SPN Legal_Companies Bill 2011_VM

7/30/2019 SPN Legal_Companies Bill 2011_VM

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KEY HIGHLIGHTS

A D V O C A T E S

SPN Legal


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.A D V O C A T E S

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Accounting Standards

Auditing Standards

Associate Company

Associate Company

Chief Executive Officer

Chief Financial Officer

Control

Deposit

Employees Stock Option

Global Depository Receipts

Independent DirectorInterested Director

Key Managerial Personnel

One Person Company

Promoter

Related Party

Small Company

Turnover

Voting Right

New Terms Introduced


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.A D V O C A T E S

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Concept of One Person Company (OPC limited) introduced.

Concept of Small companies, subject to lesser stringent regulatory frameworkhas

been introduced.

In case of Change of name, Company will have to affix along with its name, the

former name or names so changed during the last two years.

A company shall appoint an individual or a firm as auditor at annual general

meeting who shall hold office till the conclusion of sixth annual general meeting &thereafter till the conclusion of every sixth Annual General Meeting.

Concept of Dormant Companies introduced, formed for a future project or to hold

an asset or intellectual property.

A Private Company can have a maximum of 200 members.

Prohibition on appointment of an individual as auditor for more than one term of

five consecutive years and an audit firm as auditor for more than two terms of five

consecutive years on all listed & other prescribed Companies.

Incorporation & Registered Office of Companies


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.A D V O C A T E S

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MD or CEO or manager or whole-time director and Company Secretary designated as Key

Managerial Personnel.

At least one woman director will be mandatory in the prescribed class or classes of

companies.

One person companies have been given the option to dispense with the requirement ofholding an AGM.

Duties of Directors defined.

Mandatory setting up of Audit, Nomination, Remuneration and Stakeholder Relationship

Committees for all listed Companies.

Independent Directors required to be appointed by every Listed Company (even in case of

certain Public Companies). One third of the Board of Directors shall comprise of Independent

Directors.

Com anies can have a maximum of 15 Directors, without an a roval.

Every Company shall have at least one director, who was Resident in India for 182 days,

during previous calendar year.

Every Company Secretary being a KMP shall be appointed by a resolution of the Board.

If a director of the company contravenes the provisions of clause 166 i.e. Duties of Directors,

such director shall be punishable with a minimum fine of one lakh rupees.

Boards Report has been made more informative including extensive disclosures.

Every contract or arrangement entered into with a related party shall be referred to in the

Boards Report along with the justification for entering into such contract or arrangement.

Companies can accept deposits only from its members, subject to prior Shareholdersapproval in general meeting.

A public company having prescribed net worth or turnover may accept deposits from

persons other than its members subject to compliance of rules as may be prescribed by

Central Government in consultation by Reserve Bank of India.

Central Government approval is not required to enter into related party transaction or to

give loans to Directors.

Companies can issue sweat equity by passing required resolution.

Board and Governance


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.A D V O C A T E S

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Fraudulent inducement to invest money is punishable with imprisonment for a term

extendin 10 ears and with fine extendin to three times theamount involved.

Concept of Class Action Suit is introduced.

A suit may be filed by a person who is affected by any misleading statement in

prospectus.

Exit option must for minority shareholders in case the Company gets new

promoters.

Shareholders a roval must forInter-cor orate loans.

Secretarial Audit is mandatory for all Listed & other prescribed Companies.

Prohibition of insider trading and on forward dealing in securities of the Company

is included.

Public Deposits can be accepted by only banking Companies, NBFCs and other

allowed firms.

Investor Protection Measures


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.A D V O C A T E S

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Composition and constitution of the National

Company Law Tribunal [NCLT] and Special

Courts for summary trials.

Powers of arrest and cognizance to SFIO [Serious

Fraud Investigation Office] in case of certain

offences.

Setting aside 2% of average net profit in previous 3 yea

for CSR activities.

Every company having net worth of rupees five hundrcrore or more, or turnover of rupees one thousand cro

or more or a net profit of rupees five crore or more dur

any financial year shall constitute the Corporate Soc

Responsibility Committee of the Board. The composit

of the committee shall be included in the Boards Re o

Central Government is empowered to make

rules, etc. through delegated legislation.

Corporate Social Responsibility

Empowerment of Regulatory Bodies


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.A D V O C A T E S

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The entire rehabilitation and liquidation process has been made time bound.

No civil court shall have jurisdiction in respect of any matter on which NCLT or

Appellate Tribunal is empowered.

If revival scheme is not approved by the creditors, the Tribunal shall order for

winding up of the company.

The Company Administrator shall prepare a scheme of revival and rehabilitation.

The Tribunal may appoint an interim administrator or a company administrator from

the panel of Company Secretaries, CAs, CWAs, etc. maintained by the Central

Government.

The Tribunal may appoint Provisional Liquidator or the Company Liquidator from apanel maintained by the Central Government consisting of Company Secretaries,

Chartered Accountants, Advocates and Cost Accountants

Every director who fails to comply with the provisions to maintain Register of

contracts or arrangements, in which directors are interested or Register of

Contract of employment with managing or whole-time directors shall be liable to

a enalt of twent -five thousand ru ees.

Every officer of the company whose duty is to give notice of Board Meeting to

Directors shall be liable to a penalty of twenty-five thousand rupees, if he fails to

do so.

Every officer, who is guilty of fraud, shall be punishable with minimum

imprisonment of 1 year to a maximum of three years and with a minimum fine of

Rs. 1 Lac to a maximum of Rs. 3 lac.

In case of contravention of the provisions for private placement, the Company, its

promoters and directors shall be liable for a penalty which may extend to the

amount involved in the offer or invitation or two crore rupees, whichever is higher

and the Company will also have to refund the money within 60days of orderimposing penalty.

Companies contravening the provisions of audit shall be liable to a maximum fine

of Rs. 5 lac. Also, every office in default shall be liable to imprisonment for a

minimum term of 5 year or with fine, of with both.

Restructuring & Liquidation

Empowerment of Regulatory Bodies


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Global Depository Receipts can be issued by the Company by passing a special

resolution and complying with other prescribed provisions.

Companies need to file return of allotment for all kind of securities.

In case of Private Placement, Companies will have to allot securities within 60 days

of receipt of money. Also, Qualified Institutional buyers will not be counted while

calculating number of persons to whom the securities are offered.

Financial year, in relation to any company or body corporate, means the period

ending on the 31st day of March every year.

Investment Companies cannot have more than two layers of subsidiaries.

Independent directors can hold office for a maximum of two consecutive terms of

three years.

One auditor can audit maximum 20 Companies.

Miscellaneous Provisions


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Disclaimer: This document has been prepared on the basis of Companies Bill, 2011 as passed in the Lok Sabha on

18th

December, 2012. SPN Legal does not own the responsibility of any error or omission. The users and readers

are advised to seek specific opinion before acting upon this document.

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