KEY AREAS OF COMPANY ACT 2013 wrt. FINANCIAL REPORTING FRAMEWORK, ACCOUNTS, AUDITOR, MERGERS, AND ROLE OF COMPANY SECRETARIES

1. COMPANIES ACT – 2013
Introduction, Overview,
Opportunities, Challenges,
Role of CS

2.  Companies Act, 1956
appeared to be ineffective at handling some of
the present day challenges of growing industry
and the interest of an increasing class of
sophisticated stakeholders.
 Companies Act, 2013 promises to
raise bar on Governance and deal
with
― Investor Protection
― Fraud Mitigation
― Inclusive Agenda
― Auditor’s Accountability
― Efficient Restructuring
Rationale behind 2013 Act

3. OBJECTIVE
to make changes in Indian Corporate Law
in context of
challenging economic & business environment
and
make Corporate India – Transparent, Simple &
Globally acceptable.

4. # Revised Financial Reporting Framework
Revision in the Financial Statement’s
provisions

5. Mandatory requirement of Consolidated Financial Statement
New Definition : Subsidiary, Associate & Joint Venture
# Revised Financial Reporting Framework

6. Two Tier Structure of Companies : Objective - Identify Real Owners
# CORPORATE STRUCTURE
A
B
C

7. Uniform Financial Year for Companies
# Revised Financial Reporting Framework

8. Changes in Depreciation Regulations
# Revised Financial Reporting Framework

9. National Financial Reporting Authority
 Make reccos on accounting & auditing
standards
 Monitor & enforce compliance with
accounting & auditing standards
 Oversee quality of service
# Revised Financial Reporting Framework

10. Electronic maintenance of Statutory books & records
# Revised Financial Reporting Framework

11. MANDATORY
ROTATION OF AUDITOR / FIRM OF AUDITOR & COOLING OFF PERIOD
# AUDIT & AUDITORS

12. AUDITOR REPORTING RESPONSIBILITY & CARO,
2015
# AUDIT & AUDITORS

13. MANDATORY REPORTING ON FRAUD
# AUDIT & AUDITORS

14. FAST TRACK MERGER
 Between : 2 or more small companies & Holding : Subsidiary
Company
 No NCLT approval
 No Notice required to be given to various authorities
 Process timeline shortened
 Scheme is to be approved by nine – tenth in value of creditors
 Auditor’s certificate of compliance of AS not required
# CORPORATE RESTRUCTURING

15. CROSS BORDER MERGER
Indian Company with Foreign Company
With Prior RBI Approval
# CORPORATE RESTRUCTURING
1956
2013

16. # CORPORATE RESTRUCTURING
MINORITY BUYOUT

17. SIMPLIFIED PROCEDURE FOR RESTRUCTURING
 Separate procedure for Compromise & Arrangement,
Amalgamation and Demerger.
 NCLT to have same power as High Court
 Concept of Registered Valuer for the valuation
purpose of any property, stocks, shares, debentures,
securities, goodwill, net worth, or any other asset /
liabilities.
# CORPORATE RESTRUCTURING

18. Corporate Debt Restructuring
 Consent by 75% of Secured Creditors / Class of Creditors
 Valuation report is required by Registered Valuer
 Audit Report is required for the assurance of liquidity
 Compliance of RBI Guidelines
 Creditor Responsibility Statement
# CORPORATE RESTRUCTURING

19. # MANAGEMENT & RESPONSIBILITIES
 Maximum number of Directorships : 15
 At least 1 director should be present in India for at least 182 days
 Women Director on Board
 Automatic vacation from the office if absent for a period of 12 months;
increased involvement.
BOARD OF DIRECTORS

20. Mandatory Set of Nomination & Remuneration
committee
# MANAGEMENT & RESPONSIBILITIES

21. AUDIT
COMMITTEE
 Listed Companies & Other
co.'s*
 Min. 3 Directors with majority
Independent Directors
 Approve Related Party
Transactions , Evaluation of
Internal Financial Controls ,
Scrutiny of Inter Corporate
Loans and Investments.
# MANAGEMENT & RESPONSIBILITIES

22. Concept of
Key Managerial Personnel
MD , CEO, Manager, WTD, CFO, CS
Recognition of highest management personnel with liability
commensurate with their position
Stringent punishment for Non – Compliance
# MANAGEMENT & RESPONSIBILITIES

