Companies Bill 08


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Companies Bill 08

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Companies Bill 08

  1. 1. Companies Bill, 2008
  2. 2. BREIF RUNTHROUGH OF CONTENTS <ul><li>Brief summary & Status Quo of the Bill </li></ul><ul><li>Chapter-wise changes </li></ul><ul><ul><li>Incorporation of Co </li></ul></ul><ul><ul><li>Share Capital & Debentures </li></ul></ul><ul><ul><li>Deposits </li></ul></ul><ul><ul><li>Shareholders’ meeting </li></ul></ul><ul><ul><li>Dividend </li></ul></ul><ul><ul><li>Accounts </li></ul></ul><ul><ul><li>Board of Directors </li></ul></ul><ul><ul><li>Audit & Auditor </li></ul></ul><ul><ul><li>Managerial remuneration </li></ul></ul><ul><ul><li>Amalgamation/Arrangement </li></ul></ul><ul><ul><li>Other </li></ul></ul>
  3. 3. <ul><ul><li>The Bill is based on the report submitted by the Expert Committee under the Chairmanship of Dr. J. J. Irani </li></ul></ul><ul><ul><li>Introduced in Lok Sabha on 23rd October, 2008 </li></ul></ul><ul><ul><li>Referred to the Parliamentary Standing Committee </li></ul></ul><ul><ul><li>The Bill has 426 clauses and 28 Chapters as against 658 Sections of the Companies Act, 1956 </li></ul></ul><ul><ul><li>Many new provisions have been introduced viz.: </li></ul></ul><ul><ul><ul><li>Registered Valuers; </li></ul></ul></ul><ul><ul><ul><li>Nidhi </li></ul></ul></ul><ul><ul><ul><li>National Company Law Tribunal & Appellate Tribunal; </li></ul></ul></ul><ul><ul><ul><li>Special Courts </li></ul></ul></ul><ul><ul><ul><li>Dormant Company etc. </li></ul></ul></ul>Companies Bill, 2008
  4. 4. Companies Bill, 2008 Definitions – Sec. 2 Amended Bill Definitions <ul><li>Certain new definitions have been introduced: </li></ul><ul><li>Associate Company [Sec. 2 (1) (f)] </li></ul><ul><li>Deemed Director [Sec. 2 (1) (ze)] </li></ul><ul><li>Financial Year [Sec. 2 (1) (zq)] </li></ul><ul><li>Independent Director [Sec. 2 (1) (zw)] </li></ul><ul><li>Key Managerial Personnel [Sec. 2 (1) (zza)] </li></ul><ul><li>Promoter [Sec. 2 (1) (zzq)] </li></ul><ul><li>Related Party [Sec. 2 (1) (zzy)] </li></ul><ul><li>Small Company [Sec. 2 (1) (zzzg)] </li></ul>
  5. 5. <ul><li>Incorporation of Company </li></ul><ul><li>Sec. 3 to Sec. 21 </li></ul>
  6. 6. Companies Bill, 2008 Types Existing Act Amended Bill Remarks <ul><li>Public Company </li></ul><ul><li>Private Company </li></ul><ul><li>Public Co. </li></ul><ul><li>Private Co. </li></ul><ul><ul><li>Small Co. </li></ul></ul><ul><li>One Person Co. (OPC) </li></ul><ul><li>OPC: </li></ul><ul><ul><li>Only 1 member </li></ul></ul><ul><ul><li>Name to end with ‘OPC Limited’ </li></ul></ul><ul><ul><li>Memorandum to have name of the person to succeed in case of death/disability of the member. </li></ul></ul><ul><li>Small Co.: </li></ul><ul><ul><li>Other than public co.- </li></ul></ul><ul><ul><ul><li>Paid-up share capital- < 5 crores; or </li></ul></ul></ul><ul><ul><ul><li>Turnover as per its last P/L Account - < 20 crores </li></ul></ul></ul><ul><ul><ul><li>Lesser regulatory compliances. </li></ul></ul></ul>
  7. 7. Companies Bill, 2008 <ul><li>No capital infusion required for incorporating any company. </li></ul><ul><li>No minimum capital requirement </li></ul><ul><li>Private – Rs. 1 Lakh </li></ul><ul><li>Public – Rs. 5 Lakh </li></ul>Minimum Capital <ul><li>Re-registration can be done in the same or other class under the Act. </li></ul><ul><li>A company already registered can re-register itself. </li></ul>No provision Re- Registration Documents for Incorporation Existing Act Amended Bill Remarks Form 1, 18, 32 and MOA & AOA <ul><li>In addition to that: </li></ul><ul><li>Affidavit from each subscriber and Director stating that he is not convicted for any offence. </li></ul>
  8. 8. Companies Bill, 2008 <ul><li>May include entrenchment in Articles of Association </li></ul><ul><li>Special Resolution </li></ul><ul><li>contain provisions for entrenchment to the effect that specified provisions of the articles may be more restrictive </li></ul>Alteration of Articles <ul><li>Special Resolution </li></ul>Existing Act Amended Bill Remarks
