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Companies bills 2011
Following has been introduced in the new company’s bill 2011
1. Provision for e-governance:-
i. Participation of directors and shareholders through video conferencing is allowed in general meeting and board meeting.
ii. Voting in GM’s through electronic mode-: NSDL and CSDL are given approval by the MCA for providing electronic platform to capture the electronic votes of the shareholders in the GM’s.
iii. Registrar of the company shall issue digital certificates to every company.
iv. Maintenance of documents in electronic form is allowed.
v. Inspection of such documents in electronic form is allowed.
2. Corporate social responsibilities:-
A. Any company doing business of more than following threshold limits shall have to constitute, a “corporate social responsibility committee”
i. Net worth of more than 500 crores or;
ii. Turnover of more than 1000 crores or;
iii. Net profit of Rs 5 crores or more
B. Bill suggests that the companies doing business more than above specified thresholds limits shall mandatorily earmark at least 2% of average net profits for preceding 3 years for CSR activities.
C. Schedule VII of amended company’s act 2011 specifies the activities which shall constitute the part of such company’s corporate social responsibility policy.
D. The committee shall consist of 3 directors including one independent director.
3. Investor protection measures:-
i. “Professional institute of trade and business chambers” shall be established across the country during 2010-11 to ensure the investor protection.
ii. Acceptance of deposits from public shall be under more stringent regime.
iii. Central government shall have the power to specify the companies in which proxies shall not be allowed in the shareholders meeting.
iv. Minimum number of members, depositors or debenture holders filing class action suits against any company u/s 245 has been revised to such percentage as may be prescribed.
4. Changes in the concept of independent directors (Tenure, Code of conduct and liabilities):-
i. Minimum 1/3 of the total no. of directors shall be independent directors; however CG shall have the power to increase or decrease such minimum no. of independent directors in any public company.
ii. Independent directors shall not retire by rotation.
iii. Independent director shall be appointed by the company from the data bank of independent director as maintained by the CG and put on their website for the use of the companies making appointment of such independent directors.
iv. Any resolution passed in the absence of independent director shall be final only on ratification of such resolution by at least one independent director.
v. Audit committee shall consist of minimum 3 independent directors
vi. Schedule IV prescribes the code of independent directors (Role, function, manner of appointment, reappointment, removal, resignation, and separate meetings of independent directors.)
5. Mandatory appointment of women directors in every company accept one person company.
6. Introduces new concept of One Person Company.(Sec 122, 193):-
(a) All the provision of private company shall apply to one Person Company.
(b) Provision of section 98 and Sec 100 to 111 shall not apply to one person Company.
(c) Minimum no. of members in case of one person company shall be one.
(d) Ordinary business shall be deemed to be transacted by the company if they are entered by such member in the minute book, they shall be deemed to be passed on the date when the minute books are dated and signed.
(e) No. of board meetings to be conducted-: One board meeting should have been conducted in each half year of a calendar year (Jan – Dec) and the gap between 2 board meetings should be at least more than 90 days.
(f) Similarly the business transacted in board meeting shall be deemed to have been passed on the date when they are entered into minutes of board meeting.
(g) The concept of Producer Company is still retained in companies act.
(h) More stringent regime for not for profit companies to check the misuse.
(i) No restrictions on the number of subsidiaries a company can have.
7. Vigil mechanism shall be established in the every listed company to safeguard and reward whistle blowers.
8. Rotation of auditors and audit firms:-
i. An auditor shall be appointed for a minimum period of 4 yrs. With a minimum cooling of 4 years between 2 fixed terms of 4 yrs. Each and
ii. During such fixed tenure the concerned partner authorizing the financial statement shall change every year
iii. LLP of CA’s (as auditors) shall be treated as body corporate under section 226(3A) of the companies act.
iv. Following disclosures need to be given in the financial statements:-
a. Development and implementation of risk management policy
b. Corporate social responsibility policy of the company
c. Evaluation of the performance of the board of directors of the company
9. Formation of national financial reporting authority (NFRA) in place of the existing (NACAAS); with added quasi-judicial powers to exercise independent oversight over the professionals.
10. Serious fraud investigation officer (SFIO)
i. Statutory status has been granted to SFIO.
ii. Investigation report filled by SFIO to the court shall be treated as report filled by police officer.
iii. Serious fraud investigation officer shall have the powers to arrest against any offences which comes under the definition of fraud.