Limits and obligations under the companies act 2013

nirdeshbadjatya
on 11 January 2018

In the business and corporate world every one's desire is to grow and catch new numbers of capital, profit, turnover etc. a common businessman and also a professional must know the limits and obligations to estimate the liabilities, the formalities, the compliances and the overall cost while thinking of dreaming new numbers. Under the Companies Act 2013, there are various limits and concerned obligations which require attention in advance.

This article is must for the directors and fresh professionals. If you are an independent director or a woman director or a nominee director or even a family director in good faith then you must know the triggers of the obligations on the company under corporate laws so that according to the size of the transactions of the company the materiality may be analyzed by you.

This article supports only the trigger points and make you aware so that you may further raise questions from your consultants or advisors as to 'why' and 'why not' regarding any event in the company.

The overall paradigm of our country is going to be changed and as per the single line agenda of the government 'Minimum government and maximum governance' everybody in the company should be diligent, proactive and self disciplined to avoid any unpleasant situation.

In our country due to frequent changes in the modus operandi of the concerned people, it becomes inevitable for the government to change the various corporate law frequently therefore the knowledge contents of the article is updated upto the date of its release.

The triggers are designed in terms of financial figure like in case if your company has crossed paid up capital of Rs 100 lacs, or the turnover of your company has crossed Rs 100 crores or the borrowing is crossed Rs 50 crores then what will be the additional obligations of the company.

The directors will be supported in their board room to ask KMP that what about the particular triggers and they will be able to make better governance.

The tabulated trigger figures with the indication of corresponding requirements pertaining to various classes of companies are as under:

	OBLIGATIONS			LIMITS

1	PRIVATE LIMITED COMPANY
	1.1	PAID UP CAPITAL
		i. XBRL Applicability		>= 5 Cr.
		ii. Rotation of Statutory Auditors		>= 20 Cr. (50 Cr. w.e.f. 22/06/2017)
		ii. Rotation of Statutory Auditors		>= 20 Cr. (50 Cr. w.e.f. 22/06/2017)

	1.2	PAID UP CAPITAL & FREE RESERVES
		Applicability of Companies Auditor Report Order(CARO)		> 1 Cr.


	1.3	BORROWING
		i. Companies Auditor Report Order (CARO)		> 1 Cr.
		ii. Rotation of Statutory Auditors		>= 50 Cr.
		iii. Internal Audit		>= 100 Cr.

	1.4	TURNOVER
		i. Companies Auditor Report Order (CARO)		> 10 Cr.
		ii. XBRL Applicability		>= 100 Cr.
		iii. Internal Audit		>= 200 Cr.
		iv. Corporate Social Responsibility (CSR)		>= 1000 Cr.

	1.5	NET WORTH
		i. Applicability of Ind AS		>= 250 Cr. But < 500 Cr.
		ii. Corporate Social Responsibility (CSR)		>= 500 Cr.

	1.6	NET PROFIT
		Corporate Social Responsibility (CSR)		>= 5 Cr.

2	UNLISTED PUBLIC LIMITED COMPANY
	2.1	COMPULSORY
		Companies Auditor Report Order (CARO)

	2.2	PAID UP CAPITAL
		i.Rotation of Statutory Auditors		>= 10 Cr.
		ii.Audit and Remuneration Committee		>= 10 Cr.
		iii.At Least Two Independent Director		>= 10 Cr.
		iv.Whole Time Key Manegarial Personnel		>= 10 Cr.
		a.	Managing Director/ Whole Time Director
		b.	Chief Financial Officer
		c.	Company Secretary
		v.Annual Evaluation in the Directors Report		>= 25 Cr.
		vi.Internal Audit		>= 50 Cr.
		vii.Secretarial Audit		>= 50 Cr.
		viii.At Least One Woman Director		>= 100 Cr.


	2.3	BORROWING
		i.Rotation of Auditors		>= 50 Cr.
		ii.Audit and Remuneration Committee		>= 50 Cr.
		iii.At Least Two Independent Director		>= 50 Cr.
		iv.Vigil Mechanism		> 50 Cr.
		v.Internal Audit		>= 100 Cr.

	2.4	PUBLIC DEPOSIT
		Internal Audit		>= 25 Cr.


	2.5	TURNOVER
		i.Circulation of Annual Financial Statement		>= 10 Cr.
		ii.Audit and Remuneration Committee		>= 100 Cr.
		iii.At Least Two Independent Director		>= 100 Cr.
		iv.Internal Audit		>= 200 Cr.
		v.Secretarial Audit		>= 250 Cr.
		vi.At Least One Woman Director		>= 300 Cr.
		vii.Corporate Social Responsibility		>= 1000 Cr.

	2.6	NET WORTH
		i.Circulation of Annual Financial Statement		>= 1 Cr.
		ii.Applicability of Ind AS		>= 250 Cr. But < 500 Cr.
		iii.Corporate Social Responsibility (CSR)		>= 500 Cr.

	2.7	NET PROFIT
		Corporate Social Responsibility (CSR)		>= 5 Cr.

3	LISTED PUBLIC LIMITED COMPANY
	3.1	COMPULSORY		Without any limit.
		i.Internal Audit
		ii.Secretarial Audit
		iii.Rotation of Statutory Auditors
		iv.Companies Auditor Report Order (CARO)
		v.Applicability of Ind AS
		vi.Independent Director
		a.	Chairperson is Executive Director -1/2 of Board
		b.	Chairperson is Non-Executive Director -1/3 of Board
		vii. Woman Director
		viii.Audit Committee
		ix.Nomination and Remuneration Committee
		x.Annual Evaluation in the Diectors Report
		xi.Circulation of Annual Financial Statement
		xii.Vigil Mechanism
		xiii.Whole Time Key Manegarial Personnel
		a.	Managing Director/ Whole Time Director
		b.	Chief Financial Officer
		c.	Company Secretary

	3.2	TURNOVER
		Corporate Social Responsibility (CSR)		>= 1000 Cr.

	3.3	NET WORTH
		i.Applicability of Ind AS		< 500 Cr.
		ii.Corporate Social Responsibility (CSR)		>= 500 Cr.

	3.4	NET PROFIT
		Corporate Social Responsibility (CSR)		>= 5 Cr.