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ADVOCATES AND CORPORATE LAW ADVISORS f u CS HIMANSHU HARBOLA Advocate and Company Secretary ACS, B.A. LL.B (Hons.), PGDIPR, PGDDLTA -

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Presentation on theme: "ADVOCATES AND CORPORATE LAW ADVISORS f u CS HIMANSHU HARBOLA Advocate and Company Secretary ACS, B.A. LL.B (Hons.), PGDIPR, PGDDLTA -"— Presentation transcript:

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

2 COMPANIES ACT, 2013 AN OVERVIEW

3 An Introduction

4 Journey so far Introduction of Companies Bill 2009 in Lok Sabha Referred to Standing Committee for examination Dr. J. J. Irani Commit tee Report Receipt of Standing Committee Report Laying down of Companies Bill 2011 in Lok Sabha Referred to Standing Committee for re- examination 20 12

5 Receipt of Standing Committee Report Notification of Sections Introduction and passage of Bill by Lok Sabha Introduction and passage of Bill by Rajya 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. 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 SEPTEMBER 12, 2013 FEBRUARY 27, 2014 MARCH 26, 2014 MARCH 27-28, 2014 Companies Act, 2013 Notified Section 1 came into effect immediately AUGUST 30, 2013

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 31 st 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 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. TERM OF APPOINTMENTROTATION OF AUDITORS 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 Audit & Auditors NON-AUDIT SERVICES

11 LISTED COMPANY Every listed company. UNLISTED PUBLIC 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. PRIVATE COMPANY 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. 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

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 Communities as suppliers Enhancing corporate reputation Reduced regulatory oversight Business take inputs from nature and society and thus owe responsibility of taking care of them.

14 CSR as per Law (Not Exhaustive) 1. Projects or programs relating to activities specified in Schedule VII to the Act 2. 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 Net Worth – Rs. 500 Crore or more Turnover – Rs Crore or more Net Profit – Rs. 5 Crore or more Applicability Every Company meeting any of the following criteria in any financial year

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

17 1. Make recommendations to Central Government on formulation of accounting and auditing standards. 2. Monitor and enforce compliance with accounting and auditing standards. 3. Oversee the quality of service of the professions associated with ensuring compliance with such standards. 4. Investigate into matters of professional or other misconduct committed by any member or firm of Chartered Accountants. 5. Impose penalty and debar such firm or Chartered Accountants from practice, in case where professional or other misconduct is proved. Section 133 of Companies Act, 2013 empowers Central Government to constitute NFRA and NFRAA to perform following functions: Constitution, Functions & Powers

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

19 A Comparison… BasisCompanies Act, 2013Companies Act, 1956 Whether dividend declaration/payment barred if company defaulted in repayment of deposits? YesNo such bar Whether transfer to reserves compulsory? No. Discretion of company. Mandatory in accordance with Companies (Transfer of Profit to Reserves) Rules, 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 Board of Directors 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 Ease of restructuring Reporting beyond SOX Wider definition of Related Party Transactions New depreciation rules may affect profitability Liable for Class Action Suits Additional rigor on financial Reporting Mandatory internal audit Reporting beyond SOX Significant penalties on Insider Trading and restatements Compliance on Related Party Transactions 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 Impact on various Stakeholders Audit Committee MNCsPromotersCXO and KMPs Independent Directors

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


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