  9. 9. <ul><li>Share Capital & Debentures </li></ul><ul><li>Sec. 37 to Sec. 65 </li></ul>
  10. 10. Companies Bill, 2008 <ul><li>Concept of Equity with DVR - deleted. </li></ul><ul><li>Equity </li></ul><ul><li>Equity with Diff. Voting Rights (DVR) </li></ul>Issue Capital Existing Act Amended Bill Remarks <ul><li>Participating Pref. Shares (PPC) </li></ul><ul><li>Non-cumulative Preference Shares </li></ul><ul><li>Redemption of pref. shares - within 20 yrs </li></ul><ul><li>Preference </li></ul><ul><li>Diff. regarding voting rights – deleted </li></ul><ul><li>Redemption of pref. share – > 20 yrs. </li></ul><ul><li>Concept of PPC has been deleted . </li></ul><ul><li>Voting rights to be provided to all pref. shareholders – if dividend payable is in arrears for > 3 yrs. </li></ul><ul><li>Issue of Pref. shares redeemable after 20 yrs for infrastructural projects </li></ul><ul><li>Shares can be issued at: </li></ul><ul><li>Par or Pre. or Dis. </li></ul><ul><li>Share can be issued at: </li></ul><ul><li>Par or Premium. </li></ul><ul><li>Can not be issued at Discount except in the case of issue of sweat equity shares </li></ul>
  11. 11. Companies Bill, 2008 <ul><li>Section 81(1A): Further issue to person other than existing shareholders by Special Resolution </li></ul>Further Issue of Capital Existing Act Amended Bill Remarks <ul><li>Section 81- Further issue can be made to existing shareholders </li></ul><ul><li>Further issue can be made: </li></ul><ul><ul><li>to existing shareholders </li></ul></ul><ul><ul><li>to employees under ESOS </li></ul></ul><ul><li>Can avail option of further issue of shares to ESOP holders </li></ul><ul><li>Special resolution </li></ul><ul><li>Price to be determined by the Registered Valuer </li></ul>
  12. 12. Companies Bill, 2008 Debenture Certificate Issue of Debentures (Sec. 64) Existing Act Amended Bill Remarks Prospectus or offer documents should be issued in the case where offer is being made to more than 50 members for subscription <ul><li>The limit increased to 500 members </li></ul><ul><li>Debenture Trustee not required to be appointed if debentures are issued to <500 person. </li></ul>Issue within 3 months from the date of allotment <ul><li>The time period increased to 6 months </li></ul><ul><li>Provision for seeking extension of time upto 9 months from CLB – deleted. </li></ul>
  13. 13. <ul><li>Acceptance of Deposits </li></ul><ul><li>Sec. 66 to Sec. 68 </li></ul>
  14. 14. Companies Bill, 2008 Acceptance of Deposits Existing Act Amended Bill Remarks <ul><li>A Company can accept deposits from public. </li></ul><ul><li>Company can accept deposits only from members subject to a resolution passed in General Meeting. </li></ul><ul><li>Only NBFCs , Banking Cos., can accept the deposits from public. </li></ul><ul><li>Amount not less than 15% of deposits maturing during the financial year & next financial year has to be deposited in Deposit Repayment Reserve A/c. </li></ul><ul><li>Deposits accepted by cos. (other than NBFC, Banking Co.) will have to be repaid within a year of Bill coming into force. </li></ul>
  15. 15. <ul><li>Meeting of Shareholders </li></ul><ul><li>Sec. 85 to Sec. 109 </li></ul>
  16. 16. Companies Bill, 2008 Annual General Meeting (AGM) Statutory Meeting Existing Act Amended Bill Remarks <ul><li>To be held within a period of 6 months from the date of Incorporation </li></ul><ul><li>No provision </li></ul><ul><li>Relaxation in the legal formalities to the companies to be formed </li></ul><ul><li>First AGM – within a period of 18 months from the date of Incorporation </li></ul><ul><li>Business hours – not defined </li></ul><ul><li>Day – other than Public Holiday </li></ul><ul><li>First AGM – within a period of 9 months from the date of closing of the first financial year </li></ul><ul><li>Business hours – 9 a.m. to 6 p.m. </li></ul><ul><li>Day – other than National Holiday </li></ul>
