Companies Bill 2011 vis-a-vis Companies Act,,1956

Companies Bill 2012 vis-a-vis Companies Act,1956By G. Praneeth AbhishekStudent of Institute of Company Secretaries of IndiaStudent Reg. No. 320617948/09/2010

1NEED FOR COMPANIES BILL 2012

To Increase: Transparency Corporate Social Responsibility Accountability Shareholder and Stakeholder Protection

To meet the internationally accepted concepts, practices.

To address the needs of the Shareholders/ Stakeholders/Government/ and public at large.

Introduction2INTRODUCTIONCompanies Bill Companies Act, 1956470SECTIONS 65829 ChaptersCHAPTERS/ PARTS13 Parts, Further divided into Chapters7SCHEDULES15

Number of SectionsThe Companies Bill 2012 has been refined, simplified to a large extent and it consists of 470 clauses and 7 schedules divided into 29 chapters, a far cry from 658 Sections and 15 Schedules in the present Companies Act, 1956

3One Person Company (Clause 2(62)) A Company which has a Single Member

Key Managerial Personal (Clause 2(51)) Includes CEO, MD, Manager, Company Secretary and CFO (if appointed by the Board of Directors)

Class Action Suit (Clause 37) - Class action suits can be filed by person or group of persons affected by any misleading statement or the inclusion or omission of any matter in the prospectus

New Concepts 4Small Company (Clause 2(85)) Means a company with paid up capital < 50 lakh or whose turnover < 2 crore

New Concepts 5Promoter (Clause 2(69)) Includes a person Named in prospectus/ identified by company as such in Annual ReturnWho has control over the affairs of the companyIn whose directions the directors are accustomed to act

Associate Company (Clause 2(6))- Means a company in which other company has significant influence (Excluding Subsidiary Company) and includes a Joint Venture company

Existing Concepts Definition Significant Influence means control of at least twenty per cent. of total share capital, or of business decisions under an agreement;6Related Party (Clause 2(75)) Elaborate definition is given in Companies Bill, 2012, which is not present in Companies Act, 1956.

Foreign Company (Clause 2(42)) Means a company or body corporate incorporated outside India

Independent Director (Clause 149(5)) Definition has been given for the first time, and nominee director cannot be considered a independent director

Existing Concepts Definition Related Party with reference to a company to mean the following:A director or his relative A Key Managerial Person or his relativesA Firm, in which a director, manager or his relative is a partnerA private company in which a director or manager is a member or directorA public company in which a director or manager is a director or holds along with this relatives, more than two per cent of its paid up capital Any body corporate whose Board of Directors, Managing Director or manager is accustomed to act in accordance with the advice, directions or instructions of a director or managerAny person on whose advice, directions or instructions a director or manager is accustomed to actAny company which is a holding, subsidiary or an associate company of such company or a subsidiary of a holding company to which it also a subsidiary Such other person as may be prescribed 7Financial Statements Clause 2(40) includes the followingBalance sheet Statement of profit and loss account/ Statement of income and expenditure Cash flow statement (not applicable for one person and small companies)A statement of changes in equities, if applicableAny Explanatory statement note, annexed or forming part of any document referred above

Existing Concepts Definition 8Charge (Clause 2(16)) - Means an interest or lien created on the property or assets of a company or any of its undertaking or both as security and includes a mortgage

Private Company (Clause 2(68)) Limit of Members extended from 50 to 200

Subsidiary Company (Clause 2(87)) As per changes made No distinction between equity and preference share capital in calculation of > 50% Company includes Body Corporate (i.e. Subsidiary or Holding)There is a limit to number of step down subsidiaries

Existing Definition Modifications 2 (16) charge means an interest or lien created on the property or assets of a company or any of its undertakings or both as security and includes a mortgage;

2 (87) subsidiary company or subsidiary, in relation to any other company (that is to say the holding company), means a company in which the holding company(i) controls the composition of the Board of Directors; or(ii) exercises or controls more than one-half of the total share capital either at its own or together with one or more of its subsidiary companies:

Provided that such class or classes of holding companies as may be prescribed shall not have layers of subsidiaries beyond such numbers as may be prescribed9Financial Year Clause 2(41) means, in relation to any company or body corporate, the period ending on the 31st day of March every year.

