The Companies Act 2013 by Cs Shishir Dudeja

THE COMPANIES ACT, 2013
(No. 18 of 2013)
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(Lets have some discussion)

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Presented by: CS ShiShir Dudeja

Cell : +91-9910938312
CS SHISHIR DUDEJA
Email: CSshishirdudeja@gmail.com,
Cell: +919910938312
2011
Introduced Companies Bill 2011 in December 2011

Passed by Lok-Sabha - 18th December,2012
Passed by Rajya Sabha - 18th August,2013
2013
Received assent of Honble President - 29th August 2013

Notified in the Gazette of India 30th August 2013
98 Sections Notified by MCA for implementation 12th September 2013
Bill withdrawn due to numerous amendments.

In the recommendations of the parliamentary standing committee on
Finance and suggestions of the stakeholders, the Central Government
withdrew Companies Bill,2009.
2009
BACKGROUND
CA, 2013 JOURNEY TILL TODAY!!!

03rd AUGUST 2009
Introduction Companies
Bill 2009 in Lok-Sabha
08th AUGUST 2013

Bill Introduced &
PASSED Rajya-Sabha
29th AUGUST 2013

President of India
Assent on Companies Bill
th OCTOBER 2013
24th
Draft Rules on IEPF under
th put live for Public
Phase 4th
Comments
09th SEPTEMBER 2009

Referred to Standing
Committee for Examination
18th DECEMBER 2012

Bill Introduced &
PASSED
LOK-SABHA
09th SEPTEMBER 2013

Draft Rules for 16 Chapter in
1st Phase made live for Public
Comments
21stst OCTOBER 2013

Draft Rules for 3 Chapters
rd Phase made live for
in 3rd
Public Comments
31st AUGUST 2010

Receipt of report of
Standing Committee
26th JUNE 2012

Receipt of report of
Standing Committee
12th SEPTEMBER 2013

MCA notifies 98 Sections
of CA, 2013
24th SEPTEMBER 2013

Draft Forms for rules
under Phase 2 put for
Public Comments
14th DECEMBER 2011

Laying down of Companies
Bill 2011 in Lok-Sabha
05th JANUARY 2012

Re-referred to Standing
Committee for reexamination
CS SHISHIR DUDEJAEmail: CSshishirdudeja@gmail.com,

Cell: +919910938312
th SEPTEMBER 2013
16th
DRAFT FORMS for rules
under Phase 1 put for Public
Comments
20th SEPTEMBER 2013

Draft Rules for 9 Chapters in
2nd Phase made live for Public
Comments
3
COMPANIES ACT, 1956
COMPANIES ACT, 2013
Introduced on 1st April, 1956

Applicable WHOLE OF
Introduced as CB, 2011 in Dec2011

Applicable to the WHOLE OF INDIA
(EXCEPT SikkimCompanies Act)
13
it
has
INDIA
its
own
658
29
470
Parts
Sections
Chapters
Sections
95
15
95
Definitions
CS SHISHIR DUDEJA
Schedules
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Definitions
Schedules
Notified 98 Sections w.e.f. 12th September,

2013 & others are likely to be notified
w.e.f. 1st April, 2014
4
WHATS IN & OUT
IN
SFIO
Vigil mechanism
Secretarial Audit
Auditor Rotation
Resident Director
Private Placement
Registered Valuers
Dormant Company
Recasting of Account
Secretarial Standards
One Person Company
Key managerial personnel
NCLT, and NFRA
CS SHISHIR DUDEJA
OUT
Treasury Stocks
Statutory Meetings
Sole Selling Agents
Qualification Shares
Convert share into stock
Commencement Certificate
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Class
Action
CSR
SFIO
OPC
Fraud
Officer
In
Default
Special
Courts
Annual
Report
Dormant
Company
Small & Big

Company
CS SHISHIR DUDEJA
NEW
CONCEPTS
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Role Of
ID
KMP
Auditors
Rotation
Boards
Report
Secretarial
Internal Audit
Women
Director
Remuneration
& Sitting Fees
NFRA
NCLT
&
NCLAT
Related Party
Transactions
Secretarial
Standards
NEW
CONCEPTS
Appointment
Of Directors
Contd!!!
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PROVISIONS CITED IN
THE COMPANIES ACT, 2013
FOR BETTER GOVERNANCE
Requirement to spend on CSR activities.
Mandatory Auditing Standards.
Disclosure and approval of Related parties Transactions.
Enhancement of liability of Auditors.
Rotation of Auditors and restriction on Auditor's for providing non-audit services.
Code of Conduct for Independent Directors.
Mode of appointment of Independent Directors and their tenure.
Specific clause pertaining to duties of directors.
Grievances Committee.
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PROVISIONS CITED IN COMPANIES ACT-2013

FOR BETTER GOVERNANCE Contd!!!
Granting of More powers to Audit Committee.
Enabling Shareholders Associations / Group of Shareholders for taking class
action its & reimbursement of the expenses out of Investor Education and
Protection Fund.
Constitution of National Financial Reporting Authority, an independent body to take
action against the Auditors in case of professional misconduct.
Requirement to constitute Remuneration and Nomination Committee and

Stakeholders.
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Issued by The Institute of Company Secretaries of India

(ICSI)
CS SHISHIR DUDEJA Email: CSshishirdudeja@gmail.com,

Cell: +919910938312
10
SS-1
Secretarial Standard
on Meetings of BOD
SS-4
Secretarial
Standard on
Registers and
Records
SS-8
on Affixing of Common
Seal
SS-2
on General Meetings
SS-5 Secretarial
Standard on Minutes
SS-6
on Transmission of
Shares and Debentures
SS-9
on Forfeiture of Shares
CS SHISHIR DUDEJA
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SS-3
on Dividend
SS-7
Secretarial
Standards on
Passing Resolutions
By Circulation
SS-10
Secretarial Standards on
Board's Report
11
One Person Company