  17. 17. Companies Bill, 2008 Notice of AGM <ul><li>Now notice of meeting can be sent via electronic means </li></ul><ul><li>21 days clear notice in advance either in writing or through electronic mode </li></ul><ul><li>21 days clear notice in writing. </li></ul><ul><li>This report is to be filed in order to confirm that the meeting was convened, held and duly conducted as per the provisions of the Act. </li></ul><ul><li>Every Listed Company to prepare a Report on each AGM </li></ul><ul><li>File the Report with the Registrar within 30 days </li></ul><ul><li>No provision </li></ul>Report of AGM Remarks Amended Bill Existing Act
  18. 18. Companies Bill, 2008 Poll Voting through electronic means Existing Act Amended Bill Remarks <ul><li>No provision </li></ul><ul><li>A member may exercise his vote at a meeting by electronic means in the manner as may be prescribed. </li></ul><ul><li>Electronic voting may be allowed, if Articles of Association specifically provides. </li></ul><ul><li>Poll can be demanded by member: </li></ul><ul><ul><li>having 1/10th of the total voting power; or </li></ul></ul><ul><ul><li>holding shares on which a sum of Rs. 50,000 has been paid up. </li></ul></ul><ul><li>Poll can be demanded by member: </li></ul><ul><ul><li>having 1/10th of the total voting power; or </li></ul></ul><ul><ul><li>holding shares on which a sum of Rs. 5,00,000 has been paid up. </li></ul></ul>
  19. 19. <ul><li>Declaration & Payment of Dividend </li></ul><ul><li>Sec. 110 to Sec. 115 </li></ul>
  20. 20. Companies Bill, 2008 Unpaid Dividend Inadequacy of profits or no profits Transfer to General Reserves (GR) Existing Act Amended Bill Remarks <ul><li>Some % of profit to be transferred to GR as specified in the Act </li></ul><ul><li>Transfer to reserves at the discretion of the Company </li></ul><ul><li>Dividends can be declared out of accumulated profits also, by special resolution. </li></ul><ul><li>Unanimous consent of the Board not required. </li></ul><ul><li>Unanimous consent of the Board - required,& </li></ul><ul><li>Approval of Financial Institutions where loan is outstanding. </li></ul><ul><li>Once transferred to IEPF – no claim for Dividend or refund amount. </li></ul><ul><li>Once transferred to IEPF – Claim for its entitlement to the Central Government. </li></ul>
  21. 21. <ul><li>Accounts of Companies </li></ul><ul><li>Sec. 116 to Sec. 122 </li></ul>
  22. 22. Companies Bill, 2008 Accounting Standards Consolidation Financial Statements Existing Act Amended Bill <ul><li>Not defined </li></ul><ul><li>Defined as Balance Sheet, P&L, Cash Flow Statement and explanatory note </li></ul><ul><li>Section 212 provides for giving certain particulars relating to the subsidiaries of the Company </li></ul><ul><li>No such provision, however, preparation of consolidated financial statement of all the subsidiaries is required and </li></ul><ul><li>the same should be laid before the AGM . </li></ul><ul><li>No provision </li></ul><ul><li>Financial Statement should comply with the Accounting Standards </li></ul>
  23. 23. <ul><li>Audit & Auditors </li></ul><ul><li>Sec. 123 to Sec. 131 </li></ul>
  24. 24. Companies Bill, 2008 <ul><li>Not only right but duty to attend the AGM </li></ul><ul><li>Mandatory attendance of auditor of the co. or his representatives at any AGM, unless exempted by the Co. </li></ul><ul><li>Right to attend the Annual General Meeting (AGM) </li></ul>Rights & Duties of Auditor Services not to be provided by Auditors Existing Act Amended Bill Remarks <ul><li>No such provision </li></ul><ul><li>Certain services not to be provided by the Auditors to the Company viz.: </li></ul><ul><ul><li>accounting and book-keeping service, </li></ul></ul><ul><ul><li>internal audit; investment advisory; </li></ul></ul><ul><ul><li>investment banking; </li></ul></ul><ul><ul><li>outsourced financial service; </li></ul></ul><ul><ul><li>management service etc. </li></ul></ul>
  25. 25. Companies Bill, 2008 Appointment of Cost Auditor Existing Act Amended Bill Remarks <ul><li>Central Government (CG) approval required </li></ul><ul><li>BOD to appoint and to fix the remuneration </li></ul><ul><li>No CG approval required </li></ul><ul><li>Remuneration to be fixed by shareholders in General Meeting </li></ul><ul><li>Board of Directors only to make appointment and not to fix the remuneration. </li></ul>
  26. 26. <ul><li>Board of Directors </li></ul><ul><li>Appointment & Qualification – Sec. 132 to Sec. 153 </li></ul><ul><li>Meetings & Powers – Sec. 154 to Sec. 173 </li></ul>