Existing Definition Modifications 2(41) financial year, in relation to any company or body corporate, means the period ending on the 31st day of March every year, and where it has been incorporated on or after the 1st day of January of a year, the period ending on the 31st day of March of the following year, in respect whereof financial statement of the company or body corporate is made up:

Provided that on an application made by a company or body corporate, which is a holding company or a subsidiary of a company incorporated outside India and is required to follow a different financial year for consolidation of its accounts outside India, the Tribunal may, if it is satisfied, allow any period as its financial year, whether or not that period is a year:

Provided further that a company or body corporate, existing on the commencement of this Act, shall, within a period of two years from such commencement, align its financial year as per the provisions of this clause10Financial Statement doesnt need to include cash flow statement

Signing of Annual Return:By Company Secretary in employment orBy 1 Director (Where no CS)

Exemption from conducting Annual General Meeting

Approval of Financial statements can be done by only one director for submission to auditors

One Person Company - Exemptions 11Min. No. of directors is only 1

Only 1 board meeting conducted in each half calendar year, deemed proper compliance

One Person Company - Exemptions 12The MOA of the One person company to include:Name of Nominee Consent of NomineeNominee can be changed (and such change not treated as Alteration of MOA)One person Company can be:Limited by shares Limited by guarantee Unlimited companyCapital :Minimum Rs. 100,000Maximum No limit

One Person Company - Incorporation 13

Memorandum and Articles of Association Power of Tribunal Incase of Wrong/false info. /Misrepresentation/fraudulent actions ` Pass such Orders for/to:Regulation of Management of Company Changes in MOA, AOA Direct the liability of members to be unlimited Pass order for winding up Pass such other orders, as it deems fit14

Memorandum and Articles of Association Companies Bill, 2012Companies Act, 1956Divided into- Objects to be pursed by Company on incorporation- Incidental Objects

MOA objectsDivided into - Main objects- Incidental objects- Other objects

To be filed with ROC within 15 daysAlteration of AOATo be filed with ROC within 30 days14 (2) Every alteration of the articles under this section and a copy of the order of the Tribunal approving the alteration as per sub-section (1) shall be filed with the Registrar, together with a printed copy of the altered articles, within a period of fifteen days in such manner as may be prescribed, who shall register the same.15

Memorandum and Articles of Association Companies Bill, 2012Registered OfficeCompanies Act, 1956On and from 15th day of incorporation Company shall haveOn and from 30th day of incorporationCentral Government shall dispose of application with 60 daysShift from one state to anotherNo such time limit16

Companies Bill, 2012Companies Act, 1956Both Public Companies and Private companiesApplicable toPublic companies No Certificate IssuedCertificate Issued COBDocuments to be submitted under new bill:

Declaration by Directors of payment of money by subscribers of MOAVerification of Registered office filed with ROCCommencement of Business17

Issue and Allotment of Securities Companies Bill, 2012Companies Act, 1956Not a Conclusive Evidence Certificate of IncorporationConclusive Evidence Clause 7 Section 3518

Issue and Allotment of Securities Companies Bill, 2012Companies Act, 1956Under Clause 28

Members of the Company in consultation with the board can offer there shares to public

Such Offer of Sale shall be deemed to be a Prospectus issued by the Company

Offer of SaleNo such provision exists under the Act28. (1) Where certain members of a company propose, in consultation with the Board of Directors to offer, in accordance with the provisions of any law for the time being in force, whole or part of their holding of shares to the public, they may do so in accordance with such procedure as may be prescribed.

