Companies Bill, 2012, after a very long journey and with many stumble blocks, has finally seen the light of day in Lok Sabha. After much speculation and eagerness on the subject, Lok Sabha finally approved the Bill on the night of 18th December, 2012. As we all know, Companies Bill, 2012 is meant to replace the existing Companies Act of 1956. Companies Act, 1956, one of the most important legislation governing all companies in India is already 56 years old and much deserves the retirement that the bill proposes to give it.
Companies Bill, 2012 is a vibrant initiative, a bill which promises a better tomorrow in the form of increased investor participation and protection, tighter disclosure and fraud containment measures and a greener environment.
PATHWAY TO COMPANIES BILL, 2012
Companies Bill 2012 passed by Lok Sabha on 18th December 2012 at 10.46 P.M.
Companies Bill 2011 introduced in Lok Sabha on 14th December 2011
Report of Standing Committee on Finance on Companies Bill, 2009 introduced in the Lok Sabha on 31st August 2010
Companies Bill 2009 reintroduced on 3rd August 2009, referred to SCF for further process
Companies Bill, 2008 introduced in the Lok Sabha on 23rd October 2008 to replace Existing Companies Act, 1956
WHAT’S IN STORE FOR PROFESSIONALS
• Certain Companies, as may be prescribed, to mandatorily appoint company secretary.
• Company Secretary included within the definition of Key Managerial Personnel.
• Functions of company secretary defined.
Secretarial Audit -
• All Listed companies to annex secretarial audit report obtained from a Practising Company Secretary to the Board's report.
• Board to respond to qualifications, made by the Secretary, in the Board's report.
Secretarial Standards -
• Secretarial Standards introduced and provided statutory recognition for the first time.
• Company Secretary to ensure that the company complies with the applicable Secretarial Standards.
• For all the companies (except one person companies and small companies), whether private or public, listed or unlisted, annual return has to be signed either by company secretary in employment or by a company secretary in practice. This is akin to compliance certificate u/s 383A
• Cost auditing standards’ have been mandated.
• Central Government may direct that the audit of cost records of class of companies, which are required to maintain cost records and which have a net worth of such amount as may be prescribed or a turnover of such amount as may be prescribed, shall be conducted in the manner specified in the order.
• The Central Government after consultation with regulatory body may direct class of companies engaged in production of such goods or providing such services as may be prescribed to include in the books of accounts particulars relating to utilisation of material or labour or to such other items of cost.
• Listed Companies - Individual Auditor to retire every five years. Ten years in case of firm of Auditors
• Other Companies - Auditor to be appointed for a term of 5 years in each appointment. Appointment to be ratified in each AGM.
• Internal audit may be made mandatory for prescribed companies
• Auditors not to render other services like book keeping, accounting etc. directly or indirectly to the company or its holding company or subsidiary company
• Members of a company may resolve to provide that in the audit firm appointed by it, the auditing partner and his team shall be rotated at such intervals as may be resolved by members.
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