[OPC]
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Background of One Person Company (OPC)
2004: Government on India constituted an Expert Committee on Company Law under

the Chairmanship of Dr. J. J. Irani to make recommendations on various issues.
2005: OPC Concept has been first recommended by the Expert Committee (Dr.
Irani).
Expert Committee examined that how the global changes given a chance to an
individual to participate into economic activity. And how can such economic
activity may take place through the creation of an economic person by the Company
Law.
We feel that it is possible for individuals to operate in the economic domain and
contribute effectively. To facilitate this, the Committee recommends that the law should
recognize the formation of a single person economic entity in the form of One Person
Company (OPC). Such an entity may be provided with a simpler regime through
exemptions
so that the single entrepreneur is not compelled to fritter away his time, energy and resources
on procedural matters.
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Separate legal entity

Limited liability
Debt-not the sole responsibilty of the owner
OPC to be suffixed with the name of OPC.
One
Person
Company
[Section 2 (62)]
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registered as PRIVATE Company with ONE

Member & at least One director.
Not required to hold Annual General Meeting
Min. ONE Director and Max. Fifteen which
can be increased by passing SR.
Any resolution passed and
book, signed and dated by
consider as Board Meeting.
enter into minutes

the member shall
14
OPC Contd!!!
A person can incorporate a maximum of 5 OPCs.
Not required to prepare Cash Flow Statement as a part of Financial Statement.
Must conduct at least One Board Meeting in each half of a calendar year with a
gap of atleast 90 days between the 2 meetings.
Annual Return of OPC shall be signed by Company Secretary, or where there
is no company Secretary, by the Director of the Company.
Only natural persons can incorporate an OPC .Also, the person
incorporating an OPC must be an Indian citizen who has stayed in India for
at least 182 days during the immediately preceding Financial year.
Memorandum of an OPC shall indicate the name of the another person, with
his prior written consent, who shall in the event of the subscribers death or his
incapacity to contract becomes the member of the company.
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COMPANIES LAW PROVISIONS w.r.t. OPC
Section 2 (62): Definition of "One Person Company

Section 2 (40): Definition of "Financial Statement"
Section 2 (68): Definition of "Private Company"
Section 3: Formation of the One Person Company (OPC)
Section 4(1)(f) : Memorandum
Section 12 (3) Proviso : Registered Office of the One Person Company (OPC)
Section 92 (1) Proviso : Annual Return
Section 96 (1) : Annual General Meeting (AGM)
Section 122: Applicability of Chapter-VII(Management & Administration) - OPC
Section 134 : Financial statement, Boards report, etc.
Section 137 (1) : Copy of financial statement to be filed with Registrar
Section 149 : Company to have Board of Directors
Section 152 : Appointment of Directors
Section 173 : Meetings of Board
Section 193 : Contract by One Person Company (OPC)
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COMPANIES LAW PROVISIONS w.r.t. OPC Contd!!!

SECTIONS NOT APPLICABLE TO One Person Company (OPC)
Section 98 : Power of Tribunal to call meetings of members, etc.

Section 100 : Calling of extraordinary general meeting
Section 101 : Notice of meeting
Section 102 : Statement to be annexed to notice
Section 103 : Quorum for meetings
Section 104 : Chairman of meetings
Section 105 : Proxies
Section 106 : Restriction on voting rights
Section 107 : Voting by show of hands
Section 108 : Voting through electronic means
Section 109 : Demand for poll
Section 110 : Postal ballot
Section 111 : Circulation of members' resolution
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17
SMALL COMPANY
[Section 2(85)]
Small company means a company other than a public company
i.
ii.
Paid-up Share Capital of which does not exceed Fifty Lakh or such higher
amount as may be prescribed not exceeding Five Crores;
OR
Turnover of which as per its last profit and loss account does not exceed Two
Crore or such higher amount as may be prescribed not exceeding Twenty
Crore.
Exemptions:
. Holding company or subsidiary company
. Company registered under section 8
. Company or body corporate governed under Special Act
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PRIVATE COMPANY
DEFINITION:
A company having minimum paid-up share capital of One Lakh Rupees or such
higher number as maybe prescribed and which by its articles;
Restricts the right to transfer its shares;
Except in case of One Person Company, limits the number of its members to
Two hundred (200);
Prohibits any invitation to public to subscribe for any securities of the

company
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DORMANT COMPANY
[Section 455]
Company is formed and registered under this Act:
for a future project; or
to hold an asset or intellectual property; and
has no significant accounting transaction
may make an application to the registrar for obtaining the status of Dormant company.
The Registrar will issue a certificate to that effect.
To retain the status the Company shall have such minimum number of directors,
file such documents and pay such annual fee to the Registrar.
On an application it may become an active company.
In case of failure of any requirements Registrar may strike off the name from
the register of dormant companies
PRIVATE LTD COMPANIES HAVING TURNOVER UPTO

60 LAKHS SHOULD BE CONVERTED TO LLP
1)
LLP is not a company, hence proposed limit of audit of 20 company / CA will not
be applicable.
2)
As Companies Act will not be applicable, you can transfer fund from one LLP to
another group LLP.
3)
Many of exemption which Pvt Ltd company enjoy under old Companies Act has
been withdrawn, which are not applicable to LLP.
Cont
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PRIVATE LTD COMPANIES HAVING TURNOVER UPTO

