Companiesact2013 170623062959

By
CS Ahalada Rao .V
cs.ahaladarao@gmail.com 1
COVERAGE
SIGNIFICANT PROVISIONS OF COMPANIES ACT,2013
Journey till now
Introduction
Significant concepts (inclusions and deletions)
Varieties of companies
Directors
Related party Transactions
Financial statements
Meetings
Professionals
CSR
HOW THIS ACT WAS ENACTED?
Journey Till Now
Companies Bill, 2008 was
2008 introduced on 23 October 2008 in

the Lok Sabha to replace existing
Companies Act, 1956
Companies Bill, 2009 was
2009 reintroduced on 3 August 2009 in

the Lok Sabha to replace existing
Companies Act, 1956, referred to
Standing Committee on Finance
Companies Bill, 2011
2011 introduced in Lok Sabha on 14th

December 2011
Journey Till Now
Companies Bill, 2012 passed by Lok

2012 Sabha on 18th December 2012
Companies Bill, 2012 passed in

2013 the Rajya Sabha on 8th August
2013
Companies Bill 2013 received

2013 assent from the President Pranab
Mukherjee on 29th August 2013
98 Sections of Companies Act, 2013

2013 were made effective from 12th
September 2013
You know why the new Act has been
introduced ?
Companies Act, 2013
Classification
Chapters Sections
29 470
Definitions Schedules
95 7
Introduction
NEED FOR COMPANIES ACT 2013
To Increase:
Transparency
Corporate Social Responsibility
Accountability
Shareholder and Stakeholder Protection
To meet the internationally accepted concepts, practices
To address the needs of the Shareholders/ Stakeholders/Government/ and

public at large
Classification
29
Chapters
95 Companies 470
Definitions Act 2013 Sections
7
Schedules
OVERALL VIEW OF
THE ACT
Companies
Judiciary Entrepreneurs
Administration Directors
Coverage of
Companies
Act 2013
Professionals Auditors
Investors Shareholders
Companies
Coverage of
Companies
Act 2013
Private Company
Companies Act, 2013 Companies Act, 1956
200 Maximum number of 50

Members
Subsidiary Company
More than half of the More than half of the

Exercise or control of
total share capital total equity capital
share capital
Restriction on layers of
Present to be prescribed Subsidiaries No restrictions present
Financial Year
1st April to 31st March

1st April to 31st March OR
1st January to 31st
December
Promoter
An exhaustive definition
which covers promoters
named as such in its
annual returns, persons
It is section specific . Sec
who control the company
62(6)(a) defined
and shadow directors.
Definition promoter as a person
Persons acting merely in
who is party to unture
professional capacity will
statement in prospectus.
not be regarded as
shadow directors and as
promoters.
Significant New Concepts
One person Company
Key Managerial Personnel
Class Action Suit
Small Company
Associate Company
Foreign Company
SMALL COMPANY PRIVILAGES
other than public

company
Paid up capital < 50 lacs

(prescribed <5 Crores)
Turn over < 2 crores (

prescribed < 20 crores)
Dormant Company
Application to ROC Has no Significant

accounting transaction
Company inactive company

incorporated for
Future project
Hold asset or IP
Associate Company
Not a SI means
subsidiary control of
Has significant 20% of total
influence Share capital
Business
Includes JV decisions under
agreement
Foreign Company
incorporated place of business

outside India in India
agent,
physically or through
electronic mode;
Foreign company
conducts any
business activity in
India
Government Company
Government Company means any company in which not less

than fifty-one percent of the paid-up share capital is held by
the Central Government, or by any State Government or
Governments, or partly by the Central Government and partly
by one or more State Governments, and includes a company
which is a subsidiary company of such a Government
company.
Financial Statements
P&L/
Balance Sheet Cash Flow
Income & Exp
Statement of
changes in Notes
equity
Under Section 131, voluntary

revision of Financial statements and
Boards report is possible
Companies
Coverage of
Companies
Act 2013
One Person Company
Companies
Coverage of
Companies
Act 2013
Board Meetings
Board Meetings
Mode
Board Structure in India is Unitary
Mode of Presence
In Person or through Video Conference
Notice
At least 7 days prior through post/ electronic
means/ hand delivery
Number
At least 4 meetings every year. Maximum gap- 120 days
between two Meeting
Separate Meeting of Independent Directors