(2) Any document by which the offer of sale to the public is made shall, for all purposes, be deemed to be a prospectus issued by the company and all laws and rules made thereunder as to the contents of the prospectus and as to liability in respect of mis-statements in and omission from prospectus or otherwise relating to prospectus shall apply as if this is a prospectus issued by the company.19

Issue and Allotment of Securities Companies Bill, 2012Companies Act, 1956Mandatory Clause 29 for:

Companies Making public offer Certain Companies as may be specified Issue of Securities in Dematerialized Form Only Mandatory Sec 68B for every listed company making IPO of any security for a sum of 10 crore or more20

Issue and Allotment of Securities Companies Bill, 2012Companies Act, 1956Under Clause 53

Issue of shares at discount prohibited Sweat Equity shares can be issued at DiscountIssue of Shares at Discount Under Section 79

Shares can be issued at discountUnder clause 27(2)

Exit offer should be given to dissenting shareholders by promoters or controlling shareholdersExit Offer by promoters to dissenting shareholdersNo such Provision Exists 53. (1) Except as provided in section 54, a company shall not issue shares at a discount.(2) Any share issued by a company at a discounted price shall be void

27(2) The dissenting shareholders being those shareholders who have not agreed to the proposal to vary the terms of contracts or objects referred to in the prospectus, shall be given an exit offer by promoters or controlling shareholders at such exit price, and in such manner and conditions as may be specified by the Securities and Exchange Board by making regulations in this behalf.

21Companies Bill, 2012Companies Act, 1956Under Clause 62Applicable to Both Private and Public Companies Provisions of Rights Issue Under Section 81Applicable only to public companies Under Clause 47Bill Doesnt Differentiate cumulative and non-cumulative preference shares Same period prescribed after which preference shareholders have voting rightsVoting Rights of Preference Shareholders Different period are specified for Cumulative and Non-Cumulative Preference Shares after which preference shareholders have voting rights

Share Capital and Debentures Voting Rights Under Clause 47(2) Provided further that where the dividend in respect of a class of preference shares has not been paid for a period of two years or more, such class of preference shareholders shall have a right to vote on all the resolutions placed before the company

62. (1) Where at any time, a company having a share capital proposes to increase its subscribed capital by the issue of further shares, such shares shall be offeredto persons who, at the date of the offer, are holders of equity shares of the company in proportion, as nearly as circumstances admit, to the paid-up share capital on those shares by sending a letter of offer subject to the following conditions, namely:

62(3) Nothing in this section shall apply to the increase of the subscribed capital of a company caused by the exercise of an option as a term attached to the debentures issued or loan raised by the company to convert such debentures or loans into shares in the company:Provided that the terms of issue of such debentures or loan containing such an option have been approved before the issue of such debentures or the raising of loan by a special resolution passed by the company in general meeting.22Companies Bill, 2012Companies Act, 1956Under Clause 55(2)Redeemable preference shares with a term of more than 20 years can be issued by a company limited by shares Issue of preference Shares for infrastructural projectsPreference shares with a term of more than 20 years cannot be issued under the act

Share Capital and Debentures 55. (1) No company limited by shares shall, after the commencement of this Act, issue any preference shares which are irredeemable.(2) A company limited by shares may, if so authorised by its articles, issue preference shares which are liable to be redeemed within a period not exceeding twenty years from the date of their issue subject to such conditions as may be prescribedProvided that a company may issue preference shares for a period exceeding twenty years for infrastructure projects, subject to the redemption of such percentage of shares as may be prescribed on an annual basis at the option of such preferential shareholders:23Companies Bill, 2012Deposits from membersCompanies Act, 1956To be framed by Reserve Bank of IndiaRules For all deposits Companies (acceptance of deposits) Rules, 1975 are applicableUnder Clause 73 (2)

General Meeting resolution from members required to accept deposits Authorization Companies Can accept deposits from members Circular to Members and circular to Registered with ROCMode of IntimationAdvertisements in newspaper and Statement in lieu of advertisement to be filed with ROC for all deposits