60 LAKHS SHOULD BE CONVERTED TO LLP
4) Compliances under new companies Act for Pvt Ltd Companies has been
substantially increased, which are not applicable for LLPs.
5) There is heavy penalty for non compliances under New Company Act. Penalty of
Rs 50,000 is a small amount for a single violation.
6) Cost benefit analysis suggests that these should be converted into LLP.
7) However, as per sec 47(xiiib) of Income tax Act, for tax neutrality of such
conversion , turnover of Pvt Ltd company in any of last 3 years must not exceeds
60 lakhs. So, if turnover exceeds 60 lakhs than such conversion will be subject to
income tax.
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PRIVATE LTD COMPANIES SHOULD BE

CONVERTED INTO PUBLIC LTD COMPANIES
1)
Sec 185 of New Co Act is not applicable to Public Ltd co at a general meeting of
which not less than 25% of the total voting power may be exercised or
controlled by any such director, or by two or more such directors, together
2)
We can plan accordingly and take benefit.
3)
So, we can convert our existing Pvt Ltd companies to Public Ltd companies and
take benefits.
CS SHISHIR DUDEJA
Cont
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23
KEY MANAGERIAL PERSONNEL
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KEY MANAGERIAL PERSONNEL

[Section 2(51)]
Chief Executive Officer
Managing Director
Manager
Company Secretary
Whole-Time Director
Chief Financial Officer
Such other person to be prescribed
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KEY MANAGERIAL PERSONNEL Contd!!!
Key managerial personnel includes:

- Included in the definition for an Officer who is in default
- Related party includes relative of Key Managerial Personnel
Section 21 interestingly provides that any Document/Contract requiring

authentication by Company can be signed by KMP/ person authorized by the
Board
Annual Return to contain information about KMP and changes if any thereof
and their remuneration
Relatives of KMP to not be appointed as auditors
Register of KMP along with securities held by them in the company to be

maintained & particulars of change in KMP to be filed with ROC
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KEY MANAGERIAL PERSONNEL Contd!!!

AS PER DRAFT RULE 13.6 OF CHAPTER XIII
1. As per section 203(1),Every Listed Company and other company having paidup share capital of Five crore rupees or more shall have Whole time Key
Managerial Personnel.
2. An individual shall not be appointed or reappointed as the chairperson of the
company, in pursuance of the articles of the company, as well as the Managing
Director or Chief Executive Officer of the company at the same time after the
date of commencement of this Act unless,
(a) the articles of such a company provide otherwise; or
(b) the company does not carry multiple businesses:
Provided further that nothing contained in the first proviso shall apply to such
class of companies engaged in multiple businesses and which has appointed one
or more chief executive officers for each such business as may be notified by the
central government.
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DIRECTORS
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WOMAN DIRECTOR
[Section 149 (1) Proviso II]
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WOMAN DIRECTOR Contd!!!

Concept of Woman Director on the Board
[As per 2nd proviso to Section 149(1)]
Other Public Company having

Paid-up Share
capital of Rs.100
Crore or more;
or
Turnover of
Rs.300 Crore or
more.
Within 3 Years from the

commencement of
U/s149 (1)-Proviso II
CS SHISHIR DUDEJA
Every Listed
Company
Shall have one

Woman Director
Within 1 Year from the

commencement of
U/s 149 (1)-Proviso II
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INDEPENDENT DIRECTOR
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INDEPENDENT DIRECTOR
[Section 149]
Every existing company to have IDs within one year from
commencement of the Act or from the date of notification of the Rules
(whichever is first)
Central Government to prescribe the minimum number of Independent
Directors in case of any class or classes of public Companies.
Every listed public Company to have at least one-third of the total number of
directors as Independent Directors (ID)
(As per Draft Rules: Public Companies having paid up share capital of Rs. 100 cr or
more, Public Companies having turnover of Rs. 300 cr or more, Public Companies
which have, in aggregate, outstanding loans or borrowings or debentures or deposits,
exceeding Rs. 200 cr)
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INDEPENDENT DIRECTOR Contd...!!!

TERM RESTRICTIONS
2 consecutive terms of 5 years each;
3 year cool-off (no association with the company) before becoming
eligible again.
Appointment has to be approved by members in general meeting and the

explanatory statement to the notice should indicate justification of such
appointment
Independent Directors are not entitled to any stock options. This is contrary to
the Listing Agreement, where the maximum limit can be fixed by shareholders
resolution
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INDEPENDENT DIRECTOR Contd...!!!

AS PER DRAFT RULES :
BOARDs ENSURANCE
Appropriate balance of skills, experience and knowledge in one or more fields of
finance, law, management, sales, marketing, administration, research, corporate
governance, technical operations other disciplines related to the companys business
AND DISCLOSE IN BOARD REPORT
DATA BANK with details of the person eligible and willing to be appointed as
independent director to be prepared by any body, institutions as authorized by CG
(as may be notified by CG).
Responsibility of due diligence for appointment of independent directors to be

on company.
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NUMBER OF DIRECTORSHIPS
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NUMBER OF DIRECTORSHIPS
[Section 165]
Maximum 20 companies
Directorship - Include Alternate Directorship

Maximum Directorship in Public Company - 10 (Ten)
(includes Private which are Holding /Subsidiary of Public Comp.)
No. of members specify lesser number by passing special resolution
Penalty for contravention: MINIMUM Rs. 5,000, and Maximum
Rs. 25,000 for every day during which the default continues
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REMUNERATION OF DIRECTORS
[Section 197]
Remuneration of Directors
By Public Company
Managing
Director
TO
Manager
Whole Time
Director
NOT EXCEED 11% OF THE NET PROFITS for that Financial Year.
EXCEPTION: With Prior approval of Central Government authorize
payment of remuneration exceeding 11% in General Meeting.
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REMUNERATION OF DIRECTORS Contd!!!
Remuneration to WTD or MD or Manager
If there is Only
one MD or
WTD or
Manager.
NOT EXCEED 5%
of the Net profits of
the Company.
CS SHISHIR DUDEJA
If there is more
than one MD or
WTD or
Manager.
NOT EXCEED 10%

of the Net profit to all
such Directors &
Manager taken
together.
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REMUNERATION OF DIRECTORS Contd!!!

