Companies Bill, 2012

Presented by:
CA. Suresha Balachandran FCA, DISA, ICA
Sympro Consulting Private Limited

Structure of the Bill:
• Contains 29 Chapters, 470 Clauses
(Sections) and 7 Schedules
• Substantial part of the Bill will be in
the form of Rules, which will be
prescribed separately

Sympro Consulting Private Limited


New Concepts:

One person company
Independent Directors (Sch. IV)
Dormant company
Class Actions

Sympro Consulting Private Limited


• Corporate Social Responsibility (Sch.New Concepts continued…. VII) • Secretarial Audit • National Authority for Financial Reporting Sympro Consulting Private Limited 4 .

Company to furnish company by filing eForm 18 at verification details of its registered the time and incorporation and office to the Registrar within 30 days of subsequently whenever there is its incorporation in a prescribed a change within 30 days manner. . Concept of one person Private Co. the objects incidental or ancillary objects considered necessary for furtherence and other objects of business to be given Registered Office Companies to furnish the details Within 15 days of incorporation to have of registered office of the a registered office. .2 company introduced Objects clause of MOA Bifurcated into . 2012 Maximum number of members 50 200 for Pvt.7 No change.Main objects. Companies Minimum number of members Public Co. 1956 Companies Bill.Incorporation: Particulars Companies Act... Any subsequent change to to notified within 15 days Commencement of business Applicable only to public Applicable to all companies having companies share capital Sympro Consulting Private Limited 5 . No such bifurcation.

80 prohibits issue of Issue of preference shares for period irredeemable pref. 2012 Sec.Shares and Share Capital: Particulars Issue of shares at a discount Companies Act. shares and exceeding 20 years is permitted for more than 20 years pref.79 permits issue of shares at Issue of shares at discount is discount subject to compliance prohibited except for sweat equity of conditions shares Issue of Preference shares for Sec. 1956 Companies Bill. shares redeemable after 20 infrastructure projects years Issue of shares on private No specific provisions Specific provision introduced placement Companies permitted to Consolidation and division which Consolidation and division of consolidate or sub divide its results in changes in the voting shares shares by passing resolution in percentages of shareholders shall General Meeting require approval of the Tribunal Sympro Consulting Private Limited 6 .

1. Central Govt.000/Rs. specified lesser notice can also be given if an independent director is a director and attends the board meeting Meeting through video conferencing Penalty Permitted and subject to the Clause 173(2) permits meeing through rules framed thereunder video conferencing and other audiot visual means.25.000/- Sympro Consulting Private Limited 7 . 1956 Companies Bill. may by notification specify the matters which shall not be dealt with in a meeting thrugh video conferencing or other audio visual means Every officer who fails to give Every officer who fails to give notice notice shall be fined which may shall be fined which may extend to extend to Rs. 2012 No specific time stipuated for First board meeting of the directors to be held within 30 days of its holding first board meeting incorporation Time gap between two meetings Atleast one meeting to be held Not more than 120 days gap between in every quarter tow consecutive board meeting Length of notice No specific length of notice Notice of not less than 7 days be given.Board Meeting: Particulars First board meeting Companies Act.

between 9AM to 6PM on any day that is not a National Holiday 21 days clear notice to be given by all companies. (b) 15 Members where total number of members are between 1000 .General Meeting: Particulars Companies Act.2 Members Public Companies (a) 5 Members where total number of members do not exceed 1000. 1956 Maximum time for holding first 18 months from incorporation or AGM 9 months from closure of accounts which ever earlier During the busines hours and Time and day on a day that is not a public holiday Length and mode of notice Private companies are permitted to specify the length of notice in Articles and written notice is mandatory Consent for shorter notice Consent to be given by all members entitled to vote at the meeting Quorum Private Companies .5 Members Statuotry Meeting Companies Bill. Notice may be given in writing or in electronic form in the manner prescribed Consent to be given by not less than 95% of the members entitled to vote at the meeting Private Companies .2 Members Public Companies ..5000 (c) 30 Members where total number of members are between more than 5000 Public companies to hold No such provision meeting after one month and before 6 months from the date of entitlement of commencement of business and file statutory report with ROC Sympro Consulting Private Limited 8 . 2012 9 months from the closure of accounts During business hours i.e.

