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Tuesday, 29 April 2014

Important provisions new Companies Act, 2013

This is to bring to your notice the following important points related to implementation of provisions new Companies Act, 2013 with effect from 01.04.2014:

1.      Immediate Changes in letterhead, bills or other official communications, as if full name, address of its registered office, Corporate Identity Number (21 digit number allotted by Government), Telephone number, fax number, Email id, website address if any.
2.      Woman Director: Every Listed Company /Public Company with paid up capital of Rs 100 Crores or more / Public Company with turnover of Rs 300 Crores or more shall have at least one Woman Director.
3.      Resident Director: Every Company must have a director who stayed in India for a total period of 182 days ore more in previous calendar year.  For existing companies, compliance to be made before 31st March, 2015.
4.      Accounting Year: Every company shall follow uniform accounting year i.e. 1 st April -31st March.
5.      Loans to director: The Company CANNOT advance any kind of loan / guarantee / security to any director, Director of holding company, his partner, his relative, Firm in which he or his relative is partner, private limited in which he is director or member or any bodies corporate whose 25% or more of total voting power or board of Directors is controlled by him.
6.      Acceptance of Deposits:  The company can not avail unsecured loans from the members / shareholders of the company until and unless certain conditions are fulfilled
7.      Share application money: The Company (whether Private Company or Public Company) can not hold share application money beyond thirty days.
8.      Commencement of Business: Now, every new company should obtain commencement of business before it commences its business
9.      Issue of further shares:  Now, every company (whether private or public limited company) should allot shares other than the existing shareholders after passing special resolution (other than rights issue).
10.  Borrowing powers:  Now, every company (whether private or public limited company), should obtain the approval of the shareholders by way of a special resolution before borrowing any money in excess of the aggregate of the paid up capital and free reserves
11.  Notice of General Meetings: Whether the company is a private company or public company, the notice must be not less than 21 days clear notice
12.  Filing of resignation letter by Director: Even the director who has resigned should forward a copy of his resignation along with detailed reasons for the resignation to the Registrar of Companies within thirty days of resignation
13.  Notice of Board Meeting: A meeting of the Board shall be called by giving not less than 7 days’ notice in writing to every director at his address registered with the company and such notice shall be sent by hand delivery or by post or by electronic means.
14.  Attendance to Board Meetings: A director is bound to attend atleast one meeting of the Board of Directors in a span of every twelve months ever since he becomes a director, failing which he is bound to vacate his office by operation of law automatically, even if such director had sought leave of absence. For instance, if a person becomes a director, whether ordinary or independent or woman director, on 1st April 2014 and fails to attend any meeting until 31st March 2015, with or without seeking leave of absence, at the end of 31st March 2015, he will have lost his directorship.
15.  Key Managerial Personnel (KMP): “KMP”, in relation to a company, means (i) the Chief Executive Officer or the managing director or the manager; (ii) the company secretary; (iii) the whole-time director; (iv) the Chief Financial Officer; and (v) such other officer as may be prescribed. Every listed company and every other public company having a paid-up share capital of   Rs.10 Crores or more shall have whole-time KMP. The KMP of one company cannot   double as KMP of another company save and except the holding of such a position in   a subsidiary company.
16.  Corporate Social Responsibility (CSR): CSR is mandated for the  Companies having net worth of Rs.500 Crores or more or Companies having turnover of Rs.1000 Crores or more or Companies having a net profit of Rs.5 Crores or more. The Board of Directors of the company need to ensure that the company spends at least 2% of average net profits made by it during the three immediately preceding financial years in a financial year in CSR activities as per its CSR Policy. In advancement of its CSR efforts, the Company is required to give preference to local areas and areas where it operates
17.  Board’s Report: Board’s Report should contain (i) Extract of Annual Return (ii) Details of meetings of Board of Directors, (iii) Directors Responsibility Statement (iv) Particulars of Loans, Investments, Guarantees and (v) Risk Management Policy Etc.
18.  Secretarial Audit: Every listed company and every public company having a paid-up share capital of Rs.50 Crores or more; or (b) every public company having a turnover of Rs.250 Crores or more must annex to Board’s Report a secretarial audit report issued by a company secretary in practice
19.  One Person Company (OPC): It's a Private Company having only one Member and at least One Director. No compulsion to hold AGM. Conversion of existing private Companies with paid-up capital up to Rs 50 Lacs and turnover up to Rs 2 Crores into OPC is permitted.
20.  Penal Provisions:  Now, the penal provisions are very stringent. For Ex:  If any company violates the provisions related to acceptance of deposits, the company shall, in addition to the payment of the amount of deposit or part thereof and the interest due, be punishable with fine which shall not be less than one crore rupees but which may extend to ten crore rupees and every officer of the company who is in default shall be punishable with imprisonment which may extend to seven years or with fine which shall not be less than twenty-five lakh rupees but which may extend to two crore rupees, or with both