Se ha denunciado esta presentación.
Utilizamos tu perfil de LinkedIn y tus datos de actividad para personalizar los anuncios y mostrarte publicidad más relevante. Puedes cambiar tus preferencias de publicidad en cualquier momento.

Companies Act 2013

  • Sé el primero en comentar

Companies Act 2013

  1. 1. 1
  2. 2. Companies Act 2013 Copyright This Presentation is the property of Pooja Gupta and no part of it can be copied, reproduced or distributed in any manner 2 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  3. 3. Companies Act 2013 Directors Corporate Governance and CSR Board Composition Independent Directors Duties of Directors Relatives Key Managerial Personnel (KMP) Corporate Social Responsibility Board Committees SFIO 3 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  4. 4. Companies Act 2013 Details Companies Act, 1956 Companies Act, 2013 Parts/ Chapter 13 29 Sections 658 470* Schedules 15 7 No. of Clauses in Section 2 (Definitions) 67 95 * 98 Sections notified effective from 12-September-2013 • GOI decided to enforce the provisions of the Act in phases • The provisions which require statutory or regulatory consultation or functioning of new bodies or prescription of relevant rules and forms will be brought in force after preparatory action is completed 4 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  5. 5. Companies Act 2013 Directors Each company will need to have minimum 1 (one) director who stayed in India for at least 182 days in the previous calendar year Prescribed class of companies to have at least 1 (one) woman director on the board. Existing companies will be given a one-year transition period to comply with this requirement Listed company may have 1 (one) director elected by small shareholders ~ holding shares of nominal value not > INR 20,000 or such sum as may be prescribed. Earlier, a public company either with (a) paid-up capital of 5 crore or more, or (b) 1,000 or more small shareholders, may have a director elected by the small shareholders 5 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  6. 6. Companies Act 2013 Maximum Number of Directorship Limits on maximum number of directors in a company increased from 12 to 15. It can further be increased by passing a special resolution. No approval from Central Government required A person will be able to become a director in 20 companies. However, out of this, not more than 10 companies can be public companies. Shareholders may specify lesser number of companies in which a director of the company may act as a director. Transition period to comply with the limit on directorship – 1 year from the commencement of 2013 Act 6 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  7. 7. Companies Act 2013 Duties of Director A director of the company will: i. act in accordance with the articles of the company ii. act in good faith to promote the objects of the company iii. exercise his duties with due and reasonable care, skill and diligence and independent judgement iv. not get involved in a situation in which he may have a direct or with the interest of the company v. avoid any undue gain or advantage either to himself or to his relatives, partners, or associates (if found guilty, he may be required to pay an amount equal to such gain back to the company) vi. not to assign his office, such assignment being void 7 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  8. 8. Companies Act 2013 Meetings of BOD First meeting of the BOD must be held within 30 days of its incorporation • Minimum 4 meetings of the BOD to be held each year • Gap between 2 consecutive meetings not exceeding 120 days • CG may be notification provide different requirement or modify the requirement for specific class of companies Participation in board meeting through prescribed video conferencing (VC) or other audio visual means recognized. CG may provide a list of businesses where meeting by means VC will not be recognized At least 7 days notice for board meeting shall be given Shorter notice to transact urgent business, if at least 1 ID is present at such meeting. Decision taken at such meeting in absence of an ID is final only on ratification thereof by at least one ID 8 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  9. 9. Companies Act 2013 Loans to Directors A company cannot directly or indirectly: • Advance any loan to any director or any other person in whom the director is interested; or • Give guarantee or provide security in connection with the loan taken by its director or such other person The above provision is not applicable to: • Loan to MD/ WTD as a part of contract of services extended to all its employees or pursuant to the scheme approved by members by special resolution • A company which in the ordinary course of its business provides loan, guarantee or security for due repayment of any loan and charges interest thereon not being less than bank rate declared by RBI All the above provisions made applicable to private companies 9 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  10. 