alternate directorship and directorship in nonprofit associations Composition of Board Minimum 2 directors in case of private and 3 in the case of public companies. 1956 15. particulars of loans. Sympro Consulting Private Limited 9 . Certain class of companies to have atleast 1 woman director. guarantees. Every company to have atleast one director who has stayed for atleast 182 days in India in previous calender year. number of board meetings. excludes private companies.Directors: Particulars Maximum number of directors 12 Companies Act. More than 15 with special resolution 20. Includes alternate director. un Maximum number of directorship limited companies.. Sec 217 contains disclosure requirements Additional disclosures proposed by the of Board report bill. CSR initiatives and policy. Maximum 12 directors Disclosures in Board Report Directors responsibility statement Companies Bill. investments etc. out of which not more than 10 can be public companies. No specific exclusions are provided for others. namely extract of annual returns. Listed Companies to have atleast 1/3rd independent directors. 2012 15. Sec 217 (2AA) prescribes the content of Additional clauses proposed by the bill in Director's responsibility statement which respect of "internal financial controls" and contains 4 clauses "System to ensure compliance with laws".

consent and connivance Sympro Consulting Private Limited 10 .Independent Directors: • Independent director means a director other than a MD. Thereafter. may join the board after a gap of 3 years • Independent director shall be held responsible for such acts of omission or commission by a company which had occurred with his knowledge. WTD and Nominee Director • No pecuniary relationship with company • May be appointed by another 5 years on special resolution • Independent director to give declaration in board meeting whether he meets the criteria of independence as stipulated • An independent director is not entitled to stock option and receive remuneration by way of fee • Term of office 5 years.

Independent Director: • Listed companies 1/3rd Independent directors • Appointment to be approved by shareholders in GM • Existing companies to comply within one year • Entitled for remuneration by way of fees for services rendered as professionals • Independent director to hold prescribed qualification • Not to associate with the company either directly or indirectly in any capacity during the tenure and after 3 years Sympro Consulting Private Limited 11 .

chairperson and board as a whole Sympro Consulting Private Limited 12 .Code for Independent Directors: • Schedule IV prescribes code for Independent directors and which contain:  Guidelines for professional conduct  Role and functions  Duties  Manner of appointment and re appointment  Resignation and removal • Schedule provides for a at least one meeting in a year for review and evaluate the performance of non independent directors.

directors.Independent Directors: • Not an employee or partner or proprietor of auditors or company secretaries or cost auditors to the company or its holding or subsidiary company or its associate or a legal or consulting firm having or had transaction with company or holding or subsidiary or associate exceeding 10% of gross turnover of the firm • Not a CEO or director of NGO that receives 25% or more of its receipts from company or any of its promoters.Restriction . subsidiary or holding company or associate company or an entity holding 2% or more of the total voting power of company Sympro Consulting Private Limited 13 .

Independent Directors: • Together with his relatives shall not hold more than 2% of the share in the company • He should not have been an employee of the company or holding or subsidiary or its associate in any three preceding financial years Sympro Consulting Private Limited 14 .Restriction .

Directors:  Right of any persons other than retiring director to stand for directorship: • Notice in writing shall be given at the registered office not less than 14 days before the meeting • A sum of Rs. 1 Lakh or such higher amount as may be prescribed shall be deposited  Alternate director appointment shall be for a director during his absence for a period of not less than 3 months from India  No alternate director for independent director unless the proposed director is qualified to be appointed as independent director Sympro Consulting Private Limited 15 .

Vacation of office by directors: • Absents from all meetings of the board of directors held during a period of twelve months with or without seeking leave of absence of the board • Having been appointed a director by virtue of his holding any office or other employment in the holding. imprisonment for a term which may extend to one year or fine not less than one lakh rupees to five lakhs rupees or both Sympro Consulting Private Limited 16 . subsidiary or associate company. ceases to hold such office or other employment in that company • For contravention.

Resignation by director: • Can resign by giving notice • A director shall forward a copy of his resignation along with detailed reasons for the resignation to ROC within 30 days • Resigned director is liable for offences which occurred during his tenure Sympro Consulting Private Limited 17 .