Remuneration payable to
DIRECTORS who are neither MD
nor WTD.
NOT EXCEED 1% of Net

profits of the company, if
there is a MD or WTD or
Manager.
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NOT EXCEED 3% of the

Net profits in any other
case.
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Remuneration to WTD or MD or Manager

COMPANIES ACT, 1956
Where Effective Capital
of Company is
Monthly in Rs.
(Maximum )
Less than 1 Crore
1,50,000
Rs. 1 Crore or More but less

than Rs. 5 Crores
2,00,000
Rs. 5 Crores or More but

less than Rs. 25 Crores
2,50,000
Rs. 25 Crores or more but

3,00,000
Rs. 50 Crores but less than

Rs. 100 Crores
3,50,000
Rs. 100 Crores or More
4,00,000
COMPANIES ACT, 2013

Where the Effective
Capital of Company is
Yearly in Rs.
(Maximum)
Negative or Less than Rs. 5

Crores
30,00,000
Rs. 5 Crores or More but less

than Rs.100 Crores
42,00,000
Rs. 100 Crores or More but

60,00,000
Rs. 250 Crores or More
60 Lakhs + 0.01%
of the Effective
Capital
in excess of Rs.
250 Crores
Provided that the above limits shall be

doubled if the resolution passed by the
shareholders is a special resolution
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SITTING FEE FOR DIRECTORS

[Section 197]
Director may receive remuneration by way of fee for
attending meetings of the Board or Committee
Every listed company shall disclose in Boards Report, the ratio of
remuneration of each Director to the median employees
remuneration
Director or Manager may be paid remuneration either by way of:
* A Monthly payment; or
* At a specified percentage of the net profits of the company; or
* Partly by one way and partly by other.
AS PER THE DRAFT RULES
Sitting fees: Maximum Rs.1 lakh per Board or Committee Meeting
Board may decide different Sitting Fee payable to Independent and
Non-Independent Directors other than Whole-time Directors
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BOARDS REPORT
Extract of
Annual Return
Number of
Board Meetings
Declaration by
Independent
Director
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Directors
Responsibility
Statement
Comments/Expl-anation by BOD
on Secretarial
Audit Report
Particulars of
Loan/Guarantee/
Investment
Particulars of
Contracts/Arran-gements with
Related Party
Material changes
from end of FY to
date of Report
Statement on
Risk
Management
Policy
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Details of
CSR Policy
BOD/Committee
Performance
Evaluation
Other Such
Matters
42
BOARDS REPORT
OTHER MATTERS PRESCRIBED
Financial Summary
And Highlights
Companies ceased to be
Subsidiaries,
JVs or Associate
Details of Directors
or KMP
Details of
Significant & Material
orders passed by the
Regulators/ Courts
Details relating to
Deposits
Change in the
Nature of Business,
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BOARD REPORT
Annual Return - Contents
[Section 92]
Securities &
Shareholding
Pattern
Members &
Debenture
Holders
Promoters,
Directors, &
KMP
Meeting of
Board and
Committees
Details of
Compounding
Penalty or
Punishment &
In-Debteness
Remuneration
of Directors and
KMP
Shares held by
or on behalf of
the FIIs
Other Matters
as may be
prescribed.
Meetings of
Members
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COMMITTEE OF BOARD
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COMMITTEE OF BOARD
Nomination &
Remuneration
Committee
U/s 178
Shareholders
Grievance
Committee(U/s 178)
Audit
Committee
U/s 177
BOARD COMMITTEE
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NOMINATION & RENUMERATION

COMMITTEE
[Section 178]
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SHAREHOLDERS GRIEVENCE COMMITTEE

[Section 178]
ELIGIBILITY
RESPONSIBILITES
Consider and Resolve
the Grievances of
Security/Share
Holders of the
Company
CS SHISHIR DUDEJA
Companies having more than
1000 Shareholders, DebentureHolders, Deposit-Holders and

Other Security Holders
Any time during Financial Year
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CHAIRPERSON
Non-Exec. Director
and Other Members as
decided by the Board
48
AUDIT COMMITTEE
[Section 177]
ELIGIBILITY
Every Listed and Other Prescribed Class of Companies
AS PER DRAFT RULES
Every Listed Company, and Every Other Public Company having Paid-up Capital of >Rs. 100 Crore; OR
Outstanding Loans or Borrowings or Debentures or Deposits > Rs 200 Crore
COMPOSITION
Minimum 3 Director with the Independent Director forming majority
Majority of members including its Chairperson shall be persons with ability to read and understand, the financial
statement.
RIGHTS OF AUDITORS OF COMPANY AND KMP TO ATTEND MEETING OF AUDIT COMMITTEE

Auditors & KMP have a right to be heard in the meetings of the Audit Committee when it considers the auditors
report but shall not have the right to vote.
BOARDS REPORT TO DISCLOSE :

A) Composition of the audit committee and
B) Any recommendation which has not been accepted by the board.
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AUDIT COMMITTEE Contd!!!

