New Concepts introduced in the Companies Act 2013

1. Your Legal Team
New Concepts
Introduced in the Companies Act, 2013

2. Index
Associate
Company
One
Person
Company(
OPC)
Independe
nt Director
Women
Director
Class
Action
CSR
Secretarial
Audit
Registered
Valuer
Private
Placement
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3. Associate Company
Company A
Having significant influence
*includes joint venture company
* doesn’t include subsidiary company
Company B
Note: significant influence” means control of at least twenty per cent of total share
capital, or of business decisions under an agreement;
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4. Associate Company
Related Party
Annual Return
Financial Statements
Non Cash Transactions
Register of Director
Shareholding
• Will be considered as Related Party under the new Act
• Should specify details of associate companies
• Consolidated Financial Statements shall include associate
company financials also
• Ordinary Resolution required, if Director of Associate company
wants to purchase assets from Company
• Details of securities held by directors and Key Managerial
Personnel (KMP) in associate co. should be entered in the
Register.
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5. One Person Company

Company having one
person as Member
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6. One Person Company
Legalize Sole Proprietorship
To be formed as a Private Company
Minimum1 director
Single Member to subscribe to the MOA and ensure all compliances
Name of 1 more person be given in MOA- Become member if death or member’s incapacity
One Person Company in brackets should be written, where name of Co. is printed, affixed or engraved
Annual Return to be filed by OPC & signed by CS & if no CS, then by director of company
No AGM requirement
Financials to be prepared & signed by only 1 director before giving to auditors for Audit Report
Financials to be filed, within 180 days of end of FY
Director’s Report – only explanations to auditors qualification, if any
BM- At least 1 BM, in each half year with a gap of not less than 90 days between 2 consecutive meetings.
No BM, if only one director in company
B.M.-Board Meeting
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7. Independent Director
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8. Independent Director (I.D.)
Composition of Board of Listed Co- 1/3rd of total directors as I.D.
CG may prescribe min no. of I.D. in other class of public companies as well. (Refer Note)
Declaration of Independence- First B.M. of participation and thereafter at the first B.M., in every F/Y or when
there is any change in circumstances which may affect his status as I.D.
Databank of Information- C.G. may notify a body for maintaining the data of names and addresses of I.D, who are
eligible & willing to act
Appointment by members in General Meeting
Explanatory Statement (E.S.) shall indicate justification for choosing the person as I.D.
A statement in E.S. that “In the opinion of the Board, he fulfils the conditions specified in this Act for such an
appointment”
Note: Prescribed by Draft Rules: 1/3rd ID in public companies having PUSC of Rs.100 crore or more
or Turnover of Rs.300 crores or more or if aggregate outstanding loans or borrowings or debentures or
deposits, exceeding Rs. 200 crores
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9. Eligibility of an Independent Director
Other than M.D., W.T.D or Nominee Director
Person of integrity & possessesing relevant expertise &
experience
Is or wasn’t a promoter of Co. or its Holding, Subsidiary or
Associate
Not related to promoters or directors in Company, its Holding,
Subsidiary or Associate
Has or had no pecuniary relationship with Co., its Holding,
Subsidiary or Associate or their promoters, or directors, during the
2 immediately preceding F/Y or current F/Y
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10. Eligibility of an Independent Director- Contd.
Not have any RELATIVES , who have had any pecuniary relationship with the
Company, it’s holding, subsidiary and associate Companies, their directors or
promoters,
2 or more percent of its gross turnover or total income
Amounting
To:
Rs. 50 Lakh or a higher amount as may be prescribed, whichever is
lower
During 2
immediately
preceding F/Y
or during the
current F/Y
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11. Eligibility of an Independent Director-Contd.
Neither Himself nor his relatives:
Should hold or has held the
position of K.M.P or is or has
been employee of Co. or its
holding, subsidiary or associate
company in any of the three
financial years immediately
preceding the financial
year in which he is proposed to
be appointed
Should hold together 2% or more
voting power in the Company
NPO- Non Profit Organization
Should have been an employee/
partner/ proprietor of the auditor
firm/ legal firm or a consulting firm
of the Company in 3 immediately
preceding F/Y
Should be a Chief Executive or
Director of any NPO which
receives 25% or more of its
receipts from the Company, any
of its promoters, directors or its
holding, subsidiary or associate
company or that holds two per
cent. or more of the total voting
power of Co.
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12. Other Features-Independent Director
Remuneration- No stock option & sitting fees or re-imbursement of expenses for participation in B.M. and profit related commission, approved by
members
Tenure of office- Up to 5 consecutive years
Re-appointment by special resolution and disclosure of in Directors Report
Maximum tenure-Not more than 2 consecutive terms.
Eligible for appointment after expiry of 3 years of ceasing to an I.D.
During 3 years, shouldn’t be appointed in or be associated with the company in any other capacity, either directly or indirectly.
Liability of acts of omission or commission - Shall be held liable, only in respect of such acts of omission or commission, which occurred with his
knowledge, attributable through Board processes & with his consent or connivance or where he had not acted diligently
Not liable to retire by rotation
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13. Woman Director
Class or classes of companies, may
be prescribed, which shall have at