At least one in a year
Directors
Executive and
Non-Executive
Director
Small share Women Director

holder listed at least one in
company may the prescribed in
have one small class or classes of
share holder companies
Maximum
number of
Directors 15
Resident
Director at
least on Independent
Director who Directors listed
has been India companies
for at least 182 1/3rd of the
days during the board
previous
calendar years
Key Managerial Personnel
the Chief Executive Officer or the

managing director or the manager
the Chief Financial Officer
the company secretary;
the whole-time director;
such other officer as may be prescribed
Resignation of Directors
No provisions in the old Companies Act.
Section 168 of the Companies Act, 2013 contains

provisions regarding resignation of Directors
Loan to Directors
Loan to Directors
Applicable to both public & Private Companies
Exemptions
Co. gives in ordinary course of business at

rate not less than RBI prescribed rates
Loan to MD/WTD:
Pursuant to conditions of service

Pursuant to Scheme approved by
members by special resolution
Chairman, MD and WTD
Same person Cannot be appointed as Chairman, MD/CEO

unless Articles authorize or Company is not engaged in
Multiple businesses.
Type of Resolution Special
Companies
Coverage of
Companies
Act 2013
Auditors
One term of 5
individual
consecutive years
Term
Two terms of 5
LLP, Firm consecutive years
(10 Years)
Audit, Audit Committee and
Appointment of Auditors
Term of Auditors : Individual Maximum 5 years LLP, Firm Maximum 10 years
Max. No. of Companies in which a CA can act as Auditor 20
Special Resolution not required for appointment unlike under the 1956 Act
Composition of Audit Committee

Number of Directors 3
Independent Directors to form majority
No obligation for Chairman of Audit Committee to attend AGM (under the old Act it was
compulsory)
Vigil Mechanism
Every Listed Company shall establish a vigil mechanism for directors and employees to
report genuine concerns and it shall be monitored and implemented by audit committee
Details of Vigil Mechanism shall be disclosed in Boards Report
Companies
Coverage of
Companies
Act 2013
Annual General Meeting
First AGM within 9 months of end of

financial year
Other AGMS 6 months from the end of
financial year
Gap between two AGMs not more than 15
months
AGM cannot be held on:

National Holidays
Outside business hours (9 a.m. to 6 p.m.)
Mode of Notice:
Either in writing or electronic mode
Shorter Notice:
Consent of not less than 95% of members entitled to vote at the
meeting required
In case of Public Company
5 Members,15members,30 members (1000,1000-5000,above 5000)
In case of Private Company
2 members personally present

SECRETARIAL
STANDARDS
How to set standards when you made
mistakes ?
Standard :
Minutes of the Board

Meeting may be kept at the
Registered Office of the
company or such other
place as may be approved
by the Board.
Minutes shall record the

names of the Directors
present in physical and Minutes may also be
Electronic Mode and the maintained in
Secretary in attendance
at the Meeting.
electronic form in
such manner as may
be prescribed under
the Act .
47
Convening a
meeting
Passing of
resolution by Notice
circulation
Video
Agenda
Conferencing
Frequency of
Quorum
meetings
Companies
Coverage of
Companies
Act 2013
Investors Auditors
Professionals Shareholders
Fraud
comply with auditing standards
after examination of the recommendations made by the
NFRA
duty has been casted on the auditor
To report to the central government
Concerns in Draft Rules
Auditing Standards should be laid by ICAI.
Auditor will report on Internal Financial control systems only
if it has a material impact
Fraud reporting by the auditor on the company is should

not be the responsibility of the auditor.
Fraud Reporting shall be in line with Auditing Standards
issued by ICAI. cs.ahaladarao@gmail.com 50
.
Class Action Suits
Right of members, deposit holders or their representatives to file an application
before the Tribunal for restraining the Company from some specified acts
Eligible Eligible
Members or Depositors
Class of or Class of
Members Depositors
May file application before the tribunal

seeking some specified orders
IF
Management or Conduct of the Company is prejudicial to