Acceptance of Deposits73(2) A company may, subject to the passing of a resolution in general meeting and subject to such rules as may be prescribed in consultation with the Reserve Bank of India, accept deposits from its members on such terms and conditions, including the provision of security, if any, or for the repayment of such deposits with interest, as may be agreed upon between the company and its members, subject to the fulfilment of the following conditions,namely:(a) issuance of a circular to its members including therein a statement showing the financial position of the company, the credit rating obtained, the total number of depositors and the amount due towards deposits in respect of any previous deposits accepted by the company and such other particulars in such form and in such manner as may be prescribed;(b) filing a copy of the circular along with such statement with the Registrar within thirty days before the date of issue of the circular;24Companies Bill, 2012Deposits from publicCompanies Act, 1956To public companies having such net worth or turnover as may be prescribedApplicability To all public companiesMandatory From Recognized rating agencyTo be obtained every year during the tenure of deposits Credit RatingNot Required All provisions applicable to acceptance of deposits from members shall apply mutatis mutandis to acceptance of deposits from public

Acceptance of Deposits73(2) A company may, subject to the passing of a resolution in general meeting and subject to such rules as may be prescribed in consultation with the Reserve Bank of India, accept deposits from its members on such terms and conditions, including the provision of security, if any, or for the repayment of such deposits with interest, as may be agreed upon between the company and its members, subject to the fulfilment of the following conditions,namely:(a) issuance of a circular to its members including therein a statement showing the financial position of the company, the credit rating obtained, the total number of depositors and the amount due towards deposits in respect of any previous deposits accepted by the company and such other particulars in such form and in such manner as may be prescribed;(b) filing a copy of the circular along with such statement with the Registrar within thirty days before the date of issue of the circular;

76. (1) Notwithstanding anything contained in section 73, a public company, having such net worth or turnover as may be prescribed, may accept deposits from persons other than its members subject to compliance with the requirements provided in sub-section (2) of section 73 and subject to such rules as the Central Government may, in consultation with the Reserve Bank of India, prescribe:

Provided that such a company shall be required to obtain the rating (including its networth, liquidity and ability to pay its deposits on due date) from a recognised credit rating agency for informing the public the rating given to the company at the time of invitation of deposits from the public which ensures adequate safety and the rating shall be obtained for every year during the tenure of deposits25Companies Bill, 2012Companies Act, 1956Under clause 77Wide and ambiguous CoversPropertyAssetsAny of its undertaking, whether tangible or otherwise

Scope Definite and clear Can allow registration within period of 300 days of creation of charge on payment of additional feePower of ROCROC can condone delay for registration beyond 30 and within 60 days from date of creation of charge

Registration of Charge77. (1) It shall be the duty of every company creating a charge within or outside India, on its property or assets or any of its undertakings, whether tangible or otherwise, and situated in or outside India, to register the particulars of the charge signed by the company and the charge-holder together with the instruments, if any, creating such charge in such form, on payment of such fees and in such manner as may be prescribed, with the Registrarwithin thirty days of its creation:

Provided that the Registrar may, on an application by the company, allow such registration to be made within a period of three hundred days of such creation on payment of such additional fees as may be prescribed:26Companies Bill, 2012Companies Act, 1956Under clause 92

More Disclosures

Content Minimal Disclosures

Annual Return92. (1) Every company shall prepare a return (hereinafter referred to as the annual return) in the prescribed form containing the particulars as they stood on the close of the financial year regarding(a) its registered office, principal business activities, particulars of its holding, subsidiary and associate companies;(b) its shares, debentures and other securities and shareholding pattern;(c) its indebtedness;(d) its members and debenture-holders along with changes therein since the close of the previous financial year;(e) its promoters, directors, key managerial personnel along with changes therein since the close of the previous financial year;(f) meetings of members or a class thereof, Board and its various committees along with attendance details;(g) remuneration of directors and key managerial personnel;(h) penalty or punishment imposed on the company, its directors or officers and details of compounding of offences and appeals made against such penalty or punishment;(i) matters relating to certification of compliances, disclosures as may be prescribed;(j) details, as may be prescribed, in respect of shares held by or on behalf of the Foreign Institutional Investors indicating their names, addresses, countries of incorporation, registration and percentage of shareholding held by them; and (k) such other matters as may be prescribed27New disclosures to be made:Change of promoters/ KMP since previous FY

Details of meetings of Board/Committees/ Members or class thereof along with attendance details

