Key Managerial Personnel (KMP) - Concept Old ActNew Bill Director Sec 2(13) Manager Sec 2(24) Managing Director Sec 2(26) Secretary - Sec 2(45) Secretary in WTP Sec 2(45A) Officer in default - Sec 2(31) CEO - Cl. 2 (18) CFO - Cl. 2 (19) Company Secretary - Cl. 2 (24) CS in Practice - Cl.2 (25) Director Independent Director - Cl.2 (47) / Interested Director Cl. 2(49) KMP – Cl. 2 (51) Manager - Cl. 2 (53) Managing Director - Cl. 2 (54) Officer in Default - Cl. 2 (60) Sastra Legal

Key Managerial Personnel (KMP) As per the amended Clause 2(51) “key managerial personnel”, in relation to a company, means— (i) The Chief Executive Officer or the managing director or the manager; (ii) The company secretary; (iii) The whole-time director; (iv) The Chief Financial Officer; and (v) Such other officer as may be prescribed; Sastra Legal

As per Clause203 (1) Every company belonging to such class or classes of companies as may be prescribed shall have the following whole-time key managerial personnel,— (i) managing director, or Chief Executive Officer or manager and in their absence, a whole-time director; (ii) company secretary; and (iii) Chief Financial Officer : (2) Every whole-time key managerial personnel of a company shall be appointed by means of a resolution of the Board containing the terms and conditions of the appointment including the remuneration. Sastra Legal

(3) A whole-time key managerial personnel shall not hold office in more than one company except in its subsidiary company at the same time (4) If the office of any whole-time key managerial personnel is vacated, the resulting vacancy shall be filled-up by the Board at a meeting of the Board within a period of six months from the date of such vacancy.  PENALTY On company – one lakh rupees which may extend to five lakh rupees. On every director and KMP who is in default – 50,000 rupees and 1,000 rupees per day if contravention continues. Sastra Legal

Change - KMP From segregated responsible heads/officer /centres you have one focal point - KMP Sastra Legal

Secretarial Audit – New Concept Old ActNew Bill Accounts Audit Accounting Standards Cost Audit Compliance Certificate Others Accounting Standards Auditing Standards Cost Audit Secretarial Audit Secretarial Standards & Ors Sastra Legal

Introduction of Secretarial Audit Clause 204 – Secretarial Audit for bigger companies (1) Every listed company and a company belonging to other class of companies as may be prescribed shall annex with its Board’s report made in terms of sub-section (3) of section 134, a secretarial audit report, given by a company secretary in practice, in such form as may be prescribed.  Qualification or observation or other remarks to be highlighted  PENALTY If a company or any officer of the company or the company secretary in practice, contravenes the provisions of this section, the company, then they shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees Sastra Legal

Introduction of Secretarial Audit Clause 204 – Secretarial Audit for bigger companies (1) Every listed company and a company belonging to other class of companies as may be prescribed shall annex with its Board’s report made in terms of sub-section (3) of section 134, a secretarial audit report, given by a company secretary in practice, in such form as may be prescribed.  Qualification or observation or other remarks to be highlighted  PENALTY If a company or any officer of the company or the company secretary in practice, contravenes the provisions of this section, the company, then they shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees Sastra Legal

Class Action Suits Clause 245 (1) It is provided that specified number of members or specified number of depositors may file an application before the Tribunal on behalf of the members and depositors, if they are of the opinion that the management or control of the affairs of the company are being conducted in a manner prejudicial to the interests of the company or its members or creditors. The order passed by the Tribunal shall be binding on the company and all its members and depositors. Sastra Legal

Application can be filled for seeking all or any of the following orders, namely:— To restrain the Company from: committing an act which is ultra vires the articles or memorandum of the company; committing breach of any provision of the company’s memorandum or articles; acting on such resolution; taking action contrary to any resolution passed by the members; doing an act which is contrary to the provisions of this Act or any other law for the time being in force; to claim damages or compensation or demand any other suitable action from or against— (i)the company or its directors for any fraudulent, unlawful or wrongful act (ii)the auditor including audit firm of the company for any improper or misleading statement of particulars (iii)any expert or advisor or consultant or any other person for any incorrect or misleading statement to seek any other remedy as the Tribunal may deem fit. Sastra Legal

The provision of (2) states that where the members or depositors seek any damages or compensation or demand any other suitable action from or against an audit firm, the liability shall be of the firm as well as of each partner who was involved in making any improper or misleading statement of particulars in the audit report, or who acted in a fraudulent, unlawful or wrongful manner. The requisite number of members (3) A minimum of 100 shareholders or a percentage that may be prescribed can get together and file a CAS for a company that has share-capital, whereas the number is 1/5 for a company without share capital. Sastra Legal

Any order passed by the Tribunal shall be binding on the company and all its members, depositors and auditor including audit firm or expert or consultant or advisor or any other person associated with the company.  PENALTY On company – not be less than five lakh rupees but which may extend to twenty-five lakh rupees. On any officer who is in default – imprisonment for a term which may extend to three years and with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees. Sastra Legal

Sweat Equity As per the Companies Bill, 2012 Shares, other than sweat equity, cannot be issued at a discount. As per Clause 2(88) – “sweat equity shares” means such equity shares as are issued by a company to its directors or employees at a discount or for consideration, other than cash, for providing their know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called. Sastra Legal

Clause 54 - Issue of Sweat Equity Shares (1) A company may issue sweat equity shares of a class of shares already issued, if the following conditions are fulfilled, namely:— (a) the issue is authorized by a special resolution passed by the company; (b) the resolution specifies the number of shares, the current market price, consideration, if any, and the class or classes of directors or employees to whom such equity shares are to be issued; Sastra Legal

(c) not less than one year has, at the date of such issue, elapsed since the date on which the company had commenced business; and (d) where the equity shares of the company are listed on a recognized stock exchange, the sweat equity shares are issued in accordance with the regulations made by the Securities and Exchange Board in this behalf and if they are not so listed, the sweat equity shares are issued in accordance with such rules as may be prescribed. (2) The rights, limitations, restrictions and provisions as are for the time being applicable to equity shares shall be applicable to the sweat equity shares issued under this section and the holders of such shares shall rank pari passu with other equity shareholders.