A simplified presentation based on the 98 sections notified as on 12th Sep. 2013 and other relating provisions with a foreign Wholly Owned Subsidiary

1. Impact of the new Companies Act, 2013
In
A fopreign WOS
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2. PART - I
98 Sections of the Companies Act,2013
Which came into force from 12th September,2013
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3. POSITIVE IMPACTS
• Company can maintain minutes and registers in
electronic form.
• Employee stock options may also be granted to
directors, officers and employees of holding or
subsidiary of the Company.
• Financial Statement should include Cash Flow
Statement.
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4. • Key Managerial Personnel in relation to a company
includes Company Secretary and Chief Financial
Officer
• Number of members has been increased from 50 to
200 in Private Companies.
• Remuneration includes perquisites as defined under
the Income-tax Act, 1961.
• allows a subsidiary company to hold shares in its
holding company: even if Holding or subsidiary is
beneficiary of the same (Sec.19, of Companies Act,
2013).
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5. • when any special business is to be transacted in
any general meeting, the explanatory statement
thereof should specify the nature of concern or
interest, financial or otherwise, if any, in respect of
the following persons (sec.102) :Every Director and the Manager, if any
Every other key managerial personnel; and
Relatives of the persons mentioned above and any
other information and facts that may enable members
to understand the meaning, scope and implications of
the items of business and to take decision thereon.
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6. • limits for political contribution by Company have
been increased to 7.5% from 5 %.
• Service of documents on foreign company can
now also be served through any electronic mode
(sec.383)
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7. NEGATIVE IMPACTS
• The eligibility criteria under the Act, for making
requisition for circulation of resolution have been
increased to members holding 1/10th of the
voting power instead of 1/20th ..
• Alternate Director can only be appointed in case
a Director leaves India for a period of not less
than 3 months.
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8. • certain powers which under section 293 of the
Companies Act, 1956 can be exercised by Board
with the approval of general meeting only, are
now applicable to Private Companies also.
• No Company shall give any loan or provide any
security or guarantee in connection with loan to
a Director or any other person in whom he is
interested (sec.185).
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9. • A Company shall not enter into any arrangement by
which a Director of the Company or of its Holding
Company or any person connected with him can
acquire assets for the consideration other than cash
from the Company & vice versa without the
approval of Company in general meeting. (Sec.192)
• Where the Director or connected person is a
director of its holding company, then the resolution
from Holding Company will also be required.
• The notice for approval in general meeting under
this section shall include particulars of the
arrangement along with the value of asset duly
calculated by Registered Valuer.
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10. • No Director of a Company or any of its key
managerial personnel shall buy in the Company, or in
its Holding, Subsidiary or Associate Company :–
– A right to call for delivery at a specified price and within a
specified time of a specified number relevant shares or a
specified amount of relevant debentures.
– A right to make delivery at a specified price and within a
specified time, of a specified number of relevant shares or
a specified amount of relevant debentures.
– A right as he may elect, to call for delivery at a specified
price and within a specified time, or to make delivery at a
specified price and within a specified time, of a specified
number of relevant shares or a specified amount of
relevant debentures.
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11. PART – II
Important provisions under Companies Act, 2013
for which, rules are yet to be notified
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12. • At least one Director should be a person who
has stayed in India for a total period of not less
than 182 days in the previous calendar year.
(Sec.149).
• Prescribed class or classes of companies are
required to appoint at least one women director.
• Auditor of a Company appointed for a period of
5 years, rotation of Auditors after 5 year and the
appointment shall be ratified by the members
during every annual general meeting.
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13. • At least 4 Board Meetings to be held in every
year, and not more than 120 days to elapse
between two consecutive meetings.
• Annual Return certification by a Practicing
Company Secretary.
• Mandatory CSR (Corporate Social Responsibility)
contribution of 2% of avg. net profits for the last
3 preceding financial years by the Companies
having net profit Rs.5 crore or more/ net worth
Rs.500 crore or more/ turn over Rs.1000 crore or
more.
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