Remuneration of Directors, KMP

Penalties/Punishment imposed on: Company Directors or Officers Compounding of offences Appeals against penalty or punishment

Annual Return28New disclosures to be made: Certification of Compliances, Disclosures

Details of shares held by or on behalf of FII

Annual ReturnReturn by Listed Company Clause 93Every listed Company shall file with ROC, within 15 days a return with respect to change in number of shares:Held by promotersTop Ten Shareholders of such company93. Every listed company shall file a return in the prescribed form with the Registrar with respect to change in the number of shares held by promoters and top ten shareholders of such company, within fifteen days of such change.29Companies Bill, 2012Signing Companies Act, 1956 Director and CS Where no CS, by CS in Practice General Companies Director and Manager/ Secretary If No Manager/Secretary, then by CS in practice Company Secretary If no, CS, by Director One Person/ Small CompanyNot Applicable To be also certified by CS in practice

Listed Company/ Other prescribed Companies

Only Listed Companies

Annual Return30Companies Bill, 2012Companies Act, 1956Balance sheetStatement of Profit and Loss/ Income and Expenditure AccountCash Flow statementStatement showing Changes in equityNotes of the aboveIncludeBalance SheetStatement of Profit and Loss Notes Under clause 131, voluntary revision of Financial statements and Boards report is possibleRevision of Financial Statements No such revision possible

Financial Statements131. (1) If it appears to the directors of a company that(a) the financial statement of the company; or(b) the report of the Board,do not comply with the provisions of section 129 or section 134 they may prepare revised financial statement or a revised report in respect of any of the three preceding financial years after obtaining approval of the Tribunal on an application made by the company in such form and manner as may be prescribed and a copy of the order passed by the Tribunal shall be filed with the Registrar:Provided that the Tribunal shall give notice to the Central Government and the Income tax authorities and shall take into consideration the representations, if any, made by that Government or the authorities before passing any order under this section:Provided further that such revised financial statement or report shall not be prepared or filed more than once in a financial year:Provided also that the detailed reasons for revision of such financial statement or report shall also be disclosed in the Board's report in the relevant financial year in which such revision is being made.31Companies Bill, 2012Companies Act, 1956Balance sheet and Statement of Profit and Loss including consolidated financial statementCash Flow statementStatement showing Changes in equityNotes of the aboveSubmission at AGMBalance SheetStatement of Profit and Loss Notes To be filed with ROC with 30 days of AGM or adjourned AGMUn adopted Financial Statements No such provision

Financial Statements137. (1) A copy of the financial statements, including consolidated financial statement, if any, along with all the documents which are required to be or attached to such financial statements under this Act, duly adopted at the annual general meeting of the company, shall be filed with the Registrar within thirty days of the date of annual general meeting in such manner, with such fees or additional fees as may be prescribed within the time specified undersection 403:Provided that where the financial statements under sub-section (1) are not adopted at annual general meeting or adjourned annual general meeting, such unadopted financial statements along with the required documents under sub-section (1) shall be filed with the Registrar within thirty days of the date of annual general meeting and the Registrar shall take them in his records as provisional till the financial statements are filed with him after their adoption in the adjourned annual general meeting for that purpose32Companies Bill, 2012Companies Act, 1956 Companies Not Required to conduct Statutory Meeting Statutory Meeting to be conducted Every Company:Limited by SharesLimited by guarantee Except Private Limited Co.

Statutory Meeting33Companies Bill, 2012Companies Act, 1956Within 9 months of end of FYFirst AGMWithin 18 months from date of incorporation In case of Public Co. 5 members where no. members is < 1000 15 members where no. of members is 1000 > 5000 30 members where no. of members is > 5000

In case of Private Company 2 members personally present Quorum Public Company

5 members personally present

Private Companies

2 members personally present

Annual General Meetings34Companies Bill, 2012Demand for PollCompanies Act, 1956By Person/ Proxy Holding: 1/10 voting power or shares Shares with value of more than Rs. 500,000Public CompanyBy Person/Proxy Holding: 1/10 voting power Paid up Shares with value of more than Rs. 50,000By any member(s)/proxy with 1/ 10 voting power Other Company Private Company with: 7 members, by two membersOther Company:By member(s)/proxy with > 1/10 voting power