Financial year can be extended upto 18 months by ROC Balance sheet and Profit & Loss Account alone were financial statements Maintenance of accounts electronic form permitted Companies Bill. Profit & Loss Account and Cash Flow Statement. Subsidiary includes associates and joint ventures Financial statements can be signed by the Chairman alone if so authorised the Board of Directors Financial year to end on 31st March every year for all companies subject certain rules to be prescribed. Even Private Companies are required to prepare Cash Flow Statement in Maintenance of accounts in electric form permitted Sympro Consulting Private Limited 18 . 2012 Companies having subsidiaries to prepare consolidated financial statements in addition to standalone statements. balance sheet of subsidiary to be attached with the holding company while filing the returns with ROC Balance sheet and Profit & Loss Account to be signed by not less than 2 directors and one of whom shall be the MD where there is one Financial year not to exceed 15 months. No explicit provisions regarding extension of financial year Now financial statement includes Balance Sheet. 1956 Consolidation not mandatory.Accounts: Particulars Consolidation of accounts Certification of accounts Financial year and extension Financial Statements Manner of maintenance of accounts Companies Act. Financial year can end on date other than 31st March.

2012 Few disclosures requirements Exhaustive disclosures requirements AR upto the date of Annual AR upto the date of financial year end General Meeting AR to be certified by directors AR to be certified by Company and Company Secretary of the Secretary of the company or Company Company Secretary in Practice No such provision Listed company to file return to ROC regarding changes in shares held by promoters and top 10 shareholders within 15 days of the change Sympro Consulting Private Limited 19 . 1956 Companies Bill.Filing of reports & returns: Particulars Board report Duration of Annual Return Certification of Annual Return Annual Returns in case of Listed Company Companies Act.

every director in default shall be punishable with fine of Rs.Secretary & secretarial audit • Mandatory Secretarial Audit for all listed companies and certain class of companies which are to be prescribed • Board to respond to qualifications contained in Secretarial Audit by means of explanation in Board’s report • Class or classes of companies as may be prescribed shall have MD / CEO / WTD.000/. Company Secretary and CFO.000/. If not punishable with fine of Rs.1 lakh to 5 lakh.additionally in continuing offences a fine of Rs.50.1.per day Sympro Consulting Private Limited 20 .

5 Crore or more • Board to ensure that at least 2% of the average net profits of last 3 years is spent on CSR activities every financial year else reason for not spending to be specified in the Board report. Sympro Consulting Private Limited 21 .Corporate social responsibility • A committee on CSR to be formed in case of the following companies: (a) Networth of Rs. 500 Crore or more (b) Turnvoer of Rs.000/.1.Crore or more (c) Net profit of Rs.

else in members EGM If no auditors are appointed NA then. members who shall within 90 days at an EGM appoint auditor NA C & AG within 60 days of incorproation shall appoint NA Appoint auditor within 30 days if C&AG fails to appoint NA If no auditors are appointed then.Appointment of First Auditors: Particulars Board of Directors Members in EGM C & AG Board of Directors Members in EGM Non-Government Companies Government Companies Appoint first auditors within 30 NA days from the date of incorporation. members who shall within 60 days at an EGM appoint auditor if Board fails to appoint Sympro Consulting Private Limited 22 .

there is no bar. A written consent of the auditor for appointment and a certificate that the appointment. if made is in accordance with conditions prescribed and a certificate to the effect that auditor satisfies the criteria for appointment Appointment afer 5 / 10 years as the case may be Intimation to ROC Cannot be appointed as auditor for a period of years after the completion Company to intimate ROC within 15 days of the meeting in which the auditor is appointed Auditor so appointed as above can be removed or the auditor can resign even though the appointment is for a maxium 5 years Auditor himself or through a authorised representative (who shall also be qualified to be auditor) shall attend General Meeting unless exempted by the company Removal and resignation of auditor Auditor and General Meeting Cannot be appointed as auditor for a period of years after the completion Company to intimate ROC within 15 days of the meeting in which the auditor is appointed Auditor so appointed as above can be removed or the auditor can resign even though the appointment is for a maxium 10 years Auditor himself or through a authorised representative (who shall also be qualified to be auditor) shall attend General Meeting unless exempted by the company Sympro Consulting Private Limited 23 . Written consent and eligibility A written consent of the auditor for before appointment appointment and a certificate that the appointment.Auditor appointment & tenure: Particulars Tenure of office Firm / LLP of Chartered Accountants Companies can appoint auditor for a maximum term of 10 years Ratification Appointment to be ratified each year by members in AGM New Auditor each year Company can appoint new auditor each year. there is no bar. if made is in accordance with conditions prescribed and a certificate to the effect that auditor satisfies the criteria for appointment Sole Proprietor Chartered Accountant Companies can appoint auditor for a maximum term of 5 years Appointment to be ratified each year by members in AGM Company can appoint new auditor each year.

intervals and reporting of internal audit Sympro Consulting Private Limited 24 .Internal Audit: • Certain classes or description of companies as may be prescribed shall be required to appoint an internal auditor • The internal auditor could be:  Chartered Accountant  Cost Accountant  Such other professional as may be decided by board • CG will specify the rules.