least 1 woman director.
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14. Woman Director-Prescribed in Rules
Every listed Company
Within 1 year from
the notification of
section
Every Public company
having
PUSC of Rs. 100
crores or more
Turnover of Rs. 300
crores or more, within
3 years from the date
of notification
PUSC- Paid-up Share Capital
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15. Class Action
Class Action is the right to members, deposit
holders, to file an application before the Tribunal
for restraining the Company from some specified
acts
IF
Management/ Conduct of the Company is
prejudicial to interests of the Company or its
members/depositors
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16. Eligible Member Or Eligible Depositor
For Members-Co. having Share Capital
not less than 100 members or
For Members- Company not having
Share Capital
Not less than 1/5th of total
number of its members
Depositors
Not less than 100 depositors
not less than such % of total
number of members(prescribed10% by rules), whichever is less
or
Not less than prescribed %(10%)
of total number of depositors,
whichever is less or
Any member or members holding
not less than prescribed(10%) %
of issued share capital of Co.
Any depositor or depositors to
whom the company owes
prescribed %(10%) of total
deposits
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17. Order that can be sought
Restrain Co. from committing an act which is ultra vires AOA or MOA
Restrain Co. from committing breach of any provision of Company’s MOA or AOA
Declare a resolution for alteration of MOA or AOA as void, if same was passed by suppression of material
facts or by mis-statement
Restrain Co. from doing an act, which is contrary to the provisions of this Act or any other law for the time
being in force.
Restrain the company from taking action contrary to any resolution passed by the members
Claim any damages/ compensation or demand any other suitable action in cases of wrongful/ fraudulent/
unlawful act by Directors/ Auditors/Experts
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18. Corporate Social Responsibility
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19. Corporate Social Responsibility Committee
Co. having Net
Worth of Rs.500
crore or more or
Turnover of Rs.
1000 crore or
more or
Net profit of Rs.
5 crore or more
during any F/Y
Shall constitute a Corporate Social Responsibility
Committee of the Board consisting of a minimum of 3
directors with at least 1 independent director
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20. Other Features-CSR
Responsibility of
CSR Comm.
• Recommend CSR
Policy to Board
• Recommend
amount of CSR
expenditure
• Monitoring CSR
Policy from time to
time
Responsibility of
Board
Responsibility of
Company
• Approve CSR Policy
• Disclose policy
features in Directors
Report and on
website
• Ensuring CSR
activities are
undertaken as per
Policy
• Explanation in
Directors Report, if
fails to spend
prescribed amount
on CSR activities
• CSR spending to
give preference to
preference to the
local area and areas
around it where it
operates, for
spending the
amount earmarked
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21. Secretarial Audit
Every Listed Co. & a Co. belonging
to other class of companies as may
be prescribed, shall carry secretarial
audit
Report to be given by a Company
Secretary in whole-time practice
Report to be attached with Directors
Report
Board to give explanation to any
remark, observation or qualification
in Directors Report
Note: Prescribed by Rules: Every Public Co. having PUSC of
Rs. 100 crores or more
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22. Registered Valuer
Registered Valuer
A person having
prescribed qualifications
& experience and
registered as a valuer
Appointed by Audit
Committee(if any) or by
Board of Directors
Do valuation of property,
stocks, shares,
debentures, securities or
goodwill or any other
assets (herein referred to
as the assets) or net
worth of a company or its
liabilities.
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23. Registered Valuer
Qualification Prescribed in Rules
Chartered Accountant or Company Secretary or Cost accountant in whole-time practice,
or any person holding equivalent Indian or foreign qualification
Merchant Banker registered with the Securities and Exchange Board of India
Member of Institute of Engineers & who is in whole-time practice
Member of Institute of Architects & who is in whole-time practice
Person or entity possessing necessary competence & qualification as may be notified by
C.G., from time to time
Note: For first 4 points, shall not less than five years continuous experience after
acquiring membership .
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24. Requirements of Valuation
under the New Act
Determine price for further issue of shares
Value assets in an arrangement calling for restriction on Non Cash transactions involving directors
Value shares, property and all assets in a scheme of compromise/ arrangement
Value shares of the Minority Shareholders during their purchase by the Company
Determine value of assets as it will be shown in the report of Company Liquidator-WU by Tribunal
Declaration of Solvency to be accompanied with a report on the assets prepared by a Registered
Valuer
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25. Private Placement
Any offer of securities or
Invitation to subscribe securities
To a select group of persons by a
company
Through issue of a private
placement offer letter
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26. Private Placement
Public and Private company
to make private placement
through private placement
offer letter.
Can’t use any marketing
channels for advertising or
to inform public at large
about such an offer
Allotment to be completed
within 60 days of receipt of
fund
Funds received to be kept in
separate bank account and
not be utilized for other
purpose
Offer to not more than 50
persons(excluding QIBs and
employees of company, as
a part of ESOP), in a
financial year
No fresh private placement,
unless allotment of last
offer is complete
Payment not to be made by
Cash but by cheque/DD/other
Banking Channel
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