Annual General Meetings35Companies Bill, 2012Companies Act, 1956National holidaysOutside Business Hours (9am to 6pm)

AGM Cannot be onPublic Holidays andOutside Business HoursEither in writing or electronic modeMode of Notice In writingConsent of not less than 95 % of members entitled to vote at that meeting required Shorter NoticeConsent of All members entitled to vote required

Annual General Meetings36Companies Bill, 2012Companies Act, 1956Under Clause 204, Mandatory for:

All Listed Companies Such Class of Companies as may be prescribed

Secretarial AuditNot Mandatory To include Secretarial Audit Report

Boards ReportNot Mandatory

Secretarial Audit37Companies Bill, 2012Companies Act, 1956Statutory Recognition given under Clause 118(10) and Clause 205

Secretarial Standards No provisions relating to applicability

Secretarial StandardsUnder Companies Bill, 2012 Statutory Recognition Clause 118(10) - Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980, and approved as such by the Central Government.

clause 205 - the functions of the company secretary is mentioned to include, ensuring the company complies with the applicable secretarial standards.

38

Corporate Social Responsibility Companies Bill, 2012Companies Act, 1956Mandatory for certain class of Companies

Corporate Social Responsibility Not MandatoryAs per the Companies Bill, 2012, every company having net worth of Rs. 500 crore or more or turnover of Rs. 1000 crore or Net profit of Rs. 5 crore or more, shall make every endeavor to ensure that the company spends, in every Financial year, at least 2% of the average net profits of the company made during the 3 immediately preceding financial years

39Companies Bill, 2012Companies Act, 1956Under Clause 123

Not Mandatory Transfer to Reserves Mandatory depends on rate of dividendUnder Clause 123(3) and (6)Restrictions on declaration:FinalInterim dividend

Restriction on declaration of Dividend No Such Restrictions are provided

Dividend Restriction on declaration of dividend

Final Dividend-When the company fails to comply with the provisions of the bill relating to acceptance of and repayment of deposits, the company cannot issue any dividend during the period the non-compliance continues

Interim Dividend-As per Clause 123(3) of the Bill, in case the company has incurred loss during the current FY up to the end of the quarter immediately preceding the date of declaration of such interim dividend shall not be declared at a rate higher than the average dividends declared by the company during the immediately preceding 3 financial years

40Companies Bill, 2012Companies Act, 1956Clause 124(2)

To be prepared within 90 days of transfer to unpaid Dividend A/c Statement of unpaid Dividend

Companies are not required to prepare any such statementUnder clause 124(6)

Have to Transfer :Unpaid DividendRespective Shares Transfer of shares and unpaid dividend

Under section 205A(5) Only Unpaid Dividend

Dividend 124(6) All shares in respect of which unpaid or unclaimed dividend has been transferred under sub-section (5) shall also be transferred by the company in the name of Investor Education and Protection Fund along with a statement containing such details as may be prescribed:41Companies Bill, 2012Companies Act, 195615*Max. No. of Directors12*Listed Companies 1/3rd of the Board Independent Directors No such provision At least one Women DirectorsNo such provision 1 director who has been in India - For 182 days in the previous calendar yearSituation No such provision

Directorship Companies Bill, 2012Companies Act, 1956 One term 5 years Eligible for 2 consecutive terms Cooling period 3 years Term of Independent Directors Can be appointed for 3 years Disqualified to be appointed in all companies Failure to File: Accounts Annual Returns Repay deposits Interest on deposits etc. Disqualified to be appointed in public companies Nominee Directors of: Financial Institutions Holding Co. GovernmentNot to be considered Independent Directors

Nominee DirectorsNo such provision

Directorship Companies Bill, 2012Companies Act, 1956Listed Company May have one small shareholder directorSmall Shareholders Director Public Co. having: Paid up capital 5 crore 1000 small shareholders May have a representative director 20* Max. No. of Directorships 15*Clause 166 provides for the duties of Directors Duties of DirectorsDuties of Directors are not provided in the Act

