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Companies Act, 1956

Companies Act, 2013

16 Schedules

7 Schedules

The Companies Act,2013 has skips the following schedules:

Schedule

Particulars

Remarks

IA

List of Relatives

Rules drafted, awaited for notification.

II

Matters to be Specified in Prospectus and reports to be set out therein

Rules drafted, awaited for notification.

III

Form of Statement in Lieu of Prospectus (SLP)

Companies Act,2013 has done away with the concept of SLP

IV

Form of Statement in Lieu of Prospectus (SLP) to be filed by private company on becoming public company.

Companies Act,2013 has done away with the concept of SLP

V

Annual Return Form

Forms drafted, awaited for notification.

VII

Restrictions on powers of Managing Agents, Secretaries and Treasurers

Redundant after abolition of  Managing Agents, Secretaries and Treasurers

VIII

Declaration to be made by Managing Agents, Secretaries and Treasurers

Redundant after abolition of  Managing Agents, Secretaries and Treasurers

IX

Form of Proxy

Forms drafted, awaited for notification.

X

Table of fees to be paid to ROC

Fees details awaited for notification.

XI

Forms in which Sec.539 to 544 of the 1956 Act are to apply in cases where application made under Sec.397/398.

Matters are dealt with section 26 of the Companies Act,2013.

XII

Enactments Repealed by the 1956 Act

Sec.465 of the Companies Act,2013 repeals the 1956 act except provision of Part IXA of  the 1956 act relating to Producer Companies.

XV

List of Industries

Omitted by the Companies Act,2013.

The Companies Act,2013 has retained only 4 of 16 schedules of the Companies Act,1956 with changes and introduces 3 new schedules to cover new concepts of Independent Directors, CSR and Infrastructural Projects.

The  4 modified and 3 new schedules are summarized below:

Particulars

Schedules

Remarks

CA 1956

CA 2013

Companies Act,1956

Companies Act,2013

Forms of MOA &AOA-

Table F of the 1956 Act

I

I (Table A to J)

Form of statement to be published by limited Banking Cos, Insurance Cos,etc.,.

Formats modified to accommodate new concepts of OPC,

e-voting,etc.,.

Useful lives to Compute Depreciation

XIV

II

It deals with only depreciation of tangible assets.

It deals with the Rate of Depreciation of tangible assets.

It deals with amortization of Intangible assets also.

It deals with the useful lives of tangible assets and does not prescribe depreciation rates.

General Instructions for Preparation of B/S &Statement of P&L of a Company

VI

III

Form  of B/S

Same as Revised Sch.VI except that Sch.III contains instructions regarding consolidated accounts as preparation of consolidated accounts made mandatory by the 2013 act.

Code of Independent Directors(IDs)

-------

IV

      

                -----

IDs is new concept introduced by the 2013 act. Sch.IV is a new schedule containing CoC for IDs.

Conditions to be fulfilled for  the appointment of a MD/WTD or a Mgr without the approval of CG

XIII

V

               -----

                -----

Infrastructural Projects/Facility

-------

VI

              -----

New Schedule introduced  by  the Companies Act,2013

Activities which may be included by companies in their CSR Polices

-------

VII

              -----

MCA has notified the Sec.135 and corresponding rules & Sch.VII on 27 /02/14 to comply with mandatory CSR spends for specified companies.

Useful lives to Compute Depreciation: -–Schedule-II.{(Sec.123(2)}

Depreciation:

Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life.

Depreciable amount of an asset = Cost of an asset/other amount substituted for cost

                                                                      (-)

                                                                Residual value       

(Residual value should not be more than 5 % of the original cost of the asset)

Useful life:

‘Useful life’ may be considered as a period over which an asset is available for use or as the number of production or similar units expected to be obtained from the asset by the entity.