VIGIL MECHANISM
ELIGITILITY
Every Listed Company or Such Class of Companies
AS PER DRAFT RULES
Companies which accept deposits from public and Companies
which have borrowed money from banks and public financial
institutions > Rs 50 Crores
MECHANISM FACILITATES
Directors and Employees to report genuine concerns
SAFEGUARDS
Adequate safeguards against victimization of persons who
use such mechanism
ACCESSEBILITY
Direct Access to Chairperson of the Audit Committee
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Vacation of Office of Directors
Office of Director
shall become vacant in
case Director-
Disqualified by an order of
Court/Tribunal; and/or
Fails to disclose interest in any
Contract / Arrangement; and/or
(in which directly or indirectly interested);
Absents from all Meetings of the Board

(during period of 12 months with or without seeking leave
of absence); and/or
Acts in contravention of Section 184

(w.r.t. contracts or arrangements)
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OFFICER-IN-DEFAULT
[Section 2(60)]
CS SHISHIR DUDEJA
Liable To Penalty Or Punishment By Way Of

Imprisonment
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RELATED PARTY TRANSACTIONS

[RPT]
[Section 188]
NEW PROVISIONS:
Combines sections 297 and 314 both the sections dealt with 2 different
scenarios
Definition of related party widened
Purview of related party transaction widened sale, purchase, leasing of
property included
Arms Length Transaction defined
CG approval replaced with prior approval of shareholders for prescribed
class of companies
Related party contracts to be explained in the Boards report along with
justification for the contract
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RELATED PARTY
[Section 2(76)]
A Director;
A Key Managerial Person;
Relatives of any of Director and/or KMP
A Firm, in which director, manager or his relative is a partner
A Private Company, in which director, manager is a director or member;
A Public Company, in which director or manager is a director or holds along with
his relatives more than 2% of paid-up capital;
Any body corporate whose Board of Directors, Managing Director or Manager is
accustomed to act in accordance with the advice, directions or instructions of a
director or manager;
Any person on whose advice, directions or instructions a director or manager is
accustomed to act;
Any company which is a holding, subsidiary or an associate company of such
company
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List of Relatives
S.
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
The Companies Act, 1956 Vs. The Companies Act, 2013
COMPANIES ACT 1956
Father
Mother (including step-mother)
Son(including step-son)
Sons wife
Daughter ( including step-daughter)
Fathers father and/or Fathers Mother
Mothers Mother and/or Mothers father
Sons son
Sons sons wife
Sons daughter
Sons daughters husband
Daughters husband
Daughter son
Daughters sons wife
Daughters daughter
Daughters daughters husband
Brother ( including step- brothers)
Brothers wife
Sister (including step sister )
Sisters husband
CS SHISHIR DUDEJA
COMPANIES ACT 2013
Spouse
Father (including step-father)
Fathers father
Fathers mother
Mother (including step-mother)
Mothers mother
Mothers father
Son ( including step son)
Sons wife
Sons son
Sons daughter
Daughter ( including step- daughter)
Daughters husband
Brother (including step-brother)
Sister (including step-sister)
Cell: +919910938312
ADDITION /
DELETION
ADDITION
Step-father
DELETION
Sons Wife
Sons Daughters
Husband
Daughter s son
Daughter s sons
wife
Daughters daughter
Daughters
daughters husband
Brothers wife
Sisters husband
55
CORPORATE SOCIAL RESPONSIBILITY
PROMOTING
WELFARE
INITIATIVES
CS SHISHIR DUDEJA
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CORPORATE SOCIAL RESPONSIBILITY

(CSR)
[Section 135]
Every Company
(during any Financial
Year)
Net worth of
Rs. 500 crore or
more
Turnover of Rs.
1000 crore or
more
Net Profit of Rs. 5

Crore or more
Every Company complying any one of above 3 conditions, constitute a Corporate

Social Responsibility Committee of the Board consisting of 3 or more directors, out
of which at least one director shall be an independent director.
The Boards report to disclose the composition of the CSR Committee
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CSR Contd!!!
CS SHISHIR DUDEJA
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CSR Contd!!!
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CSR Contd!!!
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CSR Contd!!!
AS PER THE DRAFT RULES
Net Profit: defined as Net Profit before Tax as per books of accounts and does not
include profits from branches outside India
CSR Policy of the company to include:
CSR activities to be within India only;
CSR activities not to benefit only the employees of the company;
Companies may collaborate resources with other companies to undertake CSR;
Specify the projects and programmes that are to be undertaken.;
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CSR Contd!!!
Company may conduct CSR activities through trusts, societies, or non profit
companies operating in India, not set up by company itself.
CSR Project may also focus on integrating business models with social and
environmental priorities.
CSR Policy should provide that surplus arising out of the CSR activity will not be
part of business profits of a company
CSR activities to be conducted as projects or programmes excluding activities
undertaken in normal course of business
CSR
Committee
to
prepare
transparent
monitoring
mechanism
for
implementation
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LOAN AND INVESTMENT

BY A COMPANY
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DEFINITION OF LOAN
Loan has not been defined u/s 185.
Any transaction of giving money to be returned

in money with or without interest can be treated as loan.
Group companies usually give guarantee or provide securities for loan taken by
other group company.
Should we Stop doing this also?
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POSITIONS OF EXISTING LOAN
Existing loan/guarantee/security provided before 12th Sep is not affected by

above provisions. However, it should not be renewed & should be repaid on due
date.
LOAN given after 11th Sept.
If any loan had already been given after 11th sep., you should book it as share
application money/ advance for property/ purchase of goods/ materials etc. backed
by adequate documentation. These should be return as soon as possible.
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LOAN given by holding to subsidiary co.
Relevant interest is interest of director, not of Holding co, for applicability of