One person company (OPC): • Only one person as a member and director • OPC shall be a private company • The words one person company to be mentioned in brackets below the name of the company • OPC to maintain minutes of BM & GM • No transfer of shares in OPC • Subscriber to intimate ROC name of the person who shall become member of the company in the event of his death or incapacity Sympro Consulting Private Limited 25 .

National Financial Reporting Authority: • CG to constitute NFRA – provision for accounting & auditing standards • NFRA replaces NACAS • Recommend to CG on formulation and laying accounting and auditing standards • Monitor and enforce AS & Audit Standards • Oversee the quality of services of professionals and suggest measures for improvement Sympro Consulting Private Limited 26 .

Powers of NFRA: • Powers of a Civil Court • Order for discovery and production of books of accounts at any place • Summon and enforce attendance of persons and examine on oath • Inspection of books at any place • Power to investigate suo moto or on reference by CG in professional or other misconduct of CA’s Sympro Consulting Private Limited 27 .

.10 Lakh and may extend upto 10 times the fees in case of firm of CA’s • Debar CA from practice for 6 months to 10 years Sympro Consulting Private Limited 28 .1 Lakh to Rs. • Powers to levy penalty and punish CA’s if found guilty • Penalty Rs.Powers of NFRA contd.5 Lakh & may extend to 5 times the fees in case of individual CA and minimum of Rs.

Associate: • A company in which other company has significant influence. but which is not a subsidiary and includes joint venture company • Significant influence means control of at least 20% of total share capital or of business decisions under an agreement. Sympro Consulting Private Limited 29 .

Dormant company: • A company registered under new law for a future project or to hold asset or IPR with no significant accounting transaction such company or an inactive company may make application to ROC for the status of dormant company • Inactive means no business or operation carried on or not made any significant accounting transactions during last 2 FY and has not filed AR & Financial Statement for last 2 FY • Significant accounting transaction excludes – fee payment to ROC. payment to fulfill any law requirement. allotment of shares and payment for maintenance of office and records Sympro Consulting Private Limited 30 .

unlawful or wrongful act or conduct or any likely act or conduct on his part Sympro Consulting Private Limited 31 .Class Actions: • Members or depositors or any class can make application to Tribunal. in their opinion management or conduct of the affairs are conducted which are prejudicial to the interest of the company • To claim damages / compensation / demand any other suitable action from or against:  Auditor including audit firm for any improper or misleading statement made in audit report or for any fraudulent. unlawful or wrongful act or conduct Any expert / advisor / consultant / any other person for any incorrect or misleading statement made to the company or for any fraudulent .

VII Relates to Format of Memorandum & Articles Depreciation Format of Balance sheet & Statement of Profit & Loss Code for Independent Directors Managerial Remuneration Definition of Infrastructure Projects CSR Activities Sympro Consulting Private Limited 32 .I Schedule .IV Schedule .VI Schedule . 2012: Schedule Reference Schedule .II Schedule .Schedules in Companies Bill.III Schedule .V Schedule .

The information is not intended to be relied upon as the sole basis for any decision which may affect you or your business. tax. the views and opinions expressed herein are the subjective views and opinions of presenter based on such parameters and analyses which in its opinion are relevant to the subject.Further. or other professional advice or services. consulting. Email: suri@symproconsulting. Accordingly. © 2013 Sympro Consulting Private Limited . investment. Sympro Consulting Pvt. Phone: This material prepared by the presenter and not of the company. The recipient is strictly prohibited from further circulation of this material. legal. This material is intended only for the use of the entity/person to whom it is addressed and the others authorized to receive it on their behalf. Before making any decision or taking any action that might affect your personal finances or business. the information in this material is not intended to constitute accounting. neither the presenter/company shall be responsible for any loss whatsoever sustained by any person who relies on this material.Thank You Contact : Suresha Balachandran. Ltd. is intended to provide general information on a particular subject or subjects and are not an exhaustive treatment of such subject(s). 080-41203899. you should consult a qualified professional adviser.