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100 amendments of Co. Act, 2013 - Part 3

CA Neha Bhuwania 
on 07 May 2014

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Click Here to read the 1st part of the article

Click Here to read the 2nd part of the article

Amendment 32: Section 92 [Annual Return]

The Annual Return of the Companies shall now require additional information to be included. Particulars like details of its holding, subsidiary and associate companies, certification of compliances, remuneration of directors as well as key managerial personnel etc.

Amendment 33: Section 92 [Annual Return read with Rule No. 11 (2)]

A company which is either listed or has a paid-up share capital of Rs. 10 crores or more and a turnover of > 50 crores shall get their annual returns certified by a CS in practice.

Amendment 34: Section 92[Annual Return]

The former Companies Act’1956 required the companies to provide information up to the date of AGM. This requirement has been ceased and now information only up to date of closure of FY needs to be provided.

Amendment 35: Section 93 [Return to be filed with the Registrar in case Promoter’s stake changes]

In case there is a change in the promoter’s stake then all the listed companies are required to file a return in the prescribed form (within 15 days of change) with the Registrar regarding the change in the number of shares held by the promoters along with the top 10 shareholders of the company.

Amendment 36: Section 93[Return to be filed with the Registrar in case Promoter’s stake changes read with Rule No. 13]

In continuation of the above amendment, such a return shall be filed with respect to changes relating to either increase or decrease of > 2% either in value or volume of the shares within 15 days of such a change.

Amendment 37: Section 96 [Annual General Meeting]

The first AGM of a company has to be held within 9 months (instead of 18 months earlier) from the closure of its financial year.

Amendment 38: Section 100 [Calling of extraordinary general meeting read with explanation to Rule No. 18]

The extraordinary meeting held, if any, shall be held at a place within India only.

Amendment 39: Section 103 [Quorum for Meetings]

A quorum for a general meeting for a public company is now dependent upon the number of members of the company whereas the former act prescribed a fixed quorum of 5 persons only. Also, for companies having > 5000 members, at least 30 have to be present personally.

Amendment 40: Section 105 [Proxies read with Rule No. 19(1)]

Provisions regarding Proxies have been strengthened to avoid misuse of voting rights. A person who is appointed as a proxy member has to be a member of the company. Also, such proxy can become so on behalf of 50 members only not and holding in total not > 10% of total share capital of company carrying voting rights.

Amendment 41: Section 108 [Voting through electronic means read with Rule No. 20 (1)]

This rule specifies the detailed procedure, requirements with reference to the notice, advertisement modes, time period of voting, scrutinizing etc. with respect to companies (Only Listed companies or a company >1000 shareholders) which have been now permitted to provide their members a facility to vote at general meetings by electronic means.

Amendment 42: Section 108 [Voting through electronic means read with Rule No. 20 (3) (ix)]

In case the option of e-voting is exercised, the act has laid rules for a fair and transparent purpose. The Board shall have to appoint a scrutinizer who may be a Chartered Accountant or Cost Accountant or CS or an advocate in practice. The scrutinizer can’t be in employment of the company and should be a person (in the opinion of the Board) who shall scrutinize the process in a fairly.

Amendment 43: Section 110 [Postal Ballot read with Rule No. 22(16) proviso]

The provisions of postal ballot is applicable to all Companies (listed/unlisted). The items of business which can be transacted only through postal ballot are specifically provided. Further, OPC and companies having members up to 200 aren’t required to transact any business via this method.

Amendment 44: Section 115 [Resolutions requiring Special Notice]

Unlike provisions of Companies Act’1956, now a special notice to move a resolution can be moved only by such number of members who hold not less than 1% of total voting power or holding shares aggregating to a sum of not less than Rs. 5 lakh (paid up).

Amendment 45: Section 118 [Minutes of proceedings of General Meeting, Meeting of Board of Directors & other meetings & resolutions passed by Postal ballot]

Secretarial Standards have to be complied with by all the companies while preparation of the minutes of the board/general meeting.

