Highlights of companies bill 08 for accounts dept

Existing Provisions

Revised Provisions

·         a few internal corporate processes (such as appointment of managerial personnel and remuneration thereof) are controlled by the Central Government

·         such powers will now be exercised by the shareholders

·         one person company is not allowed

·         one person company is allowed

·         companies, associations and partnerships of more than 10 people (for banking companies the minimum limit is 20) must be registered

·         companies, associations and partnerships of more than 100 people could be registered and no ceiling as far as professions regulated by specific enactments are concerned.

·         there are no provisions for the appointment of independent directors; however SEBI governs these for listed companies

·         33% of the directors should be independent

·         all the directors of a company can be foreign directors

·         at least one director has to be Indian

·         companies are allowed to raise deposits from the public

·         companies are not allowed to raise deposits from the public, except for deposits raised through other specific enactments

·         insider trading regulations are governed by SEBI

·         insider trading by company personnel is recognized as a criminal liability

·         unlike accounting standards, there is no specific recognition of auditing standards

·         recognition is provided to both-auditing and accounting standards

·         no compulsory consolidation; except for listed companies which are governed by SEBI

·         consolidation of financial statements is mandatory

·         there are different forums for mergers & approvals

·         there is a single forum for mergers and acquisitions

·         claim/s of investor/s for dividend etc; after seven years are extinguished

·         claim/s of investor/s for dividend etc are not extinguished and Investors Education and Protection Fund now being administered by a Stat Authority  

·         no shareholder's association can take legal action against fraudulent action by companies

·         shareholder's association/s can be enabled to take legal action against fraudulent action by companies

·         company is not identified as a separate entity from the officers in default, for imposition of monetary penalties

·         company is recognized as separate identity from the officers in default, for imposition of monetary penalties

·         the levy of additional fee for procedural offences is incorporated in various sections and these vary, as per the discretion of the Registrar of Companies

·         the levy of additional fee for procedural offences is enabled through various rules and these are non-discretional in nature

·         there are no special courts for offences in relation to amalgamations and mergers, reduction of capital, insolvency etc.

·         special courts to deal with such offences.

·         a single, comprehensive, legal framework administered by the Central Government for all aspects of internal governance of corporate entities

·         an easy transition of companies to the new framework and from one type of company to another

·         statutory recognition to audit, remuneration and stakeholders grievances committees of the

Board and the Chief Executive Officer, the Chief Financial Officer and the Company Secretary being recognised as Key Managerial Personnel

·         a separate framework for enabling fair valuations in companies for various purposes; and the  appointment of valuers in this respect, by audit committees

·         a revised framework for regulation of insolvency, including rehabilitation, winding up etc, in a time bound manner

·         a more effective regime for inspections and investigations of companies for levy of penalties