  27. 27. Companies Bill, 2008 Appointment & Qualifications – Sec. 132 to Sec. 153 Nationality Maximum Directors Minimum Directors Existing Act Amended Bill <ul><li>Private – 2 </li></ul><ul><li>Public – 3 </li></ul><ul><li>Private – 2 </li></ul><ul><li>Public – 3 </li></ul><ul><li>OPC – 1 </li></ul><ul><li>12 directors – including Nominee Director </li></ul><ul><li>If more, CG approval necessary </li></ul><ul><li>12 Directors – excluding Nominee Director </li></ul><ul><li>No provision for > 12 directors </li></ul><ul><li>All Directors can be Foreign Directors </li></ul><ul><li>One of the Director – ordinarily resident in India </li></ul>
  28. 28. Companies Bill, 2008 Resignation of Director Duties of Director No. of Directorship Existing Act Amended Bill <ul><li>A person can become Director in not more than 15 Public Ltd. Cos. </li></ul><ul><li>No change in number of directorships but alternate directorship to be included while counting the number of directorships </li></ul><ul><li>Not mentioned </li></ul><ul><li>Mentioned </li></ul><ul><li>No specific provisions in the Act </li></ul><ul><li>Resignation by giving a notice in writing to the Company. </li></ul><ul><li>Effective from the date of receipt of the notice or any date mentioned in the notice , whichever is later </li></ul>
  29. 29. Companies Bill, 2008 Independent Director Vacation of Office Existing Act Amended Bill Remarks <ul><li>Absence allowed with leave of absence . </li></ul><ul><li>In case of absent from all meetings during a period of 12 months, either with or without leave of absence. </li></ul><ul><li>No Director can absent himself from 4 consecutive meetings of the Board. </li></ul><ul><li>No provisions </li></ul><ul><li>Listed Public Company- at least 1/3rd of the total no. of Directors should be Independent Director </li></ul><ul><li>Other Public Company – Central Government may prescribe </li></ul>
  30. 30. Companies Bill, 2008 Meetings & Powers – Sec. 154 to Sec. 173 Disposal of Undertaking Powers of Board Existing Act Amended Bill <ul><li>To be specifically exercised in the meting </li></ul><ul><li>Following powers are added to the existing one which can be exercised at the board meetings: </li></ul><ul><ul><li>To approve financial statements </li></ul></ul><ul><ul><li>To diversify the business of the co. </li></ul></ul><ul><ul><li>To approve amalgamation , merger or reconstruction </li></ul></ul><ul><ul><li>To takeover or acquire a co. or controlling interest. </li></ul></ul><ul><li>Approval in G.M. required for disposal of substantial undertaking </li></ul><ul><li>Approval now required for the disposal of undertaking if it is more than 20% of the net worth / revenue of the company </li></ul>
  31. 31. Companies Bill, 2008 <ul><li>Notice can now be sent electronically </li></ul><ul><li>Written notice to be sent to directors at their usual residential address in India </li></ul>Mode of Notice <ul><li>Attendance of directors present through video conferencing is considered for quorum </li></ul><ul><li>Allowed but attendance not counted for quorum </li></ul>Video conferencing <ul><li>Board Meeting – not more than 120 days between two meetings. </li></ul><ul><li>Board Meeting – atleast once in every three months </li></ul>Time Gap <ul><li>Notice period of 7 days </li></ul><ul><li>Shorter notice for urgent business – presence of or ratification by 1 independent director </li></ul><ul><li>No notice period </li></ul>Notice Amended Bill Existing Act
  32. 32. Companies Bill, 2008 <ul><li>As specified by the Board </li></ul>As specified by the Board Terms of reference Chairman Membership Applicability Committees of the BOD – Sec. 158 (Audit Committee) Existing Act Amended Bill <ul><li>Company having paid up share capital more than Rs. 5 crores. </li></ul><ul><li>Every Listed Company ; and </li></ul><ul><li>Other Company as may be prescribed </li></ul><ul><li>Not less than 3 Directors. </li></ul><ul><li>Minimum of 3 Directors with majority of Independent. </li></ul><ul><li>One Director having knowledge of Financial Management </li></ul><ul><li>No provisions </li></ul><ul><li>Should be Independent </li></ul>