Directorship Maximum number of companies in a person can be a Director

Under Companies Bill, 2012 Maximum number is 20Maximum Number of public companies in which he can be a director is 10In calculation of limits, alternate directorships and private company directorships are included

44Companies Bill, 2012Companies Act, 1956 Cannot be appointed Unless the AOA authorize Same person MD and Chairman Can be AppointedSpecial Resolution Ordinary Applicable to: Public Co. Private Co. Appointment of MD/WTDApplicable to:Public Co.Private Companies which are subsidiary of public co.

Chairman and Managing Director

Limits of Managerial Remuneration payable incase of inadequate profit has been changed Managerial Remuneration in case of Inadequate profits

Under Companies Bill, 2012Under Companies Act, 1956Effective Capital Yearly limit (Rs.)Effective Capital Monthly limit (Rs. )Less than 5 crore 30 lakhs Less than 1 crore 75,0005 to 100 crore 42 lakhs 1 to 5 crore - 1,00,000100 to 250 crore 60 lakhs 5 to 25 crore 1,25,000250 crore and above 60 lakhs plus 0.01% 25 to 50 crore 1,50,000of the effective capital in excess of Rs. 250 crore 50 to 100 crore 1,75,000100 crore and more 2,00,000

45Companies Bill, 2012Companies Act, 1956Individual Max. 5 yearsLLP, Firm Max. 10* years Term of AuditorNo such term specifiedProvided in clause 144Negative List of Services No Restrictions on services Independent Directors Should form the majorityNo. of Directors 3 Audit Committee Composition

No specific provision present No. of Directors - 3

Audit, Audit Committee and Appointment of Auditors Vigil Mechanism Every Listed Company shall establish a vigil mechanism for directors and employees to report genuine concerns and it shall be monitored and implemented by audit committee Companies Bill, 2012Companies Act, 1956 Fine Rs. 25000 to Rs. 500,000 1 year imprisonment or fine of Rs. 10,000 to Rs. 100,000 or both Penalty for Non-Compliance by Company Fine up to Rs. 5000 Fine Rs. 25000 to Rs. 100000 For Willful Contravention Imprisonment which may extend to one year or fine not less than Rs. 100,000 or both Penalty for Non-Compliance by AuditorFine up to Rs. 10000

Audit, Audit Committee and Appointment of Auditors Companies Bill, 2012Companies Act, 1956 No Buy-back within 1 year reckoned from the date of closure of the preceding offer of buy-back, if any. Restriction on further buy back No buy-back (made in pursuance of the resolution of the board) within a period of 365 days reckoned from date of the preceding offer of buy-back

BUY BACK OF SHARES Companies Bill, 2012Meetings Companies Act, 1956 In Person Video conference ModeIn Person 7 days, through: Post Hand Delivery Electronic means NoticeNo Length of Notice prescribed 4 every year 120 days between meetings Number 4 every year 1 in each quarter

Board Meeting Companies Bill, 2012Companies Act, 1956Every listed Company and such other Company shall have mandatorily Applicability

No provisions for such committee exists Composition 3 or more Non Executive directors, with not less than being Independent DirectorsFunctions Identify Prospective directors and senior management, andRecommend to board their appointment and removalFormulate criteria for determining qualifications, positive attributes, independence of directorsRemuneration policy for directors and senior managementCarry out evaluation of every directors performance

Nomination and Remuneration Committee 50Companies Bill, 2012Companies Act, 1956Companies With 1000:Shareholders Debenture holders Deposit holders Any other security - At any time during the FYApplicability Not Applicable To consider and resolve the grievances of security holders of the companyMandate Not Applicable

Stakeholders Relationship Committee Companies Bill, 2012Companies Act, 1956 Strength To be decided by Board Chairman Non Executive Director

Composition Not Applicable

Stakeholders Relationship Committee Companies Bill, 2012Companies Act, 1956 Private Companies Public companies Applicability Public Companies Deemed Public Companies Co. gives in ordinary course of business at rate not less than RBI prescribed rates Loan to MD/WTD:Pursuant to conditions of servicePursuant to Scheme approved by members by special resolution Exemption Private Companies Banking Companies Loans by Holding to Subsidiary Co. etc.