Sec. 185.
To attract Sec. 185, any interest of director (or other person) in his personal
capacity is relevant. Interest of holding co. is not relevant.
Holding co. itself hold shares, not its directors or other person. Hence, Sec. 185
may not be applicable.
LOAN given by subsidiary to holding co.
Assuming that directors (& persons in whom directors are interested) of

subsidiary co. does not hold any shares in holding co, Sec. 185 is not attracted.
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LOAN AND INVESTMENT BY A COMPANY
According to section 186 without prejudice of the provisions contained in this

Act, a company shall unless otherwise prescribed, make investment through not
more than two layers of investment companies;
Provided that provisions of this sub-section shall not affect:
a)
A company from acquiring any other company incorporated in a country outside

India if such other company has investment subsidiaries beyond two layers as
per the laws of such country;
b)
A subsidiary company from having any investment subsidiary for the purposes
of meeting the requirements under any law or under any rule or regulation
framed under any law for the time being in force.
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LOAN AND INVESTMENT BY A COMPANY
a)
b)
c)
No company shall directly or indirectlygive any loan to any person or other body corporate;
give any guarantee or provide security in connection with a loan to any other
body corporate or person; and
acquire by way of subscription, purchase or otherwise, the securities of any
other body corporate,
exceeding 60% of its paid-up share capital, free reserve and securities premium
account or 100% of its free reserves and securities premium account, whichever is
more.
)
Where the giving of any loan or guarantee or providing any security or the
acquisition under sub-section (2) exceeds the limits specified in that sub-section, prior
approval by means of a special resolution passed at a GM shall be necessary.
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NO LOAN / SECURITY / GUARANTEE

TO DIRECTORS & PERSONS
IN WHOM DIRECTOR IS INTERESTED
[Section 185)]
No company can advance loan to its directors or to other persons in whom

directors are interested.
No company can give any guarantee or provide any security in connection with
any loan taken by him or such other person.
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MEANING OF TO ANY OTHER PERSON IN

WHOM DIRECTOR IS INTERESTED
(a) any director of the lending company, or of a company which
is its holding company or any partner or relative of any such
director;
(b) any firm in which any such director or relative is a partner;
(c) any private company of which any such director is a director or member;
(d) any body corporate at a general meeting of which not less than 25 % of the total
voting power may be exercised or controlled by any such director, or by two or
more such directors, together; or
(e) any body corporate, the Board of directors, managing director or manager,
whereof is accustomed to act in accordance with the directions or instructions of
the Board, or of any director or directors, of the lending company.
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MEANING OF CONTROL
[Section 2(g)]
"Control" has been defined as to include:a.
The right to appoint majority of the directors; or
b.
To control the management or policy decisions,
c.
Directly or indirectly,
exercisable by a person or persons acting individually or in concert, including by

virtue of their shareholding or management rights or shareholding or management
rights or shareholders agreements or voting agreements or in any other manner.
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EXCEPTIONS
a)
(i)
(ii)
b)
CS SHISHIR DUDEJA
MD/WTD - The giving of any loan to a Managing or

Whole-time directoras a part of the conditions of service extended by the
company to all its employees; or
Pursuant to any scheme approved by the members by a
special resolution;
ORDINARY COURSE - A company which in the ordinary
course of its business provides loans or gives guarantees or
securities for the due repayment of any loan and in respect
of such loans an interest is charged at a rate not less than the
bank rate declared by RBI.
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IMPRISONMENT & FINE UPTO 25 LAKHS
Company Fine Rs. 5 lakhs to Rs. 25 lakhs &
Director or other person to whom any loan is advanced or guarantee or security is

given -Imprisonment upto 6 months or fine Rs. 5 lakhs to Rs. 25 Lakhs, or both.
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D
U
A
R
F
CS SHISHIR DUDEJA
Y
T
I
L
A
I
T
N
E
D
I
F
N
CO
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FRAUD
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DEFINITION OF FRAUD
[Section 447]
Fraud includes
Any act,
Omission,
Concealment of any fact; or
Abuse of position committed
by any person or any other person with the connivance in any manner, with intent to
deceive, to gain undue advantage from, or to injure the interests of, the company or its
shareholders or its creditors or any other person, whether or not there is any wrongful
gain or wrongful loss.
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PENALTY FOR FRAUD

Any person guilty of fraud
Imprisonment: 6 months to 10 years; and
Fine: Atleast amount involved in fraud, but may extend to 3 times the amount
involved in fraud.
Where the fraud involves public interest, imprisonment shall not be less than 3
years.
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REPORTING OF FRAUD TO CENTRAL

GOVERNMENT
[Section143 (12)]
If an auditor of a company,
in the course of the performance of his duties as auditor,
has reason to believe that an offence involving
has been committed
against the company
by officers or employees
Central Government
fraud
is being
of the company, he shall report the matter to the
Immediately or within prescribed time & manner.
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or
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APPLICABLE TO COST & SECRETARIAL AUDITORS

[Section 143(14]
Section 143(14) extends obligation cast by section 143 mutatis mutandis to:
Cost Auditors appointed u/s 148 &
Secretarial Auditors appointed u/s 204.
NO DUTY OF CONFIDENTIALITY
UNDER THE CA ACT. [Section 143(13)]
No duty to which an auditor of a company may be subject to (e.g. duty of

confidentiality under the CA Act, 1949) shall be regarded as having been
contravened by reason of his reporting the matter as above if it is done in good faith.
CS SHISHIR DUDEJA
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REPORTING OF MATERIAL FRAUD