Applicability

The Companies Act, 2013 states that Schedule II will be applicable as follows:

- For a prescribed class of companies, whose financial statements are required to comply with AS prescribed under the 2013 Act, the useful lives should normally be in accordance with the Schedule. However, if a prescribed company uses a different useful life, it should disclose a justification for doing so;

- For Government Companies,useful life or residual value of any specified asset, as notified for accounting purposes by a Regulatory Authority constituted under an Act of parliament or by the Central Government shall be applied in calculating the depreciation to be provided for such asset irrespective of the requirements of this Schedule.

- For other Companies, the useful life of an asset shall not be longer than the useful life and the residual value shall not be higher than that prescribed in Part C.

Other Points:

1. The following information shall be disclosed in the accounts namely;

- Depreciation method used &

- Useful lives of the assets for computing depreciation, if they are different from the life specified in the schedule.

2. Factory Buildings does not include offices, godowns, staff quarters.

3. During any financial year, if any addition has been made to any asset or where any asset has been sold, discarded, demolished or destroyed, the depreciation on such assets shall be calculated on a pro rata basis from the date of such addition or, as the case may be, up to the date on which such asset has been sold, discarded, demolished or destroyed.

4. Useful life specified in Part C of the Schedule is for whole of the asset. Where cost of a part of the asset is significant to total cost of the asset and useful life of that part is different from the useful life of the remaining asset, useful life of that significant part shall be determined separately.

5. Transitional Provisions:

From the date this Schedule comes into effect, the carrying amount of the asset as on that date—

(a) shall be depreciated over the remaining useful life of the asset as per this Schedule;

(b) after retaining the residual value, shall be recognised in the opening balance of retained earnings where the remaining useful life of an asset is NIL.

6. ‘‘Continuous process plant’’ means a plant which is required and designed to operate for 24 hours a day.

Schedule XIV Vs Schedule II:

.Companies Act,1956 – Sch.XIV

Companies Act,2013- Sch.II

 It deals with only depreciation of tangible assets.

It deals with the amortization of intangible assets also.

It contained rates of depreciation of tangible assets.

It contains only useful lives of tangible assets and does not prescribe depreciation rates.

100% Depreciation shall be charged on assets whose actual cost does not exceed Rs.5,000/-

Omits the provision for 100% Depreciation on immaterial items i.e, assets whose actual cost does not exceed Rs.5,000/-

Extra Shift Depreciation (ESD) not applicable to:

- Items marked NESD in the schedule

- Specified items of P&M to which general rate of Depreciation was applicable.

Extra Shift Depreciation (ESD) not applicable to:

- Items marked NESD in  the schedule.

- ESD will apply to P&M items subject to general rate i.e., useful life of 15 years.

ESD for double shift and triple shift was to be made separately in proportion with No.of days for which concern worked second shift or triple shift bears to normal No.of working days in a year.

For Seasonal factory:

Greater of actuals and 180 days.

Other cases:

Greater of actual and 240 days.

ESD working simplified by the 2013 act-

For Double shift:

50% more depreciation for that period for which asset used.

For Triple shift:

100% more depreciation for that period for which asset used.

Practical Issues:

How the rates of depreciation will be arrived for each class under WDV method as per Schedule II, where each asset is capitalized at different dates in a year?

Whether there will be any retrospective impact if company changes its existing depreciation policy (from WDV to SLM and Vice versa) under new Compaines Act, 2013 and charge depreciation as per useful life provided in Schedule II?

What will be the treatment of the balance depreciable value of the asset in case when useful life of such asset has already expired as per new schedule II of 2013 Act?

For example remaining carrying value of the asset is 50% of the original cost and the remaining useful life is zero as per Schedule II, then what will be treatment of entire 50% remaining value? Should it be charged to reserves?

Under block of assets method when different plant and machineries under the same block are purchased in different years then in that case there will be different rates of depreciation for each year for each new machinery purchased.

Transitional provision requiring carrying value to be depreciated over remaining useful life will result in very cruel outcomes. 

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Category Corporate Law, Other Articles by - CS M.Kurtrala Nathan 



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