companies act 2013 & company secretary

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


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 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


# 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


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.


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


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


SECRETARIAL STANDARDS# ROLE OF COMPANY SECRETARY

Corporate Actions: Bonus Right Issue Dividend Stock Split, etc. . .


MERGER . . . DEMERGER . . . . TAKEOVER. . . . AMALGAMATION

VALUATION TAXATION IMPLICATIONS

APPROVALS FROM COURT, SHARE HOLDERS, CREDITORS


Revival of Sick Companies

viaB.I.F.R.

Board of Industrial & Financial Reconstruction


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

THANK YOUCS ANAND KANKANI

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