10. Companies Act 2013 Key Managerial Personnel (KMP) • In relation to a company, KMP means: – – – – – CEO or MD or Manager; Company Secretary; Whole time Director (WTD); Chief Financial Officer (CFO); and Such other officer as may be prescribed • CFO to be whole time KMP for prescribed class of companies • CFO made responsible and liable for penalty and/ or prosecution for compliance with various provisions such as – maintenance of books of accounts, preparation & filing of annual accounts, disclosure of financial information in offer document, risk management, internal control, etc. 10 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  11. 11. Companies Act 2013 Board Committees Audit Committee Mandatory for listed companies and other prescribed classes of companies Minimum 3 directors with majority comprising of Independent Directors Chairperson and majority of directors shall be persons with ability to read and understand financial statements Listed companies and prescribed companies to have vigil mechanism for directors and employees to report genuine concern in prescribed manner 11 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  12. 12. Companies Act 2013 Board Committees Nomination and Remuneration Committee Mandatory for listed companies and other prescribed classes of companies 3 or more Non-Executive directors (NED) of which at least ½ shall be Independent Directors (IDs) Chairperson of the company can be a member of the committee but cannot be a chairperson of the committee 12 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  13. 13. Companies Act 2013 Board Committees Nomination and Remuneration Committee The committee shall amongst other: Identify persons who are qualified to be directors and who can be appointed in senior management Recommend to the BOD, policy relating to remuneration to directors, KMP and other employees keeping in mind appropriate performance benchmark; striking a balance between fixed and incentive pay, etc. Be responsible for evaluation of every director of BOD 13 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  14. 14. Companies Act 2013 Board Committees Stakeholders Relationship Committee Mandatory where total number of shareholders, deposit holders, debenture holders and other security holder exceeds 1,000 at any time during the financial year (FY) Chairperson shall be NED and such other number of directors as determined by the BOD To consider and resolve the grievances of the security holders of the company 14 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  15. 15. Companies Act 2013 Board Committees Corporate Social Responsibility Committee (CSRC) Mandatory where the company is required to contribute to CSR if it meets with the net worth, turnover or net profit criteria Minimum 3 directors of which at least 1 shall be Independent Director (ID) This committee shall amongst other: Formulate and recommend to BOD, a CSR policy Recommend the amount of expenditure to be incurred on CSR activities Monitor the CSR policy 15 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  16. 16. Companies Act 2013 Independent Listed companies to have at least 1/3rd of its total number of directors as IDs Directors (IDs) ID is not liable to retire by rotation and is not included in total number of directors liable to retire by rotation ID shall be appointed for a term of 5 consecutive years and are eligible for re-appointment subject to compliance with conditions including performance evaluation by BOD and approval by members through special resolution 16 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  17. 17. Companies Act 2013 Independent Once 2 consecutive terms are completed, the ID shall be eligible for appointment after the cooling period of 3 years, Directors provided he is not associated with the company during this 3 (IDs) years period in any capacity, either directly or indirectly ID may be selected from the data bank maintained by notified institute or association having expertise in creation and maintenance of such data bank IDs is not entitled to stock options but may receive remuneration by way of sitting fees, reimbursement of expenses for participation in meetings, profit related commission as approved by the members of the company 17 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  18. 18. Companies Act 2013 Independent Directors (IDs) ID and NED (not being promoter or KMP), shall be held liable only for such acts by a company which had occurred with his knowledge, attributable through Board processes, and with his consent or connivance or where he had not acted diligently Detailed code of conduct to be followed by companies and their IDS have been included in the Act At the 1st meeting of the Board in which he participates as a director and thereafter the 1st meeting of the Board in every financial year or whenever there is a change in circumstances, which may affect his status as an ID, will have to give a declaration that he meets the criteria of independence 18 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  19. 