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Company's Act (Bill) 2011

Internal Assessment Presentation - Business Law (Semester 1)
by

Shailin Mullaji

on 20 January 2013

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Transcript of Company's Act (Bill) 2011

Changing Business Landscape Of India Broad analysis of changes between Companies Act, 1956
vis-a-vis Companies Bill, 2011 Key objectives for amendment Background Conclusion To protect interest of small investors
Encourage companies to undertake social welfare
Promote societal interests
E-Governance
Accountability at all levels
Consolidation of accounts of subsidiaries including Associate Company or JV mandatory History and Background
of Companies Bill, 2011 On December 18, 2012, Lok Sabha approved Companies Bill 2011 (Bill No. 121-C of 2011), in a bid to make sweeping changes to the existing 56 years old law Structure of Companies Act 1956 & the Companies Bill Act Bill 13 Part
750+ Sections
15 Schedules 29 Chapters
470 Clauses (i.e. Sections)
7 Schedules Note: More details can be found on http://www.mca.gov.in/Ministry/companies_act.html Companies Act 1956 vis-à-vis Companies Bill 2011 Analysis Transfer of Shares

Buy-Back of shares

Dividend

Holding - Subsidiary Company

Consolidation of Financial Statement

Registered Valuer
Acceptance of Deposits

Inter-corporate loan, guarantee, security & investment

Related Party Transactions

Loan to Directors

Compromise, Arrangement and Amalgamation

Winding-up & Strike off Salient Features of the Bill Corporate Social Responsibility (CSR) About Directors in the company Managerial Personnel Audit & Auditors Salient Features of the Bill... E-Governance Investor Protection Measure Company Accounts Other Important Provisions Impact on various stake holders Auditors Limit of 20 companies an auditor can serve

Appointment for 5 years. Annual ratification of appointment of auditors

Mandatory rotation - individual every five years and audit firm every 10 years in listed companies and certain other classes of companies, as may be prescribed

Auditor will not be allowed to provide non-audit services such as accounting and book keeping, internal audit, actuarial services, etc

Obligation on the auditors to report to the Central Government offense involving fraud, if the auditor has reason to believe that such an offense has been committed against the company by its officers or employees

Penalty if found involved in a fraud or has abetted or colluded in any form
Impact on various stake holders Directors Atleast one director resident in India for atleast 182 days

Prescribed class of companies to have atleast 1 woman director

Maximum limit of directors increased to 15

Independent directors to form majority in audit committee

Restrictions on directors remuneration

Participation in meetings through electronic means (e.g. video-conferencing) Directors Impact on various stakeholders Company Secretaries (CS) Impact on various stakeholders Shareholders Contd.. Mandatory for independent directors to constitute atleast one-third of board

Independent directors not entitled to stock options

A person cannot be director in more than 20 companies (more than 10 public companies)

Prohibition from insider trading and forward dealings in securities of company

Defined duties of directors

Restrictions on directors remuneration
Included in definition of key managerial personnel

Declaration by CS in practice engaged in formation of company to be filed with registrar stating that all requirements of Act have been complied.

Annual Return to be signed by CS (if no CS, CS in practice)

For listed company or by a company having such paid up capital or turnover as prescribed, annual return to be certified by CS in practice

Class of companies to mandatorily have CS, vacancy to be filled by Board within 6 months

Merger and Amalgamation : Company to file a statement every year indicating whether scheme is being complied with in accordance with order of Tribunal

Listed company and such class of companies to be prescribed to annex secretarial audit report with its Board’s report
Investor protection activities and class action suits

Exit option if object clause changes of public issue

Enabled to take legal action in case of any fraudulent action on the part of company

To approve annually auditor appointment at annual general meeting

Speedy proceedings at Appellate levels

Electronic voting permitted
1. In view of the changing economic and commercial

growth and regulation of corporate sector in India in line with good governance practices environment Companies Bill is a modern legislation for 2. Through this new legislation, the government intends to make
India an attractive and safe investment destination.
3. This legislation extends the intent of the Business Responsibility Reporting guidance for the top 100 listed companies by market capitalization on the NSE and the BSE and Global Reporting Initiative for reporting and disclosure beyond financial performance indicators – environmental and social behavior compliance's
4. It has wide implications across different sectors, stakeholders
with emphasis on accountability, business responsibility, social
welfare and better governance.
5. The tone of the legislation is forward looking and
will facilitate responsible growth.
Presentation Team 1. Shailin Mullaji
2. Payal Purohit
3. Neeraj Rastogi
4. Pinaaz Pagdiwalla
5. Jimit Shah
6. Miti Shah
7. Rahul Sikarwar
Full transcript