Amendment 46: Section 120 [Maintenance and inspection of documents in electronic form read with Rule No. 27 (1)]

Every listed company or a company with not less than 1000 shareholders, debenture holders and other security holders shall have to abide by the provisions with respect to the maintenance & inspection of a document in electronic form wherein the term “record” is also defined. Also, in case the data is held in physical mode by such existing companies, the data has to be converted to electronic mode within 6 months from the date of notification.

Amendment 47: Section 128 [Books of accounts, etc., to be kept by the company read with Rule No. 3(1) & 3(2)]

Rules have been specified for the books of accounts or any other relevant books along with papers maintained in an electronic mode. They need to remain accessible in India so that it can be used for subsequent referencing. Also, such information has to remain complete and unaltered.

Amendment 48: Section 128 [Books of accounts, etc., to be kept by the company read with Rule No. 4(1)]

In case summarized books of accounts of a company are maintained outside India, then the same has to be sent to the registered office at India quarterly. The same shall be kept & maintained at such registered office and shall be open to the directors for inspection.

Amendment 49: Section 2(41) [Definitions] + Section 129 [Financial Statements]

The flexibility of having any 12 month period as a FY and extension of FY has been removed. All companies to now have uniform FY (April- March).

Amendment 50: Section 129 [Financial Statements read with Rule No. 5]

Along with own Financial Statements, consolidated Financial Statements for all the subsidiaries (inclusive of associates and joint ventures) have to be prepared and laid before the AGM. Also, a statement containing the salient feature of the financial statement of such consolidated “subsidiaries” to be included.

Amendment 51: Section 129 [Financial Statements]

The earlier requirement of attaching the Balance Sheet, P & L A/c and Director’s Report, Auditor’s Report along with a statement of holding company’s interest in its subsidiary & all other reports required u/s 212 of Companies Act’1956 has been ceased.

Amendment 52: Section 134 [Financial Statement, Board’s report, etc. read with Rule No. 8(4)]

Every listed public company and other public companies (which have a paid up share capital of Rs. 25 crores or more calculated at the end of the preceding FY) shall include in the report by its Board of Directors, a statement with respect to the manner in which formal annual evaluation has been made by the Board or their own performance including that of the committees and individual directors as well.

Amendment 53: Section 134 [Financial Statement, Board’s report, etc. read with Rule No. 8(5)]

The Director’s Report of every company [excluding OPC] shall now provide additional information such as number of meetings of the board, policy of the company on director’s appointment & remunerations, explanations or comments by the board on every qualification, reservation or adverse remarks or disclaimer made by the CS in his secretarial audit report etc. The rules also specify the requirement of additional disclosures to be made. For example:-

• Change in the nature of the business (if any)

• Details of the directors/key managerial personnel who were appointed/have resigned during the FY.

• Names of the companies which have added/deducted as a subsidiary, JV or associate company during the year with reasons for change.

• Details of the Deposits as specified under Chapter V of the Act.

• Details of the significant/material orders passed by the Regulators/ Courts/ tribunals which have an impact on the going concern assumption and the future operations of the company.

Amendment 54: Section 134 [Financial Statement, Board’s report, etc.]

The Director’s Responsibility Statement shall also include additional statements on compliance with all the applicable laws & also, in case of listed companies, it is also required to include a statement that adequate internal finance controls were in place.

Amendment 55: Section 136 [Right of member to copies of audited financial statements read with Rule No. 11]

In case of listed companies as well as public companies which have a net worth of > Rs. 1 crore and turnover of > Rs. 10 crores, the financial statements can be sent:-

• By an electronic mode to all such members whose shareholding is in DEMAT format and whose email IDs have been registered with the Depository for communication purposes.

• Where shareholding is in any other form, then to such members’ e-mode can be used in case they have positively consented in writing for receiving via electronic mode.

