Dear Members
The draft rules (3rd phase) under the Companies Act, 2013 was released yesterday, i.e. 22.10.2013. The same has been posted on the website for suggestions and comments and the last date for submitting the same is 01.11.2013.
For quick reference, the third tranche covers the following subjects:
1. Under Chapter V - Acceptance of Deposits by Companies (consisting of 25 pages). The draft of Companies (Acceptance of Deposits) Rules, 2013 has been laid out. The said rules covers the undermentioned topics:
a. Definitions (like what includes deposits, depositor, eligible company, trustee etc.)
b. Acceptance of deposits by companies
c. The rate of interest
d. The form and particulars of advertisements/ circulars
e. Deposit insurance
f. Creation of security
g. Appointment of deposit trustees
h. Duties of deposit trustees
i. Form of application for deposits
j. Furnishing of deposit receipts to depositors
k. Maintenance of liquid assets and creation of deposit repayment reserve account
l. Alteration of any terms and conditions
m.Register of Deposits
n. General provisions regarding premature repayment of deposits
o. Return of deposits to be filed with the Registrar
p. Penal rate of interest
r. Power of Central Government to decide certain questions
s. Punishment for contravention
The Companies (Acceptance of Deposit) Rules, 2013 shall not apply to Banking Company and to NBFC's.
2. Under Chapter XIV - Inspection, Inquiry and Investigation (consisting of 8 pages). In these Rules, the following has been dealt with:
a. The Central Government may appoint persons for the efficient discharge of SFIO (Serious Fraud Investigation Office) functions. The terms and conditions of service of directors, experts, other officers and employees of SFIO has been laid out.
b. For the purposes of sub-sections (8) and (9) of section 212 of the Act (section 212 deals with investigation into the affairs of the Company by SFIO under which sub-sections (8) and (9) deals with the powers of arrest by the Directors of SFIO and the procedure to be followed); the rules lays down the said procedure.
c. The requirement of security before the appointment of inspectors u/s 210(3) or clause b of section 213. The security is to be given for payment of the costs and expenses of investigation. Just for reference, section 210(3) mentions that the Central Government may appoint inspector(s) to investigate into the affairs of the Company and to give its report.
d. Appeal before the Appellate Tribunal u/s 218(3) with grounds of appeal.
e. The format of arrest memo, personal search memo, authorisation memo, memorandum of appeal, prescribed fees for filing appeal has been laid down.
3. National Financial Reporting Authority (Composition and the manner of selection of Chairperson and Members) Rules, 2013 (6 pages). These rules, inter-alia, lays down the following:
a. Definition of certain terms
b. Composition of NFRA (National Financial Reporting Authority)
c. The qualifying criteria of Chairperson, full time Members
d. The list of persons who will not be considered eligible for the said posts
e. The manner of selection of a panel of names. It is pertinent to mention here that, Committee plays an important role.
‘Committee’ means the Selection Committee constituted under and pursuant to rule
3 of the National Financial Reporting Authority (Constitution of Selection Committee)
Rules, 2013
f. Functions of Committee
g. Other conditions of service
4. National Financial Reporting Authority (Constitution of Selection Committee) Rules, 2013 (2 pages). These contain the following:
a. Definitions of certain terms
b. Constitution of Selection Committee
c. Other matters
5. National Financial Reporting Authority (Salary, Allowances and other Terms and Conditions of Service of Chairperson and other Members) Rules, 2013 (6 pages). These contain the following:
a. Definitions
b. Salary
c. Contributory Provident Fund
d. Leave
e. Travelling and Daily Allowances
f. Official visits abroad
g. Leave Travel Concession
h. Facility for Medical Treatment
i. Declaration of independence and lack of conflict of interest
j. Term of office of Chairperson and Members of Authority
k. Vacancy
l. Resignation, removal and suspension of Chairperson and other Full time Members
m. Administrative powers of Chairperson
n. Terms and Conditions of service of part time Members
o. Other Conditions of Service
p. Power to relax
6. National Financial Reporting Authority Rules, 2013 (31 pages). These contain, inter-alia, the following:
a. Definitions
b. Composition of the Authority
c. Structure of the Authority
d. Functions of the Authority: This mentions Standard Setting, Monitoring, compliance review and overseeing quality of service and Enforcement
e. The Authority shall undertake investigation or conduct quality review of audit of certain mentioned class of companies
f. The Authority shall undertake investigation in accordance with the provisions of sub-section (4) of section 132 of the Act and rules made thereunder against the auditors or audit firms which conduct the audit of the mentioned category of companies or their branches
g. Committee on Accounting Standards and its functions-the composition of the committee has also been mentioned. For the purpose of formulation of accounting standards under the Act, the process that needs to be followed by the Committee has been laid down too.
h. The process to be followed by the Committee for the purpose of monitoring compliance of accounting standards under the Act
i. The composition of the Committee on Auditing Standards and its functions, investigation and monitoring
j. Committee on Enforcement and its functions
k. The provisions for meetings for transaction of business and their procedure
l. The procedures of Investigation related to Complaints and Information, withdrawal of a complaint
m. The procedure for examination of the Complaint, the time limit etc.
n. The procedure to be followed by the Committee on Enforcement, Orders given by them, Appeal provisions etc.
The link at which the above can be viewed is https://ncbfeedback.mca.gov.in/
Just to mention, the last date for submitting comments/ suggestions for the 2nd tranche of draft rules is tomorrow, i.e. 23.10.2013.
Draft Rules are also attached.
Regards
Sanjay Gupta
CAclubindia
