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ADVOCATES AND CORPORATE LAW ADVISORS

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Presentation on theme: "ADVOCATES AND CORPORATE LAW ADVISORS"— Presentation transcript:

1 ADVOCATES AND CORPORATE LAW ADVISORS
f u CORPORATE JURIS CS HIMANSHU HARBOLA Advocate and Company Secretary ACS, B.A. LL.B (Hons.), PGDIPR, PGDDLTA - Mobile: VAIBHAV AGARWAL MT – Legal & Secretarial - Mobile: 754, 2nd Floor, Sukhdev Nagar, Near New Public School, Kotla- Mubarak Pur, Opp. Defence Colony, New Delhi- 03

2 COMPANIES ACT, 2013 AN OVERVIEW

3 An Introduction

4 Dr. J. J. Irani Committee Report
Journey so far Dr. J. J. Irani Committee Report 2005 Laying down of Companies Bill 2011 in Lok Sabha Referred to Standing Committee for examination 2009 2010 2012 2009 2011 Introduction of Companies Bill 2009 in Lok Sabha Receipt of Standing Committee Report Referred to Standing Committee for re-examination

5 Notification of Sections
Receipt of Standing Committee Report Introduction and passage of Bill by Rajya Sabha 2012 2013 2012 2013 Introduction and passage of Bill by Lok Sabha Receipt of President assent

6 Implementation in Steps
Section 1 of CA, 2013 empowers Central Government to commence the different provisions of Companies Act 2013 on different dates. MARCH 27-28, 2014 MARCH 26, 2014 FEBRUARY 27, 2014 SEPTEMBER 12, 2013 AUGUST 30, 2013 Companies Act, 2013 Notified Section 1 came into effect immediately 98 Sections Notified Sections for which rules were not required CSR Notified Section 135 read with Companies (Corporate Social Responsibility Policy) Rules, 2014 Some more Sections Notified Incorporation of Companies Prospectus & Allotment of Securities Dividends Meetings & Directors Accounts and Audits Some Rules Notified Companies (Incorporation) Rules, 2014 Companies (Prospectus & Allotment of Securities) Rules, 2014 Companies (Management & Administration) Rules, 2014 Companies (Accounts) Rules, 2014 Companies (Declaration & Payment of Dividend) Rules, 2014

7 SOME CONCEPTS CONCERNING PROFESSION OF CHARTERED ACCOUNTANTS
Accounts & Audits Corporate Social Responsibility National Financial Reporting Authority Dividend Depreciation

8 ACCOUNTS AND AUDITS CHAPTER IX AND X OF COMPANIES ACT, 2013

9 Accounts The 2013 Act contains a number of provisions which have implications on accounts. Some of these provisions are analysed below. Consolidated Financial Statements (Section 129) CA, 2013: Mandates preparation of CFS by all companies having one or more subsidiaries (including associates and joint ventures). CA, 1956: No such requirement. Financial Year (Section 2(41)) CA, 2013: FY for all companies and body corporates to end on 31st March CA, 1956: Company's /body corporate's election to choose FY. Restatement of Financial Statements (Section 130) – Yet to be notified CA, 2013: Mandatory restatement, in case of fraud and when a Court/ the Tribunal passes an order for restatement; Voluntary restatement to comply with accounting standards with the approval of the tribunal CA, 1956: Not allowed

10 Audit & Auditors TERM OF APPOINTMENT ROTATION OF AUDITORS
NON-AUDIT SERVICES Individual or firm to be appointed for five years, subject to ratification by members in every AGM. Change of auditors before the five year term would require special resolution after obtaining the previous approval of the Central Government. Listed Companies and such class of companies as may be prescribed cannot appoint or reappoint – Audit Firm for more than 2 consecutive terms of 5 years Individual for one term of 5years. Cooling Period of 5 years. Prohibition on auditor rendering non-audit services to auditee company/ its subsidiary/ holding company. Some of such services are as follows: Accounting and book keeping Internal Audit Investment advisory services Investment banking services Management services

11 Mandatory Internal Audit (Section 138)
Following class of companies shall appoint either Chartered Accountants or Cost Accountants or other professional as may be decided by the Board LISTED COMPANY UNLISTED PUBLIC COMPANY PRIVATE COMPANY Every listed company. Paid-up Share Capital – Rs. 50 Crore or more during preceding FY. Turnover – Rs. 200 Crore or more during preceding FY. Outstanding loans from Banks/PFIs – Rs. 100 Crore or more at any point of time during preceding FY. Outstanding deposits – Rs. 25 Crore or more during preceding FY.

