to the MOA and ensure all compliances Name of 1 more person be given in MOA- Become member if death or member’s incapacity One Person Company in brackets should be written, where name of Co. is printed, affixed or engraved Annual Return to be filed by OPC & signed by CS & if no CS, then by director of company No AGM requirement Financials to be prepared & signed by only 1 director before giving to auditors for Audit Report Financials to be filed, within 180 days of end of FY Director’s Report – only explanations to auditors qualification, if any BM- At least 1 BM, in each half year with a gap of not less than 90 days between 2 consecutive meetings. No BM, if only one director in company B.M.-Board Meeting Your Legal Team
  7. 7. Independent Director Your Legal Team
  8. 8. Independent Director (I.D.) Composition of Board of Listed Co- 1/3rd of total directors as I.D. CG may prescribe min no. of I.D. in other class of public companies as well. (Refer Note) Declaration of Independence- First B.M. of participation and thereafter at the first B.M., in every F/Y or when there is any change in circumstances which may affect his status as I.D. Databank of Information- C.G. may notify a body for maintaining the data of names and addresses of I.D, who are eligible & willing to act Appointment by members in General Meeting Explanatory Statement (E.S.) shall indicate justification for choosing the person as I.D. A statement in E.S. that “In the opinion of the Board, he fulfils the conditions specified in this Act for such an appointment” Note: Prescribed by Draft Rules: 1/3rd ID in public companies having PUSC of Rs.100 crore or more or Turnover of Rs.300 crores or more or if aggregate outstanding loans or borrowings or debentures or deposits, exceeding Rs. 200 crores Your Legal Team
  9. 9. Eligibility of an Independent Director Other than M.D., W.T.D or Nominee Director Person of integrity & possessesing relevant expertise & experience Is or wasn’t a promoter of Co. or its Holding, Subsidiary or Associate Not related to promoters or directors in Company, its Holding, Subsidiary or Associate Has or had no pecuniary relationship with Co., its Holding, Subsidiary or Associate or their promoters, or directors, during the 2 immediately preceding F/Y or current F/Y Your Legal Team
  10. 10. Eligibility of an Independent Director- Contd. Not have any RELATIVES , who have had any pecuniary relationship with the Company, it’s holding, subsidiary and associate Companies, their directors or promoters, 2 or more percent of its gross turnover or total income Amounting To: Rs. 50 Lakh or a higher amount as may be prescribed, whichever is lower During 2 immediately preceding F/Y or during the current F/Y Your Legal Team
  11. 11. Eligibility of an Independent Director-Contd. Neither Himself nor his relatives: Should hold or has held the position of K.M.P or is or has been employee of Co. or its holding, subsidiary or associate company in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed Should hold together 2% or more voting power in the Company NPO- Non Profit Organization Should have been an employee/ partner/ proprietor of the auditor firm/ legal firm or a consulting firm of the Company in 3 immediately preceding F/Y Should be a Chief Executive or Director of any NPO which receives 25% or more of its receipts from the Company, any of its promoters, directors or its holding, subsidiary or associate company or that holds two per cent. or more of the total voting power of Co. Your Legal Team
  12. 12. Other Features-Independent Director Remuneration- No stock option & sitting fees or re-imbursement of expenses for participation in B.M. and profit related commission, approved by members Tenure of office- Up to 5 consecutive years Re-appointment by special resolution and disclosure of in Directors Report Maximum tenure-Not more than 2 consecutive terms. Eligible for appointment after expiry of 3 years of ceasing to an I.D. During 3 years, shouldn’t be appointed in or be associated with the company in any other capacity, either directly or indirectly. Liability of acts of omission or commission - Shall be held liable, only in respect of such acts of omission or commission, which occurred with his knowledge, attributable through Board processes & with his consent or connivance or where he had not acted diligently Not liable to retire by rotation Your Legal Team
  13. 13. Woman Director Class or classes of companies, may be prescribed, which shall have at least 1 woman director. Your Legal Team
  14. 14. Woman Director-Prescribed in Rules Every listed Company Within 1 year from the notification of section Every Public company having PUSC of Rs. 100 crores or more Turnover of Rs. 300 crores or more, within 3 years from the date of notification PUSC- Paid-up Share Capital Your Legal Team
  15. 15. Class Action Class Action is the right to members, deposit holders, to file an application before the Tribunal for restraining the Company from some specified acts IF Management/ Conduct of the Company is prejudicial to interests of the Company or its members/depositors Your Legal Team