[DRAFT RULES 10.10(1)]
For the purpose of Section143(12), in case:
the auditor has sufficient reason and information to believe that an offence
involving fraud, is being or has been committed against the company by officers or
employees of the company,
such fraud is likely to materially affect the
company, he shall report the matter to CG within 30 days.
PENALTY FOR NOT REPORTING OF FRAUD
Fine Rs. 1,00,000/- to Rs. 25,00,000/[Section 143 (15)].
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REPORT TO AUDIT COMMITTEE/ BOARD ALSO

IN PRESCRIBED FORM
Report shall be in the form of a statement as given in Form No. 10.3:

Report to be sent immediately but not later than 30 days of his knowledge or
information, with a copy,
to the audit committee or
in case the company has not constituted an audit committee, to the Board.
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MEANING OF MATERIALITY
A.
B.
Fraud(s) that is or are happening frequently; or

Fraud(s) where the amount involved or likely to be involved is not less than:
5% of net profit or
2 % of turnover of the company for the preceding FY.
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REPORTING OF NON-MATERIAL FRAUD

Auditors shall send a report in writing

to the audit committee and
Where the co. has not constituted an audit committee, to Board.
The audit committee or the Board, as the case may be, shall reply to the auditors
in writing as to steps taken by the audit committee or the Board in addressing the
issues of fraud, including systemic issues.
In case the audit committee or the Board, as the case may be, is not taking action
or the auditor is not satisfied with the action taken, he may report to the CG even
if the fraud is not material in nature.
CS SHISHIR DUDEJA
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AUDIT & AUDITORS
CS SHISHIR DUDEJA
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AUDITORS
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TRANSITION PROVISIONS
[PROVISO TO Section 139(2)]
Every company, existing on or before the commencement of this Act which is

required to comply with provisions of this sub-section, company shall comply with
the requirements of this sub-section within 3 years from the date of commencement
of this Act.
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AUDIT & AUDITORS: SOME AMENDMENTS
Individual/ Audit Firm shall be appointed for a period of 5 years and block of 5
years thereafter, respectively
For Listed Companies and other prescribed class of companies Compulsory

rotation in 5 years (individual)/ 10 years (firm)
In addition to accounting standards, auditing standards also being made

compulsory
Casual vacancy caused due to resignation- to be filled in 3 months by general body
Errant auditor-removed and may not be allowed to become auditor of other

Companies also for 5 years.
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Meaning of Remuneration
[Section 142(2)]
The remuneration under sub-section (1) shall, in addition to the fee payable to an
auditor, include the expenses, if any, incurred by the auditor in connection with the
audit of the company and any facility extended to him but does not include any
remuneration paid to him for any other service rendered by him at the request of the
company.
Remuneration of Auditors
[Section 142]
This Section provides for remuneration of auditors of the company. It further defines
the term remuneration. The remuneration is to be fixed generally in the general
meeting.
CS SHISHIR DUDEJA
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Eligibility, Qualifications of Auditors

[Section 141]
A CA within the meaning of the CA Act, 1949 may be appointed as an auditor. Only
a CA holding a CP can be appointed as an auditor.
A firm whereof all the partners practicing in India are qualified for appointment
may be appointed by its firm name to be the auditor of a company.
Where a firm including a LLP is appointed as an auditor of a company, only the

partners who are CA shall be authorized to act and sign on behalf of firm.
CS SHISHIR DUDEJA
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89
DISQUALIFICATIONS OF AUDITORS
[Section 141]
A body corporate other than a LLP:
An officer or employee of the company.
A person who is a partner, or who is in the employment, of an officer or employee
of the company
A person who, or his relative or partner
is holding any security of or interest (beneficial owner) in the company or its
subsidiary, or of its holding or associate co. or a subsidiary of such holding co.
However, the relative may hold security or interest in the company of face value
not exceeding Rs. 1,000 or such sum as may be prescribed (1 Lakh) ;
CS SHISHIR DUDEJA
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DISQUALIFICATIONS OF AUDITORS Contd!!!
is indebted to the co., or its subsidiary, or its holding or associate co. or a

subsidiary of such holding co., in excess of such amount as may be prescribed (1
Lakh); or
has given a guarantee or provided any security in connection with the

indebtedness of any third person to the co., or its subsidiary, or its holding or
associate co. or a subsidiary of such holding co., for such amount as may be
prescribed (1 Lakh);
a person or a firm who, whether directly or indirectly, has business relationship

with co., or its subsidiary, or its holding or associate co. or subsidiary of such
holding co. or associate co. of prescribed nature;
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DISQUALIFICATIONS OF AUDITORS Contd!!!
A person whose relative is a director or is in employment of the co. as a director or

KMP;
A person who is in full time employment elsewhere or a person or a partner of a

firm holding appointment as its auditor, if such person or partner is at the date of
such appointment or reappointment holding appointment as auditor of more than 20
companies;
A person who has been convicted by a court of an offence involving fraud and a
period of 10 years has not elapsed from the date of such conviction;
Any person whose subsidiary or associate co. or any other form of entity, is engaged
as on the date of appointment in consulting and specialized services as provided in
sec. 144.
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APPOINTMENT OF FIRST AUDITORS IN CASE

OF COMPANIES OTHER THAN GOVT. CO.
[Section 139(6)]
Appointment by Board: within 1 month of the date of registration.
Appointment in EGM within 90 days : On failure of Board, Co. shall inform the
members, who shall appoint at EGM.
Tenure of office: Till the conclusion of the first AGM.
No notice of appointment to ROC
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APPOINTMENT OF AUDITORS
[Section 139(1)]
Appointment at 1st AGM: Every company shall, at the first AGM, appoint an
individual or a firm as an auditor.
Tenure of office: Till the conclusion of 6th AGM and thereafter till the conclusion
of every 6th meeting.
Ratification: The Company shall place the matter relating to such appointment of
ratification by member at every Annual General Meeting.
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APPOINTMENT OF AUDITORS Contd!!!
Written consent: Before such appointment is made, the written consent of the
auditor to such appointment shall be obtained from the auditor.
Certificate: A certificate from him or it that the appointment, if made, shall be in

accordance with the conditions as may be prescribed, shall be obtained from the
auditor. The certificate shall also indicate whether the auditor satisfies the criteria
provided in section 141.
Notice of appointment: The Company shall inform the auditor concerned of his or
its appointment, and also file a notice of such appointment with the Registrar within
15 days of the meeting in which the auditor is appointed.
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ROTATION OF AUDITORS IN LISTED AND