19. Companies Act 2013 Independent Director - Meaning “Independent Director” in the Companies Act, 2013 contains most of the attributes prescribed in the listing agreement. The Act however, contains certain additional criteria: a. An independent director should be a person of integrity and possess relevant expertise and experience b. ID should not have any pecuniary relationship / transactions with the company, its promoters, its directors or its holding company, its subsidiaries and associates, which will affect independence of the director, either in the current FY or immediately preceding two years. 19 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  20. 20. Companies Act 2013 Independent Directors c. A person cannot be appointed as ID if the person and/ or his relative is/ was a partner/ executive in statutory audit firm, internal audit firm, legal firm, and or consulting firm(s), which have association with the company. d. Under the Companies Act, 2013, the CG may prescribe additional qualifications for an “independent director.” e. The Companies Act, 2013, however, states that an ID will be a director other than the nominee director appointed by an institution, which has invested in or lent to the company g. An ID should not be a Chief Executive or director, by whatever name called, of any non- profit organisation, which receives 25% or more of its receipts from the company, any of its promoters, directors or its holding, subsidiary or associate or that holds 2% or more of the total voting power of the company. 20 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  21. 21. Companies Act 2013 Independent Directors – Impact • The SEBI may need to amend the listing agreement to bring it in line with the Companies Act, 2013. Till such time, listed companies will need to follow the requirement of the stringent. • Considering additional criteria prescribed in the Companies Act, 2013, many listed companies may need to revisit appointment of their independent directors. • The Companies Act, 2013 lays down various restrictions, on the person as well as its relatives, for being eligible to be appointed as independent director. If the government prescribes a long list of relations, the company, the person who is or seeking to be an independent director and the relatives of such person will have to keep track of this, to ensure compliance on a going forward basis. For example, a company cannot appoint any person as an independent director if that person or his relative is/ was a partner / executive in the preceding 3 financial years in the firm of auditors of the company. • The Companies Act, 2013 states that an independent director will not be entitled to any stock option. The Companies Act, 2013 is not clear as to how a company will deal with stock options granted in the past and which are outstanding at the date of its enactment. It seems possible that a company will cancel / forfeit these stock options immediately. It may be appropriate for the MCA to clarify this matter. 21 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  22. 22. Companies Act 2013 Corporate Social Responsibility (CSR)  CSR has been made mandatory for companies with a Networth of INR 500 Cr. (INR 5 Billion) or more, or a turnover of INR 1000 Cr. (INR 10 Billion) or more, or a Net Profit of INR 5 Cr. (INR 50 million) or more during each financial year  The board will ensure that company spends, in every financial year, at least 2% of its average net profits during the immediately preceding 3 years, in pursuance of CSR policy. 22 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  23. 23. Companies Act 2013 Corporate Social Responsibility (CSR)  The company will give preference to local area and areas around where it operates, for spending the amount earmarked for CSR activities.  The board will approve the CSR policy and disclose its contents in the board report and place it on the company‟s website.  If a company fails to spend such amount, the board will, in its report specify the reasons for not spending the amount  The MCA has issued “National Voluntary Guidelines on Social, Environmental & Economic Responsibilities of Business,” for voluntary adoption by companies. In addition, the SEBI has mandated that the top 100 listed entities, based on their market capitalization at the BSE and NSE, should include business responsibility reports as part of their Annual Reports. 23 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  24. 24. Companies Act 2013 Corporate Social Responsibility (CSR) • Schedule VII of the Companies Act, 2013 sets out the activities, which may be included by companies in their CSR policies. They relate to: • eradicating extreme hunger and poverty • promotion of education • promoting gender equality and empowering women • reducing child mortality and improving maternal health • combating HIV, AIDs, malaria and other diseases • ensuring environmental sustainability • employment enhancing vocational skills • social business projects • contribution to certain funds such as the Prime Minister‟s National Relief Fund and • other matters that may be prescribed. 