23. Net worth of ₹ 500 cr. or more
Turnover of ₹ 1,000 cr. or more
Net Profit of ₹ 5 cr. or more
# CORPORATE SOCIAL RESPONSIBILITY
applicable to companies

24.  Companies need to spend 2% of their Net Profit on CSR activities
 Constitution of CSR Committee to
 Approve CSR Policy
 Ensure CSR activities & spending as per Sch. VII
# CORPORATE SOCIAL RESPONSIBILITY

25. CLASS ACTION SUITS
# INVESTOR PROTECTION

26. HEAVY PENALTY FOR INSIDER TRADING
# INVESTOR PROTECTION

27.  Fraud definition included
 Auditor’s responsibility w.r.t. Reporting on Fraud clearly defined
 Power to investigation into the affairs of the company
 Statutory status is given to SFIO (established under MCA)
 SFIO comprise of experts from various relevant discipline including Law,
Banking, Corporate affairs, Taxation, IT, Capital Market, Forensic Audit, etc.
 Non – cognizable Offence
 Imprisonment : 6 month – 10 years
 Fine up to 3 times the amount involved
# FRAUD RISK MITIGATION

28. QUORUM No. of Shareholders
5 < 1000
15 >1000 - <5000
30 > 5000
# MEETINGS : QUORUM

29. Not just confined to Listed Companies
# MEETING : POSTAL BALLOT

30. # MEETING : Concept of e – Voting

31. # MEETING : Concept of e – Meetings

32.  Only a natural person who is an Indian citizen and
resident in India shall be eligible to act as a
member and nominee of an OPC.
 A person can be member in only one OPC.
 Must have a minimum of One Director, the Sole
Shareholder can himself be the Sole Director.
 An OPC cannot be incorporated or converted into
a company under Section 8 of the Act. [Company
not for Profit].
 An OPC cannot carry out Non-Banking Financial
Investment activities including investment in
securities of any body corporate.
 Lesser Compliance burden & Organized Sector of
Proprietorship business in corporate form
# Concept of ONE PERSON COMPANY

33. # ROLE OF COMPANY SECRETARY
Incorporation:
• birth of Company.

34. # ROLE OF COMPANY SECRETARY
ISSUE
PUBLIC ISSUE
RIGHT ISSUE
BONUS
ISSUE
PRIVATE
PLACEMENT
I.P.O.
F.P.O.
Q.I.P.
PREFRENTIAL
ISSUE
EXISTING
SHAREHOLDERS

35. # ROLE OF COMPANY SECRETARY
Compliance Officer : ensuring that all the rules and
regulations are followed by the Company & Board
Company Secretary to act as COMPLIANCE OFFICER : SEBI

36. # ROLE OF COMPANY SECRETARY
Ensuring Good Governance
Vision
“ to be global leader in promoting good corporate governance.”
Mission
“ to develop the high calibre professionals facilitating good
corporate governance.”

37. LIAOSING WITH SEBI
Company Secretaryship : only course which covers
SEBI in its curriculum
# ROLE OF COMPANY SECRETARY

38. SECRETARIAL STANDARDS
# ROLE OF COMPANY SECRETARY

39. Corporate Actions:
 Bonus
 Right Issue
 Dividend
 Stock Split, etc. . .
# ROLE OF COMPANY SECRETARY

40. MERGER . . . DEMERGER . . . . TAKEOVER. . . . AMALGAMATION
 VALUATION
 TAXATION IMPLICATIONS
 APPROVALS FROM COURT, SHARE HOLDERS, CREDITORS
# ROLE OF COMPANY SECRETARY

41. Revival of Sick
Companies
via
B.I.F.R.
Board of Industrial & Financial
Reconstruction
# ROLE OF COMPANY SECRETARY

42. LIQUIDATION & DISSOLUTION OF THE COMPANY
# ROLE OF COMPANY SECRETARY

43. I. Merchant Banking
II. Project Financing
III. Registered Valuer
IV. Company Law
V. Taxation
VI. Debt Syndication
VII. NCLT
# ROLE OF COMPANY SECRETARY
Consultancy

44. # ROLE OF COMPANY SECRETARY

45. THANK YOU
CS ANAND KANKANI
MUMBAI
anandkankani@live.com