companies act 2013 & company secretary
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COMPANIES ACT – 2013 Introduction, Overview,
Opportunities, Challenges,Role of CS
Companies Act, 1956appeared 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
OBJECTIVEto make changes in Indian Corporate
Law in context of
challenging economic & business environment
and make Corporate India – Transparent,
Simple & Globally acceptable.
# Revised Financial Reporting FrameworkRevision in the Financial Statement’s
provisions
Mandatory requirement of Consolidated Financial Statement
New Definition : Subsidiary, Associate & Joint Venture
# Revised Financial Reporting Framework
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 with accounting & auditing standards
Oversee quality of service
# Revised Financial Reporting Framework
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 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
CROSS BORDER MERGERIndian Company with Foreign
CompanyWith Prior RBI Approval
# CORPORATE RESTRUCTURING
1956 2013
# CORPORATE RESTRUCTURINGMINORITY BUYOUT
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
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
# 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
Mandatory Set of Nomination & Remuneration committee
# MANAGEMENT & RESPONSIBILITIES
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
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
Net worth of ₹ 500 cr. or more
Turnover of ₹ 1,000 cr. or more
Net Profit of ₹ 5 cr. or more
# CORPORATE SOCIAL RESPONSIBILITYapplicable to companies
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
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 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
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 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
# ROLE OF COMPANY SECRETARYIncorporation: • 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 ISSUE
EXISTING SHAREHOLDERS
# ROLE OF COMPANY SECRETARYCompliance Officer : ensuring that all the rules and
regulations are followed by the Company & BoardCompany Secretary to act as COMPLIANCE OFFICER : SEBI
# ROLE OF COMPANY SECRETARYEnsuring Good Governance
Vision “ to be global leader in promoting good corporate governance.”Mission “ to develop the high calibre professionals facilitating good corporate governance.”
LIAOSING WITH SEBICompany 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, SHARE HOLDERS, CREDITORS
# ROLE OF COMPANY SECRETARY
Revival of Sick Companies
viaB.I.F.R.
Board of Industrial & Financial Reconstruction
# ROLE OF COMPANY SECRETARY
LIQUIDATION & DISSOLUTION OF THE COMPANY# ROLE OF COMPANY SECRETARY
I. Merchant BankingII. Project FinancingIII. Registered Valuer IV. Company LawV. TaxationVI. Debt SyndicationVII. NCLT
# ROLE OF COMPANY SECRETARYConsultancy
# ROLE OF COMPANY SECRETARY
THANK YOUCS ANAND KANKANI
MUMBAIanandkankani@live.com
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