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COMPANIES ACT – 2013
Introduction, Overview,
Opportunities, Challenges,
Role of CS
 Companies Act, 1956
appeared to be ineffective at handling some of
the present day challenges of growing industry
and th...
OBJECTIVE
to make changes in Indian Corporate Law
in context of
challenging economic & business environment
and
make Corpo...
# Revised Financial Reporting Framework
Revision in the Financial Statement’s
provisions
Mandatory requirement of Consolidated Financial Statement
New Definition : Subsidiary, Associate & Joint Venture
# Revised...
Two Tier Structure of Companies : Objective - Identify Real Owners
# CORPORATE STRUCTURE
A
B
C
Uniform Financial Year for Companies
# Revised Financial Reporting Framework
Changes in Depreciation Regulations
# Revised Financial Reporting Framework
National Financial Reporting Authority
 Make reccos on accounting & auditing
standards
 Monitor & enforce compliance wit...
Electronic maintenance of Statutory books & records
# Revised Financial Reporting Framework
MANDATORY
ROTATION OF AUDITOR / FIRM OF AUDITOR & COOLING OFF PERIOD
# AUDIT & AUDITORS
AUDITOR REPORTING RESPONSIBILITY & CARO,
2015
# AUDIT & AUDITORS
MANDATORY REPORTING ON FRAUD
# AUDIT & AUDITORS
FAST TRACK MERGER
 Between : 2 or more small companies & Holding : Subsidiary
Company
 No NCLT approval
 No Notice requ...
CROSS BORDER MERGER
Indian Company with Foreign Company
With Prior RBI Approval
# CORPORATE RESTRUCTURING
1956
2013
# CORPORATE RESTRUCTURING
MINORITY BUYOUT
SIMPLIFIED PROCEDURE FOR RESTRUCTURING
 Separate procedure for Compromise & Arrangement,
Amalgamation and Demerger.
 NCL...
Corporate Debt Restructuring
 Consent by 75% of Secured Creditors / Class of Creditors
 Valuation report is required by ...
# MANAGEMENT & RESPONSIBILITIES
 Maximum number of Directorships : 15
 At least 1 director should be present in India fo...
Mandatory Set of Nomination & Remuneration
committee
# MANAGEMENT & RESPONSIBILITIES
AUDIT
COMMITTEE
 Listed Companies & Other
co.'s*
 Min. 3 Directors with majority
Independent Directors
 Approve Related...
Concept of
Key Managerial Personnel
MD , CEO, Manager, WTD, CFO, CS
Recognition of highest management personnel with liabi...
Net worth of ₹ 500 cr. or more
Turnover of ₹ 1,000 cr. or more
Net Profit of ₹ 5 cr. or more
# CORPORATE SOCIAL RESPONSIBI...
 Companies need to spend 2% of their Net Profit on CSR activities
 Constitution of CSR Committee to
 Approve CSR Policy...
CLASS ACTION SUITS
# INVESTOR PROTECTION
HEAVY PENALTY FOR INSIDER TRADING
# INVESTOR PROTECTION
 Fraud definition included
 Auditor’s responsibility w.r.t. Reporting on Fraud clearly defined
 Power to investigation ...
QUORUM No. of Shareholders
5 < 1000
15 >1000 - <5000
30 > 5000
# MEETINGS : QUORUM
Not just confined to Listed Companies
# MEETING : POSTAL BALLOT
# MEETING : Concept of e – Voting
# MEETING : Concept of e – Meetings
 Only a natural person who is an Indian citizen and
resident in India shall be eligible to act as a
member and nominee of...
# ROLE OF COMPANY SECRETARY
Incorporation:
• birth of Company.
# ROLE OF COMPANY SECRETARY
ISSUE
PUBLIC ISSUE
RIGHT ISSUE
BONUS
ISSUE
PRIVATE
PLACEMENT
I.P.O.
F.P.O.
Q.I.P.
PREFRENTIAL
...
# ROLE OF COMPANY SECRETARY
Compliance Officer : ensuring that all the rules and
regulations are followed by the Company &...
# ROLE OF COMPANY SECRETARY
Ensuring Good Governance
Vision
“ to be global leader in promoting good corporate governance.”...
LIAOSING WITH SEBI
Company Secretaryship : only course which covers
SEBI in its curriculum
# ROLE OF COMPANY SECRETARY
SECRETARIAL STANDARDS
# ROLE OF COMPANY SECRETARY
Corporate Actions:
 Bonus
 Right Issue
 Dividend
 Stock Split, etc. . .
# ROLE OF COMPANY SECRETARY
MERGER . . . DEMERGER . . . . TAKEOVER. . . . AMALGAMATION
 VALUATION
 TAXATION IMPLICATIONS
 APPROVALS FROM COURT, SHA...