24 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  25. 25. Companies Act 2013 Corporate Social Responsibility (CSR) - Impact 1. The Companies Act, 2013 does not prescribe any penal provision if a company fails to spend amount on CSR activities. The board will need to explain reasons for noncompliance in its report 2. The Companies Act, 2013 has set threshold of INR 5 crore net profit for applicability of CSR requirements. In comparative terms, this seems to be on lower side vis-à-vis net-worth and turnover thresholds of INR 500 crore and INR1,000 crore, respectively. This may result in companies getting covered under the CSR requirements, even when they don‟t meet net worth / turnover criteria 3. Due to determination of average profit as per section 198, actual expenditure on CSR activities for a company may be higher/ lower than 2% of its average profits for the last 3 years determined in accordance with the P&L. 25 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  26. 26. Companies Act 2013 Corporate Social Responsibility (CSR) - Impact 4. Section 149 of the Act mandates only public companies whether listed or in other prescribed class to have independent directors. In contrast, applicability of CSR requirements depends on net worth, turnover or net profit criterion, irrespective of whether the company is is a public or private company. Every company covered by CSR needs to constitute a CSR committee with at least one independent director. This implies that even a private company will need to have an independent director if it is covered under CSR requirements. 5. It is not absolutely clear whether a company will need to create provisions in the financial statements towards unspent if it fails to spend 2% of the amount of CSR activities in a particular year. The resolution of this issue may depend of legal/ other consequences, which may follow, if a company fails to spend the requisite amount in a particular year. For example, if a company can get away with an explanation in the board‟s report and need not make good past shortfall in the future period, there may be no need to create provision. However, if the company needs to incur the amount currently unspent in future periods legally, a provision in accordance with AS 29 may be needed 26 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  27. 27. Companies Act 2013 Corporate Social Responsibility (CSR) - Impact 6. Although the detailed rules/ clarifications will throw light on exact requirements, the perception is that Ministry of Corporate Affairs may follow the National Voluntary Guidelines (NVG) for disclosure and encourage the concept of „shared value‟ where companies are encouraged to work on common CSR projects which would result in win-win scenario for all participants. One may look at the existing expenditure and evaluate whether the same can qualify as eligible CSR expenditure. 27 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  28. 28. Companies Act 2013 Corporate Social Responsibility (CSR) - Impact 7. Tax deductibility of CSR expenditure,. While one argument is that there is an obligation to incur such expenses and also, from financial reporting perspective, it will be treated as an expense, the counter argument could be that it is in the nature of allocation of profit and therefore will not be allowed as deduction for tax purposes. 8. As per the news report, when Sachin Pilot, the Corporate Affairs Minister, was asked whether the companies would get any tax benefits from CSR expenditure, he indicated that CSR expenditure is 2% of PBT and therefore a kind of benefit is already available by way of deduction from taxable income. However, he mentioned that he will speak to Finance Minister and see what can be done. 9. To clear the ambiguity surrounding the deductibility of the CSR expense, industry expects the Central Board of Direct Taxes to clarify the position on deductibility of CSR expenditure 28 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  29. 29. Companies Act 2013 Serious Fraud Investigation Office • Currently, the SFIO has been set-up by the Central Government under resolution no. 45011 / 16/ 2003 – Adm-I dated 2 July 2003. Under the Companies Act, 2013, statutory status will be conferred upon the SFIO. Till the time SFIO is established under the Companies Act, 2013, the SFIO previously set up by the CG will be deemed to be SFIO under the Companies Act, 2013. • The CG may assign investigation into the affairs of a company to SFIO (i) on receipt of a report of the registrar or inspector, (ii) on intimation of a special resolution passed by a company that its affairs are required to be investigated, (iii) in public interest, or (iv) on state government. • Where any case has been assigned by the CG to SFIO for investigation, no other investigating agency of the CG / State Govt will proceed with investigation in such cases. 