  33. 33. Companies Bill, 2008 Terms of Reference Membership Applicability Committees of the BOD – Sec. 158 (Remuneration Committee) Existing Act Amended Bill <ul><li>In terms of Schedule XIII Managerial remuneration payable by the companies having no profits or inadequate profits </li></ul><ul><li>Every Listed Company and </li></ul><ul><li>Other Company as may be prescribed </li></ul><ul><li>No provision </li></ul><ul><li>Non-Executive Directors one of whom shall be Independent </li></ul><ul><li>Chairman–present in the General Meeting </li></ul><ul><li>No provision </li></ul><ul><li>Determine the Company’s policies relating to the remuneration of : </li></ul><ul><li>Directors; KMP and Other Employees as may be decided by the Board </li></ul>
  34. 34. Companies Bill, 2008 Terms of Reference Membership Applicability Committees of BOD – Sec. 158 (Stakeholders Relationship Committee) Existing Act Amended Bill <ul><li>No Provision </li></ul><ul><li>Combined membership of the Shareholders, Debenture holders and other security holders of more than 1000 at any time during a financial year </li></ul><ul><li>No Provision </li></ul><ul><li>Non-Executive Directors </li></ul><ul><li>Chairman –present in the General Meeting </li></ul><ul><li>No Provision </li></ul><ul><li>Resolve the grievances of stakeholders </li></ul>
  35. 35. <ul><li>Appointment & Remuneration of Managerial Personnel </li></ul><ul><li>Sec. 174 to Sec. 178 </li></ul>
  36. 36. Companies Bill, 2008 <ul><li>No limits prescribed </li></ul><ul><li>Maximum Rs. 20,000/- </li></ul>Sitting Fees <ul><li>Alternate Director appointed for Independent Director shall also be Independent Director </li></ul><ul><li>Board can appoint Alternate Director </li></ul>Alternate Director Approval for appointment Age Limit Existing Act Amended Bill <ul><li>MD or Manger can not be appointed who: </li></ul><ul><ul><li>Below 25 years </li></ul></ul><ul><ul><li>Attained the age of 70 years </li></ul></ul><ul><li>Revised age limit: </li></ul><ul><ul><li>Below 21 years </li></ul></ul><ul><ul><li>No change </li></ul></ul><ul><li>Board </li></ul><ul><li>Shareholder – by ordinary resolution </li></ul><ul><li>Unanimous consent of the Board </li></ul><ul><li>Shareholder – by special resolution </li></ul>
  37. 37. Companies Bill, 2008 <ul><li>Limits of Remuneration removed </li></ul>Managerial Remuneration <ul><li>Limits as prescribed by the Schedule XIII of the Act. </li></ul>Appointment in more than one company Existing Act Amended Bill <ul><li>MD - Can be appointed as MD in another company (not >1) with the unanimous consent of the Board of the Company in which he is MD. </li></ul><ul><li>Manager – can not hold office in more than one company </li></ul><ul><li>Key Managerial Personnel: </li></ul><ul><ul><li>can not hold office in >1 company. </li></ul></ul><ul><ul><li>can be appointed as a Director of any other Company with the permission of the Company in which he is KMP </li></ul></ul><ul><ul><li>In case of vacancy in office of KMP - to be filled within 6 months from the date of vacancy </li></ul></ul>
  38. 38. <ul><li>Compromise, Arrangement and Amalgamation </li></ul><ul><li>Sec. 201 to Sec. 211 </li></ul>
  39. 39. Companies Bill, 2008 Objection <ul><li>Any objection to the compromise or arrangement shall be made only by persons: </li></ul><ul><ul><li>holding not less than 10% of the shareholding, or </li></ul></ul><ul><ul><li>having outstanding debt amounting to not less than 5% of the total outstanding debt as per the latest audited balance sheet. </li></ul></ul>Approval Amended Bill Remarks <ul><li>Not to be approved by members/creditors constituting majority in no. holding more than 3/4th in value. </li></ul><ul><li>The requirement of majority in number has been dispensed with, for getting approvals from shareholders / creditors. </li></ul><ul><li>A single shareholder having 75% voting right can approve the merger. </li></ul>