Revival of Sick
Companies
via
B.I.F.R.
Board of Industrial & Financial
Reconstruction
# ROLE OF COMPANY SECRETARY
LIQUIDATION & DISSOLUTION OF THE COMPANY
# ROLE OF COMPANY SECRETARY
I. Merchant Banking
II. Project Financing
III. Registered Valuer
IV. Company Law
V. Taxation
VI. Debt Syndication
VII. NCL...
# ROLE OF COMPANY SECRETARY
THANK YOU
CS ANAND KANKANI
MUMBAI
anandkankani@live.com
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COMPANIES ACT 2013 & COMPANY SECRETARY

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KEY AREAS OF COMPANY ACT 2013 wrt. FINANCIAL REPORTING FRAMEWORK, ACCOUNTS, AUDITOR, MERGERS, AND ROLE OF COMPANY SECRETARIES

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COMPANIES ACT 2013 & COMPANY SECRETARY

  1. 1. COMPANIES ACT – 2013 Introduction, Overview, Opportunities, Challenges, Role of CS
  2. 2.  Companies Act, 1956 appeared to be ineffective at handling some of the present day challenges of growing industry and the interest of an increasing class of sophisticated stakeholders.  Companies Act, 2013 promises to raise bar on Governance and deal with ― Investor Protection ― Fraud Mitigation ― Inclusive Agenda ― Auditor’s Accountability ― Efficient Restructuring Rationale behind 2013 Act
  3. 3. OBJECTIVE to make changes in Indian Corporate Law in context of challenging economic & business environment and make Corporate India – Transparent, Simple & Globally acceptable.
  4. 4. # Revised Financial Reporting Framework Revision in the Financial Statement’s provisions
  5. 5. Mandatory requirement of Consolidated Financial Statement New Definition : Subsidiary, Associate & Joint Venture # Revised Financial Reporting Framework
  6. 6. Two Tier Structure of Companies : Objective - Identify Real Owners # CORPORATE STRUCTURE A B C
  7. 7. Uniform Financial Year for Companies # Revised Financial Reporting Framework
  8. 8. Changes in Depreciation Regulations # Revised Financial Reporting Framework
  9. 9. National Financial Reporting Authority  Make reccos on accounting & auditing standards  Monitor & enforce compliance with accounting & auditing standards  Oversee quality of service # Revised Financial Reporting Framework
  10. 10. Electronic maintenance of Statutory books & records # Revised Financial Reporting Framework
  11. 11. MANDATORY ROTATION OF AUDITOR / FIRM OF AUDITOR & COOLING OFF PERIOD # AUDIT & AUDITORS
  12. 12. AUDITOR REPORTING RESPONSIBILITY & CARO, 2015 # AUDIT & AUDITORS
  13. 13. MANDATORY REPORTING ON FRAUD # AUDIT & AUDITORS
  14. 14. FAST TRACK MERGER  Between : 2 or more small companies & Holding : Subsidiary Company  No NCLT approval  No Notice required to be given to various authorities  Process timeline shortened  Scheme is to be approved by nine – tenth in value of creditors  Auditor’s certificate of compliance of AS not required # CORPORATE RESTRUCTURING
  15. 15. CROSS BORDER MERGER Indian Company with Foreign Company With Prior RBI Approval # CORPORATE RESTRUCTURING 1956 2013
  16. 16. # CORPORATE RESTRUCTURING MINORITY BUYOUT
  17. 17. SIMPLIFIED PROCEDURE FOR RESTRUCTURING  Separate procedure for Compromise & Arrangement, Amalgamation and Demerger.  NCLT to have same power as High Court  Concept of Registered Valuer for the valuation purpose of any property, stocks, shares, debentures, securities, goodwill, net worth, or any other asset / liabilities. # CORPORATE RESTRUCTURING
  18. 18. Corporate Debt Restructuring  Consent by 75% of Secured Creditors / Class of Creditors  Valuation report is required by Registered Valuer  Audit Report is required for the assurance of liquidity  Compliance of RBI Guidelines  Creditor Responsibility Statement # CORPORATE RESTRUCTURING
  19. 19. # MANAGEMENT & RESPONSIBILITIES  Maximum number of Directorships : 15  At least 1 director should be present in India for at least 182 days  Women Director on Board  Automatic vacation from the office if absent for a period of 12 months; increased involvement. BOARD OF DIRECTORS
  20. 20. Mandatory Set of Nomination & Remuneration committee # MANAGEMENT & RESPONSIBILITIES