29 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  30. 30. Companies Act 2013 Serious Fraud Investigation Office • If authorised by CG, the SFIO will have the power to arrest in respect of certain offences, which attract the punishment for fraud. Those offences will be cognizable and the person accused of any such stipulated conditions. • Investigation report of SFIO filed with special court for framing of charges will be deemed as a report filed by the police officer • Stringent penalties are prescribed for fraud-relate offences. • SFIO will share any information or documents, with any investigating agency, state government, police authority or Income-tax authorities, which may be relevant or useful for them in respect of any offence or matter being investigated by them under any other law. 30 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  31. 31. Companies Act 2013 Directors – Recap.. TYPE OF COMPANY INDEPENDENT DIRECTOR WOMAN DIRECTOR Private Company 1 Independent Director on Corporate Social Responsibility (CSR) Committee if CSR requirement is triggered Required if paid-up share capital > INR 100 crores (to be appointed within 3 years) from the commencement of the Act 1/3rd of the Board to be Independent if the Company has: Public Unlisted Company • Paid-up share capital of INR 100 crores or more; or • Aggregate outstanding loans, borrowings, debentures or deposits exceeding INR 200 crores • All listed companies to have 1/3rd of the Board comprised of Independent Director Listed Company • Requirement increases to half of the Board if there is an executive chairman [Clause 49, Listing Agreement] Required if paid-up share capital > INR 100 crores (to be appointed within 3 years) from the commencement of the Act SMALL SHAREHOLDER DIRECTOR RESIDENT DIRECTOR Section 151 Rule 11.5 Not applicable Section 151 Rule 11.5 Not applicable 1 director required to be resident in India for at least 182 days in a calendar year Section 149(3) Mandatory. All listed companies to have a woman director (to be appointed within 1 year) from the commencement of the Act Suo motu; or Request of 1/10th the number of small shareholders or 500 small shareholders (whichever is lower) 31 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  32. 32. Companies Act 2013 Board Committees – Recap.. TYPE OF COMPANY Private Company AUDIT COMMITTEE NOMINATION & REMUNERATION COMMITTEE Not applicable Not applicable Both committees required if the company has: Public Unlisted Company • Paid-up share capital of INR 100 crores or more; or • Aggregate outstanding loans, borrowings, debentures or deposits exceeding INR 200 crores CSR COMMITTEE STAKEHOLDER RELATIONSHIP COMMITTEE Not applicable Independent Director required on CSR Committee if: • Net worth ≥ INR 500 Crores Applies if the company has 1000 or more security holders • Turnover ≥ INR 1000 Crores • Net profit ≥ INR 5 crores Public Listed Company Applicable Applies if the company has 1000 or more security holders 32 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  33. 33. Companies Act 2013 Board Committees – Recap.. TYPE OF COMMITTEE COMPOSITION OTHER REQUIREMENTS • Roles stipulated Audit Committee [Section 177] Nomination & Remuneration Committee [Section 135] CSR Committee [Section 178] Stakeholder Relationship Committee [Section 178] • 3 Directors • Majority Independent Directors • Decisions no longer binding on the Board • Whistle-blower policy required, providing direct access to the chairman of the Audit Committee • 3 Directors • Majority Independent Directors • 3 Directors • 1 Independent Director • Strength and composition determined by the Board • Chairman to be non-executive • Purpose – to solve the grievances of security holders 33 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  34. 34. Companies Act 2013 Non Executive Director (NED) and Independent Director Non Executive Director Non-executive directors are the custodians of the governance process. They are not involved in the day-to-day running of business but monitor the executive activity and contribute to the development of strategy. Independent Director Are directors who do not have any pecuniary relationship or transactions with the company, its promoters, its management or its subsidiaries, which in the judgement of the board may affect their independence of judgement. 34 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  35. 35. Companies Act 2013 35 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  36. 36. Companies Act 2013 36 Presented by CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany)
  37. 37. Companies Act 2013 Presenter’s contact details CA Pooja Gupta capooja@yahoo.com www.capoojagupta.blogspot.in CA. Pooja Gupta – B.Com, FCA, LL.B, CS, Masters in Finance (Germany) 37

×