Interests of the Company/ Members/ Depositors
Section 204
IMPACT OF SECRETARIAL AUDIT
MANAGEMENT
REGULATORS
BANKS / FINANCIAL INSTITUTIONS
INVESTORS
CO PROFESSIONALS
RESEARCH SCHOLARS
cs.ahaladarao@gmail.com
55
Companies
Coverage of
Companies
Act 2013
Role Of Professionals
New Opportunities for Professionals
Secretarial
Key
Registered Auditor
Managerial Expert
Valuer (Company
Personnel
Secretary)
Companies
Coverage of
Companies
Act 2013
E- Governance
Maintenance and inspection of documents by companies in

electronic form allowed
Companies
Coverage of
Companies
Act 2013
Special Courts
May be established by Central Government for speedy trail of offences under the Act
A special court shall consist of a single judge, appointed by Central Government with
concurrence of Chief Justice of High Court within whose jurisdiction the judge to be appointed is
working
All offences under this Act shall be triable by the Special Court established for the area in which
the registered office of the company is situated
The Special Court would have the liberty to try summary proceedings for offences punishable
with imprisonment for a term not exceeding three years, although it may order
for the regular trial
Companies
Coverage of
Companies
Act 2013
Corporate Social
Responsibility
Corporate Social
Responsibility
Comply Provision companies 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
Composition:
3 or more Directors, at least one being independent (In case for Pvt. Ltd Companies, Two
directors shall form the committee)
Functions:
Recommend the amount of expenditure to be incurred on the activities
formulate and recommend to the Board, a Corporate Social Responsibility Policy
monitor the CSR Policy of the company from time to time
Board Report to disclose the composition of CSR Committee & the details about the policy
developed and implemented in respect of CSR
Minimum Amount to be spent on CSR activities:
At least 2% of the average net profits during immediately 3 preceding financial years
In case of failure to do so Boards Report should specify reason for the same
SUPER SIX
Liberalization & Globalization
SWEET Approval & Video Conferencing
Corporate Social Responsibility

SALT
Resignation of Director
TANGY
More Stringent Penalties
BITTER
Related Party Transaction
SPICY
Applicability of Provision to Private
SOUR Companies
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By

2008 introduced on 23 October 2008 in

Companies Bill, 2009 was

2009 reintroduced on 3 August 2009 in

Companies Bill, 2011

2011 introduced in Lok Sabha on 14th

Companies Bill, 2012 passed by Lok

Companies Bill, 2012 passed in

Companies Bill 2013 received

98 Sections of Companies Act, 2013

To address the needs of the Shareholders/ Stakeholders/Government/ and

Companies Act, 2013 Companies Act, 1956

200 Maximum number of 50

Companies Act, 2013 Companies Act, 1956

More than half of the More than half of the

Companies Act, 2013 Companies Act, 1956

1st April to 31st March

Companies Act, 2013 Companies Act, 1956

One person Company

Key Managerial Personnel

Class Action Suit

other than public

Paid up capital < 50 lacs

Turn over < 2 crores (

Application to ROC Has no Significant

Company inactive company

incorporated place of business

Government Company means any company in which not less

Under Section 131, voluntary

Separate Meeting of Independent Directors

Small share Women Director

the Chief Executive Officer or the

the company secretary;

the whole-time director;

such other officer as may be prescribed

No provisions in the old Companies Act.

Section 168 of the Companies Act, 2013 contains

Applicable to both public & Private Companies

Co. gives in ordinary course of business at

Pursuant to conditions of service

Same person Cannot be appointed as Chairman, MD/CEO

Type of Resolution Special

Max. No. of Companies in which a CA can act as Auditor 20

Composition of Audit Committee

First AGM within 9 months of end of

AGM cannot be held on:

In case of Public Company

5 Members,15members,30 members (1000,1000-5000,above 5000)

In case of Private Company

2 members personally present

Minutes of the Board

Minutes shall record the

Fraud reporting by the auditor on the company is should

May file application before the tribunal

Management or Conduct of the Company is prejudicial to

BANKS / FINANCIAL INSTITUTIONS

Maintenance and inspection of documents by companies in

Corporate Social Responsibility

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