The new indian company law 2013

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www.impacteducationindia.in 2/5/20151

The New Indian Company Law

Highlights 2013

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www.impacteducationindia.in2 2/5/2015

Type of Companies

Maximum number of members in a private company increased from 50 to 200

Limit of the number of members in an association or partnership(without

incorporation) increased up to100

New concepts of Small Company, One Person company (OPC), Associate Company

and Dormant Company introduced.

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Share Capital

For defined infrastructural projects, preference shares can be issued for a periodexceeding 20 years.

Shares cannot be issued at a discount except sweat equity shares.

Securities premium may also be applied for the purchase of a company‟s own shares orother securities.

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Audit & Accounting

To align with the provisions of the Income Tax Act, Companies to have a uniform

financial year-ending on 31st March each year.

Consolidation of financial statements for a Company having a subsidiary, associate or

a joint venture made mandatory.

National Financial Reporting Authority (NFRA) to be constituted by Central

Government to provide for dealing with matters relating to accounting and auditing

policies and standards to be followed by Companies and their auditors.

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Audit & Accounting

Mandatory auditors‟ rotation for listed and prescribed classes of Companies after

every five years.

Mandatory transfer of profits to Reserves for dividend declaration dispensed with.

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Management, Administration &

Corporate Governance

At least one Director of a Company shall be a person who has stayed in India for 182

days or more in the previous calendar year. This will make him „Resident‟ as per

Income Tax Laws.

Listed and prescribed class of Companies to have at least one women Director .

Following Committees of the Board made mandatory for listed and prescribed

classes of Companies:

Audit Committee

Stakeholder Relationship Committee

Nomination and Remuneration Committee

Corporate Social Responsibility Committee

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Management, Administration &

Corporate Governance

Number of Directors:

Minimum- Public 3, Private 2, OPC 1

Maximum – Limit increased to 15 from 12

Director to vacate office on remaining absent from all the meetings of the Board of

Directors held during 12 months with or without obtaining leave of absence.

A person cannot be a Director in more than 20 Companies instead of present 15 and

out of this 20, he cannot be a Director of more than 10 public Companies.

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Corporate Social Responsibility

Every Company having net worth of Rs.500 crore or more, or turnover of Rs.1000

crore or more or a net profit of Rs.5crore or more during any financial year shall

constitute a Corporate Social Responsibility Committee of the Board consisting of

three or more Directors, out of which at least one Director shall be an independent

director.

The CSR Committee shall formulate and recommend Corporate Social

Responsibility policy which shall indicate the activity or activities to be undertaken

by the Company as specified in Schedule VII and shall also recommend the amount of

expenditure to be incurred on the CSR activities.

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Corporate Social Responsibility

The Board of every Company shall ensure that the Company spends in every financial

year at least 2% of the average net profits of the Company made during the three

immediately preceding financial years in pursuance of its CSR policy.

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Financial Statement

For the first time, the term “financial statement” has been

defined to include:

A balance sheet as at the end of the financial year.

A profit and loss account, or in the case of a company carrying on

any activity not for profit, an income and expenditure account for

the financial year.

Cash flow statement for the financial year.

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Financial Statement

A statement of changes in equity, if applicable, and

Any explanatory note annexed to, or forming part of, any document referred to in

sub-clause (i) to sub-clause (iv).

The financial statement, with respect to One Person Company, Small Company and

Dormant Company, may not include the cash flow statement.

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The new indian company law 2013

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