Highlights of new companies bill

HIGHLIGHTS OF NEW COMPANIES BILL

INCORPORATION AND CAPITAL RAISING:

1. A private company can have a maximum of 200 members, up from 50 in the Companies Act, 1956.

2. The concept of One Person Company introduced. It will be a private limited company.

3. Concept of dormant companies introduced. It can be formed for a future project or to hold an asset or intellectual property.

4. All companies to follow uniform financial year,running from April to March. 5. Exceptions to be made only for certain companies with the approval of NCLT.

5. All types of securities to be governed by the Bill.

6. The Prospectus has to be more detailed, money raised through a prospectus cannot be used for dealing in equity shares of another company. If a company changes terms of the prospectus or objects for which money is raised, it shall provide dissenting shareholders an exit opportunity.

7. Private placement defined, with detailed provisions for such placement. Apart from existing shareholders, if the Company having share capital at any time proposes to increase its subscribed capital by issue of further shares, such shares may also be offered to employees by way of ESOP, subject to the approval of shareholders by way of Special Resolution.

8. NBFCs not covered by the provisions relating to acceptance of deposits. They will be governed by Reserve Bank of India Rules.

9. Companies can accept deposits only from its members, that too after obtaining shareholders approval. Acceptance of deposit also subject to compliance with certain conditions. Public companies can accept deposit from public on complying certain conditions like credit rating.

MANAGEMENT AND ADMINISTRATION:

1. Listed companies required to file a return in a prescribed form with the Registrar regarding any change in the number of shares held by promoters and top 10 shareholders of such company, within 15 days of such change.

2. Postal Ballot to be applicable to all the companies, whether listed or unlisted.

3. Interim dividend in a current financial cannot exceed the average rate of dividend of the preceding three years if a company has incurred loss up to the end of the quarter immediately preceding the declaration of such dividend.

4. Financial statements include Balance Sheet, Profit & Loss Account and cash flow statements.

5. Provisions for re-opening or re-casting of the books of accounts of a company provided.

6. The National Advisory Committee on Accounting Standards renamed as The National Financial Reporting Authority. The authority to advise on Auditing Standards and Accounting Standards.

AUDITORS AND FINANCIAL STATEMENTS:

1. Every company is required at its first annual general meeting (AGM) to appoint an individual or a firm as an auditor. The auditor shall hold office from the conclusion of that meeting till the conclusion of its sixth AGM and thereafter till the conclusion of every sixth meeting. The appointment of the auditor is to be ratified at every AGM. Individual auditors are to be compulsorily rotated every 5 years and audit firm every 10 years in listed companies & certain other classes of companies, as may be prescribed.

2. Auditors have to comply with Auditing Standards.

3. A company’s auditor shall not provide, directly or indirectly, the specified services to the company, its holding and subsidiary company.

4. A partner or partners of the audit firm and the firm shall be jointly and severally responsible for the liability, whether civil or criminal, as provided in this Companies Bill 2013 or in any other law for the time being in force. If it is proved that the partner or partners of the audit firm has or have acted in a fraudulent manner or abetted or colluded in any fraud by, or in relation to, the company or its directors or officers, then such partner or partners of the firm shall also be punishable in the manner provided in clause 447.