  40. 40. Companies Bill, 2008 <ul><li>Registered valuer has been defined under the Act. </li></ul><ul><li>A provision has been made for purchasing shares of minority shareholders at a price determined on the basis of valuation by a registered valuer. </li></ul><ul><li>For acquiring minority shareholders, the acquirer should be registered holder of 90% or more. </li></ul>Acquiring Minority Shareholding Corporate Restructuring /mergers & demerger Amended Bill Remarks <ul><li>To be approved by NCLT </li></ul><ul><li>Now rather than multiple High Courts, NCLT shall approve such proposals </li></ul>
  41. 41. Companies Bill, 2008 <ul><li>An exit option would be given to the shareholders of transferor co. </li></ul><ul><li>In case the transferor co. is a listed co. and the transferee co. is an unlisted co., the transferee co. will continue to be unlisted </li></ul>Amalgamation of Listed Co. into an Unlisted Co. <ul><li>The fees already paid by the transferor company would be available as a set off. </li></ul><ul><li>In the case of Amalgamation, the Authorised Share Capital of the transferor Company can be clubbed in the transferee company without paying any additional fees. </li></ul>Clubbing of Authorised Capital Merger with Foreign Companies Amended Bill Remarks <ul><li>Indian Company can merge with Company incorporated abroad or vice versa, subject to prescribed conditions. </li></ul><ul><li>Simplified and more feasible provisions for merger </li></ul>
  42. 42. <ul><li>Other Provisions </li></ul>
  43. 43. Companies Bill, 2008 <ul><li>No. central Government approval is required. </li></ul><ul><li>Public Company – for any RPT require Boards approval, & </li></ul><ul><li>A Company having paid up capital equal to or not exceeding such sum require prior approval of the shareholders by special resolution . </li></ul><ul><li>Not Defined. </li></ul><ul><li>Failure to file within this period would make the company and officers in default liable for action </li></ul><ul><li>The current limit of 10 times the regular fee has been done away with </li></ul><ul><li>Late filing can be done only within a period of 270 days , on payment of additional fees. </li></ul><ul><li>No prescribed time limit for late filing </li></ul>Related Party Transaction (RPT) Filing of Documents Existing Act Amended Bill Remarks
  44. 44. Companies Bill, 2008 <ul><li>In addition to existing, the details of: </li></ul><ul><ul><li>Changes in the promoters; </li></ul></ul><ul><ul><li>Meetings of member, board, committee alongwith attendance details </li></ul></ul><ul><ul><li>Remuneration of Directors and KMP </li></ul></ul><ul><li>Filing – within 30 days from the date of AGM </li></ul><ul><li>Details required: </li></ul><ul><ul><li>Name & Registered Office </li></ul></ul><ul><ul><li>Share Capital, Debentures </li></ul></ul><ul><ul><li>Directors, Members, & </li></ul></ul><ul><ul><li>Indebtedness, etc. </li></ul></ul><ul><li>Filing - Within 60 days from the date of AGM </li></ul><ul><li>Mandatory to comply with the Secretarial Standards </li></ul>Secretarial Standards <ul><li>No provisions </li></ul>Annual Return Insider Trading Existing Act Amended Bill <ul><li>No provision </li></ul><ul><li>Prohibited KMP for forward dealings and Insider trading of securities of the Co. </li></ul>
  45. 45. Companies Bill, 2008 Directors’ Report Existing Act Amended Bill <ul><li>Current provision: </li></ul><ul><ul><li>The state of Company’s affairs; </li></ul></ul><ul><ul><li>The amounts proposed to be carried to reserves; </li></ul></ul><ul><ul><li>The amount of Dividend; </li></ul></ul><ul><ul><li>Material changes; </li></ul></ul><ul><ul><li>Conservation of energy, technology, absorption; foreign exchange earnings and outgo; </li></ul></ul><ul><ul><li>Employees’ remuneration; </li></ul></ul><ul><ul><li>Directors’ responsibility statement </li></ul></ul><ul><li>It shall include : </li></ul><ul><ul><li>Extract of Annual Return; </li></ul></ul><ul><ul><li>No. of Meetings of the Board; </li></ul></ul><ul><ul><li>Director’s Responsibility Statement; </li></ul></ul><ul><ul><li>Declaration by independent directors; </li></ul></ul><ul><ul><li>Report of the Committee on Directors’ remuneration; </li></ul></ul><ul><ul><li>Clarification on adverse remark in the Auditors’ Report; </li></ul></ul><ul><ul><li>Particulars of loans, guarantee or investments; </li></ul></ul><ul><ul><li>Related party transaction </li></ul></ul>