12 CORPOARTE SOCIAL RESPONSIBILITY
SECTION 135 OF COMPANIES ACT, 2013 READ WITH COMPANIES (CORPORATE SOCIAL RESPONSIBILITY POLICY) RULES, 2014 NOTIFIED ON FEBRUARY 27, 2014

13 Concept & Benefits Communities provide licence to operate Attracting and retaining employees Business take inputs from nature and society and thus owe responsibility of taking care of them. Communities as suppliers Enhancing corporate reputation Reduced regulatory oversight

14 CSR as per Law (Not Exhaustive)
Projects or programs relating to activities specified in Schedule VII to the Act Projects or programs relating to activities undertaken by the board of directors of a company (Board) in pursuance of recommendations of the CSR Committee of the Board as per declared CSR Policy of the company subject to the condition that such policy will cover subjects enumerated in Schedule VII of the Act.

15 Applicability Net Worth – Rs. 500 Crore or more
Every Company meeting any of the following criteria in any financial year Net Worth – Rs. 500 Crore or more Turnover – Rs Crore or more Net Profit – Rs. 5 Crore or more

16 NATIONAL FINANCIAL REPORTING AUTHORITY & NATIONAL FINANCIAL REPORTING APPELLATE AUTHORITY
YET TO BE NOTIFIED (SECTION 132)

17 Constitution, Functions & Powers
Section 133 of Companies Act, 2013 empowers Central Government to constitute NFRA and NFRAA to perform following functions: Make recommendations to Central Government on formulation of accounting and auditing standards. Monitor and enforce compliance with accounting and auditing standards. Oversee the quality of service of the professions associated with ensuring compliance with such standards. Investigate into matters of professional or other misconduct committed by any member or firm of Chartered Accountants. Impose penalty and debar such firm or Chartered Accountants from practice, in case where professional or other misconduct is proved.

18 DECLARATION AND PAYMENT OF DIVIDEND
CHAPTER VIII OF COMPANIES ACT, 2013

19 A Comparison… Basis Companies Act, 2013 Companies Act, 1956
Whether dividend declaration/payment barred if company defaulted in repayment of deposits? Yes No such bar Whether transfer to reserves compulsory? No. Discretion of company. Mandatory in accordance with Companies (Transfer of Profit to Reserves) Rules, 1975. Transfer of Shares to IEPF after expiry of seven years Shares in respect of which unclaimed or unpaid dividend transferred to IEPF shall also be transferred in the name of IEPF. No such requirement was there.

20 Impact on various Stakeholders
Board of Directors Audit Committee CXO and KMPs Accountability to stakeholders beyond only shareholders Reporting beyond SOX Liability on Class Action Suits Significant penalties on Insider Trading and restatements Societal scrutiny on CSR Additional rigor on financial Reporting Mandatory internal audit Reporting beyond SOX Significant penalties on Insider Trading and restatements Compliance on Related Party Transactions Ease of restructuring Reporting beyond SOX Wider definition of Related Party Transactions New depreciation rules may affect profitability Liable for Class Action Suits Independent Directors Promoters MNCs Oversee implementation of best corporate governance practices. Safeguard interests of all stakeholders Ensure adequate and functional vigil mechanism. Determine appropriate levels of remuneration for Directors and KMP. Multi-layered structures to be collapsed Cross-border transactions allowed Mandatory CSR contribution will affect cash flows Wider definition of Related Party Transactions Lower thresholds for financial consolidation Mandatory contribution to local CSR Wider definition of Related Party Transactions Ease in cross-border restructuring Facility of minority buy-out

21 For any further queries, contact us as below
* Let’s talk Go for DISCUSSION For any further queries, contact us as below , CS HIMANSHU HARBOLA, FOUNDER-OWNER facebook.com/ You can also find us at:


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