  16. 16. Eligible Member Or Eligible Depositor For Members-Co. having Share Capital not less than 100 members or For Members- Company not having Share Capital Not less than 1/5th of total number of its members Depositors Not less than 100 depositors not less than such % of total number of members(prescribed10% by rules), whichever is less or Not less than prescribed %(10%) of total number of depositors, whichever is less or Any member or members holding not less than prescribed(10%) % of issued share capital of Co. Any depositor or depositors to whom the company owes prescribed %(10%) of total deposits Your Legal Team
  17. 17. Order that can be sought Restrain Co. from committing an act which is ultra vires AOA or MOA Restrain Co. from committing breach of any provision of Company’s MOA or AOA Declare a resolution for alteration of MOA or AOA as void, if same was passed by suppression of material facts or by mis-statement Restrain Co. from doing an act, which is contrary to the provisions of this Act or any other law for the time being in force. Restrain the company from taking action contrary to any resolution passed by the members Claim any damages/ compensation or demand any other suitable action in cases of wrongful/ fraudulent/ unlawful act by Directors/ Auditors/Experts Your Legal Team
  18. 18. Corporate Social Responsibility Your Legal Team
  19. 19. Corporate Social Responsibility Committee Co. having Net Worth of Rs.500 crore or more or Turnover of Rs. 1000 crore or more or Net profit of Rs. 5 crore or more during any F/Y Shall constitute a Corporate Social Responsibility Committee of the Board consisting of a minimum of 3 directors with at least 1 independent director Your Legal Team
  20. 20. Other Features-CSR Responsibility of CSR Comm. • Recommend CSR Policy to Board • Recommend amount of CSR expenditure • Monitoring CSR Policy from time to time Responsibility of Board Responsibility of Company • Approve CSR Policy • Disclose policy features in Directors Report and on website • Ensuring CSR activities are undertaken as per Policy • Explanation in Directors Report, if fails to spend prescribed amount on CSR activities • CSR spending to give preference to preference to the local area and areas around it where it operates, for spending the amount earmarked Your Legal Team
  21. 21. Secretarial Audit Every Listed Co. & a Co. belonging to other class of companies as may be prescribed, shall carry secretarial audit Report to be given by a Company Secretary in whole-time practice Report to be attached with Directors Report Board to give explanation to any remark, observation or qualification in Directors Report Note: Prescribed by Rules: Every Public Co. having PUSC of Rs. 100 crores or more Your Legal Team
  22. 22. Registered Valuer Registered Valuer A person having prescribed qualifications & experience and registered as a valuer Appointed by Audit Committee(if any) or by Board of Directors Do valuation of property, stocks, shares, debentures, securities or goodwill or any other assets (herein referred to as the assets) or net worth of a company or its liabilities. Your Legal Team
  23. 23. Registered Valuer Qualification Prescribed in Rules Chartered Accountant or Company Secretary or Cost accountant in whole-time practice, or any person holding equivalent Indian or foreign qualification Merchant Banker registered with the Securities and Exchange Board of India Member of Institute of Engineers & who is in whole-time practice Member of Institute of Architects & who is in whole-time practice Person or entity possessing necessary competence & qualification as may be notified by C.G., from time to time Note: For first 4 points, shall not less than five years continuous experience after acquiring membership . Your Legal Team
  24. 24. Requirements of Valuation under the New Act Determine price for further issue of shares Value assets in an arrangement calling for restriction on Non Cash transactions involving directors Value shares, property and all assets in a scheme of compromise/ arrangement Value shares of the Minority Shareholders during their purchase by the Company Determine value of assets as it will be shown in the report of Company Liquidator-WU by Tribunal Declaration of Solvency to be accompanied with a report on the assets prepared by a Registered Valuer Your Legal Team
  25. 25. Private Placement Any offer of securities or Invitation to subscribe securities To a select group of persons by a company Through issue of a private placement offer letter Your Legal Team
  26. 26. Private Placement Public and Private company to make private placement through private placement offer letter. Can’t use any marketing channels for advertising or to inform public at large about such an offer Allotment to be completed within 60 days of receipt of fund Funds received to be kept in separate bank account and not be utilized for other purpose Offer to not more than 50 persons(excluding QIBs and employees of company, as a part of ESOP), in a financial year No fresh private placement, unless allotment of last offer is complete Payment not to be made by Cash but by cheque/DD/other Banking Channel Your Legal Team
  27. 27. Your Legal Team Meet us 839, I floor, 2nd cross, 7th Main, HAL II Stg, Indiranagar (near Giria's on 100ft Rd) Ph: 080 40924173 / 25270163 Bangalore. Delhi 27