  46. 46. Companies Bill, 2008 <ul><li>The Central Government may, by notification, be declared a Company as a Nidhi Company. </li></ul><ul><li>A Company which has been incorporated with the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit. </li></ul>Nidhis <ul><li>Dissolution of role of Company Law Tribunal and constitution of NCLT </li></ul><ul><li>The Central Government shall, by notification, constitute a Tribunal known as “National Company Law Tribunal” to exercise and discharge such powers and function as are, or may be, conferred on it by or under the Act or any other Act for the time being in force. </li></ul>National Company Law Tribunal Remarks Amended Bill
  47. 47. Companies Bill, 2008 Dormant Company Amended Bill (New Provisions) <ul><li>Where a Company is formed and registered for a future project or to hold an assets or intellectual property and has no significant accounting transactions or an inactive company , may apply for obtaining the status of a Dormant Company. </li></ul><ul><ul><li>Inactive company : </li></ul></ul><ul><ul><ul><li>not carrying on any business or operations; or </li></ul></ul></ul><ul><ul><ul><li>not made any significant accounting transactions during the last 2 financial years; or </li></ul></ul></ul><ul><ul><ul><li>has not filed financial statements and annual returns during the last 2 financial years. </li></ul></ul></ul><ul><ul><li>Significant accounting transactions shall not include payment of fees to the Registrar or payment made under the Act and payment for maintenance of its office and records. </li></ul></ul><ul><li>A Dormant Company may have such minimum no. of Directors and file such documents and pay such annual fees as may be prescribed. </li></ul>
  48. 48. Companies Bill, 2008 Special Courts Registered Valuers Amended Bill (New Provisions) <ul><li>Valuation in respect of any property, stock, shares, debentures, securities, goodwill, net worth or assets of a company shall be valued by a person registered as a valuer. </li></ul><ul><li>The Central Government shall maintain a register of valuers.  </li></ul><ul><li>A CA, CS, CWA or other persons possessing prescribed qualifications may apply to the Central Government to be registered as valuers. </li></ul><ul><li>For the speedy trial of offences, Special Courts will be established in consultation with the Chief Justice of the High Court within whose jurisdiction the judge is to be appointed. </li></ul><ul><li>All offences under this Act shall be tried by the Special Court in which the registered office of the company is situated. </li></ul><ul><li>The Special Court would have the liberty to try summary proceedings for offences punishable with imprisonment for a term not exceeding three years , although it may order for the regular trial. (Clause 398). </li></ul>
  49. 50. <ul><li>Duties of directors: </li></ul><ul><ul><li>To act in accordance with the company’s articles. </li></ul></ul><ul><ul><li>To act in good faith in order to promote the objects of the company for the benefit of its members as a whole, and in the best interest of the company. </li></ul></ul><ul><ul><li>To exercise his duties with due and reasonable care , skill and diligence . </li></ul></ul><ul><ul><li>Not to involve in a situation in which he may have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company. </li></ul></ul><ul><ul><li>Not to achieve or attempt to achieve any undue gain or advantage either to himself or to his relatives, partners, or associates. </li></ul></ul><ul><ul><li>Not to assign his office and any assignment so made shall be void . </li></ul></ul><ul><li>Any director who contravenes the provisions of this section shall be punishable with fine which shall not be less than 1 lakh rupees but which may extend to 5 lakh rupees . </li></ul><ul><ul><ul><li>Further if he is found guilty of making any undue gain either to himself or to his relatives, partners or associates he shall also be liable to pay an amount equal to that gain to the company </li></ul></ul></ul>Companies Bill, 2008