  21. 21. AUDIT COMMITTEE  Listed Companies & Other co.'s*  Min. 3 Directors with majority Independent Directors  Approve Related Party Transactions , Evaluation of Internal Financial Controls , Scrutiny of Inter Corporate Loans and Investments. # MANAGEMENT & RESPONSIBILITIES
  22. 22. Concept of Key Managerial Personnel MD , CEO, Manager, WTD, CFO, CS Recognition of highest management personnel with liability commensurate with their position Stringent punishment for Non – Compliance # MANAGEMENT & RESPONSIBILITIES
  23. 23. Net worth of ₹ 500 cr. or more Turnover of ₹ 1,000 cr. or more Net Profit of ₹ 5 cr. or more # CORPORATE SOCIAL RESPONSIBILITY applicable to companies
  24. 24.  Companies need to spend 2% of their Net Profit on CSR activities  Constitution of CSR Committee to  Approve CSR Policy  Ensure CSR activities & spending as per Sch. VII # CORPORATE SOCIAL RESPONSIBILITY
  25. 25. CLASS ACTION SUITS # INVESTOR PROTECTION
  26. 26. HEAVY PENALTY FOR INSIDER TRADING # INVESTOR PROTECTION
  27. 27.  Fraud definition included  Auditor’s responsibility w.r.t. Reporting on Fraud clearly defined  Power to investigation into the affairs of the company  Statutory status is given to SFIO (established under MCA)  SFIO comprise of experts from various relevant discipline including Law, Banking, Corporate affairs, Taxation, IT, Capital Market, Forensic Audit, etc.  Non – cognizable Offence  Imprisonment : 6 month – 10 years  Fine up to 3 times the amount involved # FRAUD RISK MITIGATION
  28. 28. QUORUM No. of Shareholders 5 < 1000 15 >1000 - <5000 30 > 5000 # MEETINGS : QUORUM
  29. 29. Not just confined to Listed Companies # MEETING : POSTAL BALLOT
  30. 30. # MEETING : Concept of e – Voting
  31. 31. # MEETING : Concept of e – Meetings
  32. 32.  Only a natural person who is an Indian citizen and resident in India shall be eligible to act as a member and nominee of an OPC.  A person can be member in only one OPC.  Must have a minimum of One Director, the Sole Shareholder can himself be the Sole Director.  An OPC cannot be incorporated or converted into a company under Section 8 of the Act. [Company not for Profit].  An OPC cannot carry out Non-Banking Financial Investment activities including investment in securities of any body corporate.  Lesser Compliance burden & Organized Sector of Proprietorship business in corporate form # Concept of ONE PERSON COMPANY
  33. 33. # ROLE OF COMPANY SECRETARY Incorporation: • birth of Company.
  34. 34. # ROLE OF COMPANY SECRETARY ISSUE PUBLIC ISSUE RIGHT ISSUE BONUS ISSUE PRIVATE PLACEMENT I.P.O. F.P.O. Q.I.P. PREFRENTIAL ISSUE EXISTING SHAREHOLDERS
  35. 35. # ROLE OF COMPANY SECRETARY Compliance Officer : ensuring that all the rules and regulations are followed by the Company & Board Company Secretary to act as COMPLIANCE OFFICER : SEBI
  36. 36. # ROLE OF COMPANY SECRETARY Ensuring Good Governance Vision “ to be global leader in promoting good corporate governance.” Mission “ to develop the high calibre professionals facilitating good corporate governance.”
  37. 37. LIAOSING WITH SEBI Company Secretaryship : only course which covers SEBI in its curriculum # ROLE OF COMPANY SECRETARY
  38. 38. SECRETARIAL STANDARDS # ROLE OF COMPANY SECRETARY
  39. 39. Corporate Actions:  Bonus  Right Issue  Dividend  Stock Split, etc. . . # ROLE OF COMPANY SECRETARY
  40. 40. MERGER . . . DEMERGER . . . . TAKEOVER. . . . AMALGAMATION  VALUATION  TAXATION IMPLICATIONS  APPROVALS FROM COURT, SHARE HOLDERS, CREDITORS # ROLE OF COMPANY SECRETARY
  41. 41. Revival of Sick Companies via B.I.F.R. Board of Industrial & Financial Reconstruction # ROLE OF COMPANY SECRETARY
  42. 42. LIQUIDATION & DISSOLUTION OF THE COMPANY # ROLE OF COMPANY SECRETARY
  43. 43. I. Merchant Banking II. Project Financing III. Registered Valuer IV. Company Law V. Taxation VI. Debt Syndication VII. NCLT # ROLE OF COMPANY SECRETARY Consultancy
  44. 44. # ROLE OF COMPANY SECRETARY
  45. 45. THANK YOU CS ANAND KANKANI MUMBAI anandkankani@live.com

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