• In all other cases, by dispatch of physical copies via any recognized mode of delivery as specified under Section 20 of the Act.

Amendment 56: Section 138 [Internal Audit read with Rule No. 13]

The rules regarding appointment of internal auditors have been strengthened. All the following class of companies shall be required to appoint an internal auditor or a firm of internal auditors:-

i. Every listed company

ii. Every unlisted company having

• Paid up share capital of Rs. 50 crores or more during previous FY or

•  Turnover of Rs. 200 crores or more during previous FY or

• Outstanding loans / Borrowings from Banks or Public Financial Institutions in excess of Rs. 100 crores or more at any point of time during previous FY or

• Outstanding deposits of Rs. 25 crores or more at any point of time during previous FY.

iii. Every private company having

•  Turnover of Rs. 200 crores or more during previous FY or

• Outstanding loans / Borrowings from Banks or Public Financial Institutions in excess of Rs. 100 crores or more at any point of time during previous FY.

A transition period of 6 months has been given to the existing companies meeting the above criteria.

Amendment 57: Section 139 [Appointment with auditors]

All the companies at their first AGM shall appoint an individual/firm as an auditor who shall hold office from the conclusion of that meeting up to conclusion of the 6th AGM and thereafter till the conclusion of every 6th meeting. The Company shall have to place the matter relating to such an appointment for ratification by members at every AGM. Appointment also includes re-appointment. Also, a transition period of 3 years from the commencement of this Act has been prescribed.

Amendment 58: Section 139 [Appointment with auditors read with Rule No. 5]

Rotation of auditors have been introduced. The Auditors of the following classes of companies (excluding OPC and smaller companies) shall retire by rotation as follows:-

• All the unlisted public companies having a paid up share capital of > Rs. 10 crores.

• All the private limited companies having a paid up capital of > Rs. 20 crores.

• All companies not meeting the above thresholds, but having public borrowings from financial institutions, banks or public deposits of > Rs. 50 crores.

Amendment 59: Section 139 [Appointment with auditors read with Rule No. 6 (6)]

Rules have also been defined for the purpose of rotation of auditors:-

•  In case of an auditor, the period for which such an auditor ( both individual / firm) has held the office as an auditor prior to the commencement of the Act shall be taken into account for the purpose of calculating 5 or 10 consecutive years, as per the applicability.

• The incoming auditor shall be prohibited to act as an auditor if such individual or firm is associated with the outgoing auditor or firm under the same network of audit firms. Same network includes the firms using the same brand name, operating or functioning hitherto or in future, trade name or common control.

Amendment 60: Section 141 [Eligibility, Qualifications and Disqualification of auditors read with Rule 10 (1) & 10 (2)]

The act has enforced certain new disqualifications for the Auditors. For instance:

• An auditor can’t audit a company if his relative holds securities of FV > 1 lakh.

• An auditor can’t audit a company if he or his relative/partner is indebted to the company/its subsidiary/ its holding/ associate company or a subsidiary of such holding company for more than Rs. Lakhs.

Amendment 61: Section 143 [Power & Duties of auditors and auditing standards read with Rule No. 13]

A statutory duty has now been enforced on the Auditor that in case he comes to know about any fraud committed or being committed against a company by its officers/employees, then he needs to report the same to the Central Government immediately within a period of 60 days. The same duties shall apply mutatis mutandis to Cost Accountants for Cost Audit and CS in Practice for Secretarial Audit.

Amendment 62: Section 144 [Auditor not to render certain services]

The Auditors are now prohibited to provide either directly or indirectly certain specified services to the company, its holding and its subsidiary company.

Amendment 63: Section 147 [Punishment for contravention]

If it is proved at any point in time that partner/partners in an audit firm have acted in a manner which is fraudulent or have abetted/colluded in any fraud in relation to the company or its directors or officers, then such partner (s) shall be punishable as well.


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