Loan to Directors185. (1) Save as otherwise provided in this Act, no company shall, directly or indirectly, advance any loan, including any loan represented by a book debt, to any of its directors or to any other person in whom the director is interested or give any guarantee or provide any security in connection with any loan taken by him or such other person:Provided that nothing contained in this sub-section shall apply to(a) the giving of any loan to a managing or whole-time director(i) as a part of the conditions of service extended by the company to all itsemployees; or(ii) pursuant to any scheme approved by the members by a specialresolution; or(b) a company which in the ordinary course of its business provides loans or gives guarantees or securities for the due repayment of any loan and in respect of such loans an interest is charged at a rate not less than the bank rate declared by the Reserve Bank of India.53Companies Bill, 2012Companies Act, 1956To include valuation reportNotice Not Required to annex valuation report 3/4 value of members/ creditors voting in: Person or Through proxy or Postal ballot Special Majority 3/4 value of members/ creditors among members/ proxy/ creditors present and voting

Compromises and ArrangementsCompanies Bill, 2012Companies Act, 1956Can be Raised only by persons:Holding 10% of shareholding 5% of total outstanding debt Objections Any Member/ Creditor/ Member through proxy To be given to all Statutory Authorities Like RD/IT/CCI etc. Notice of Meeting in case of Merger To be given to Regional Director

Compromises and ArrangementsCompanies Bill, 2012Companies Act, 1956Acquirer/PAC, persons/ group holding > 90% of equity through: Amalgamation Share Exchange Conversion of securities etc. -May purchase the minority shareholding

Purchase of Minority shareholding by Majority shareholders

No Specific provisions present

Compromises and ArrangementsCompanies Bill, 2012Companies Act, 1956 Can be included

Incase of Listed Companies, SEBI Regulations need to be complied with Takeover Offer in Scheme Can not be included

Compromises and ArrangementsCompanies Bill, 2012Companies Act, 1956Chapter XVII talks Registered Valuer Registered ValuerNo provisions provided for Registered Valuer

Registered Valuer

Companies Bill, 2012Companies Act, 1956Chapter XVII talks Registered Valuer Registered ValuerNo provisions provided for Registered Valuer Where any valuation is required under the Act, a person registered as valuer shall be appointed by:

Audit Committee

Where no Audit Committee, by Board

Registered Valuer

Registered Valuer Liability of Registered Valuer Violation of Clause 247 (i.e. provision relating to Registered Valuer) Fine Rs. 25,000 and Rs. 100,000

With Intention to Defraud Company/ Members Imprisonment up to 1 year Fine Rs. 100,000 and Rs. 500,000 When Convicted for the aforesaid:

Refund remuneration received from company Pay damages to Company or any person for loss arising out of incorrect or misleading statements of particulars in his reportCompanies Bill, 2012Companies Act, 1956 9 circumstances, but: 3 removed 3 added

Circumstances in which Company may be wound up by tribunal

9 Circumstances

Winding up and Strike offCircumstance which have been removed Failure to commence business within 1 year

Minimum no. of members falling below prescribed limit

Failure to hold statutory meeting or deliver statutory report

Winding up and Strike offCircumstance which have been added Affairs of the Company conducted in fraudulent manner

Company has been incorporated for fraudulent or unlawful means

Persons involved in the formation and management of its affairs have been: Guilty of fraudMisfeasance Misconduct, in connection therewith, and that it is proper that the company be wound up

Winding up and Strike offCircumstance which have been added Failure to commence business within 1 year of incorporation

Within 198 days, subscribers to MOA have not paid subscription money

a company is not carrying on any business or operation for a period of 2 immediately preceding FY and has not made any application for obtaining the status of a dormant company

Strike off by ROC Circumstances THANK YOU