SPECIFIED CLASS OF COMPANIES
STATUS
Individual
Audit Firm
PERIOD
1 term of 5 consecutive years
2 terms of 5 consecutive years
Cooling off period of 5 years before next appointment
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OF GOVT. CO. OR CO. OWNED OR
CONTROLLED BY CG OR SG ETC.
[SECTION 139(7)]
Appointment by C&AG: In the case of a Govt. Co. or any other company owned or
controlled, directly or indirectly, by the CG, or by any SG, or Governments, or
partly by the CG and partly by one or more SGs, the first auditor shall be appointed
by the C&AG within 60 days from the date of registration.
Appointment by Board: In case the C&AG does not appoint such auditor within the
said period, the BOD shall appoint such auditor within the next 30 days.
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OF GOVT. CO. OR CO. OWNED OR
CONTROLLED BY CG OR SG ETC.
[Section 139(7)]
Appointment in EGM: In the case of failure of the Board to appoint such auditor
within next 30 days, it shall inform the members of the company who shall appoint
such auditor within 60 days at an EGM.
Tenure of office: Till the conclusion of the first AGM.
No notice of appointment to ROC
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FIRM HAVING COMMON PARTNER INELIGIBLE

FOR APPOINTMENT FOR NEXT FIVE YEARS
[PROVISO TO Section 139(2)]
As on the date of appointment, no audit firm having a common partner or partners to

the other audit firm, whose tenure has expired in a company immediately preceding
the financial year, shall be appointed as auditor of the same company for a period of 5
years.
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CONDITIONS FOR APPOINTMENT
DRAFT RULE 10.2

For the purposes of the second proviso to sub-section (1) of section 139, the
proposed appointee shall submit a certificate that
(1) He or it is eligible for appointment and is not disqualified for appointment
under the Act, the Chartered Accountants Act, 1949 and Rules and
Regulations made therein
(2) The proposed appointment is within the term allowed under the Act
(3) The proposed appointment is within the limit laid down in the Act
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INTIMATION OF APPOINTMENT
COMPANIES ACT, 1956
COMPANIES ACT, 2013
Within 7 days of appointment by the

company to the auditor
Within 15 days of appointment by

the company to the auditor
The auditor shall within 30 days of

the receipt of appointment letter,
inform the ROC in Form 23B:
a. whether he has accepted
or
b. whether he has refused to accept
The company shall within 15 days of

appointment, inform the ROC in
Form 23B:
a. his acceptance
(not mentioning rejection here because
the consent letter is taken before)
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ROTATION OF AUDITING PARTNER AND HIS

TEAM
The CG may, by rules, prescribe the manner in which the companies shall rotate
their auditors in pursuance of sub-section (2) {Sec 139(4)}.
Members
of
a
company
may
resolve
to
provide
that
(a) in the audit firm appointed by it, the auditing partner and his team shall be
rotated at such intervals as may be resolved by members; or
(b) the audit shall be conducted by more than one auditor. {Sec 139(3)}
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APPOINTMENT OF AUDITORS OF GOVT. COMPANIES

[Section 139(5)]
In the case of a Govt. Co. or any other company owned or controlled, directly or
indirectly, by the CG, or by any SG or Governments, or partly by the CG and
partly by one or more SGs, the C&AG shall, in respect of a financial year, appoint
an auditor duly qualified to be appointed as an auditor of companies under this Act,
within a period of 180 days from the commencement of the FY, who shall hold
office till the conclusion of the AGM.
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CASUAL VACANCY
Any casual vacancy in the office of an auditor shall

be filled by the Board of Directors within 30 days.
If it is because of RESIGNATION:
a. At a general meeting
b. Convened within 3 months of the recommendation of the BOD
c. The Auditor to hold the office till the conclusion of the next annual general
meeting
CASUAL VACANCY - CAG
Companies whose accounts are subject to audit by an auditor appointed by the

CAG:
Casual vacancy shall be filled by CAG within 30 days
In case does not get filled, the BOD shall fill the vacancy within next 30 days
CS SHISHIR DUDEJA
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Reappointment of retiring auditor at AGM

[Section 139(9)]
A retiring auditor may be re-appointed at an AGM, if
he is not disqualified for re-appointment;
he has not given the company a notice in writing of his unwillingness to be reappointed; and
a Special Resolution has not been passed at that meeting appointing some other
auditor or providing expressly that he shall not be re-appointed.
However, the above provision is subject to Sec 139(1) and the rules made
thereunder. Where at any AGM, no auditor is appointed or re-appointed, the
existing auditor shall continue to be the auditor of the company [Sec 139(10)].
CS SHISHIR DUDEJA
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REMOVAL, RESIGNATION & SPECIAL NOTICE

of AUDITOR
[Section 140]
The auditor may be removed by special resolution after obtaining the previous
approval of CG and after giving an opportunity of being heard.
When the Auditor resigns, a statement in prescribed form is to be filled with the
Company and the Registrar within 30 days.
Special notice shall be required for appointing a person as auditor other than a
retiring auditor.
The Tribunal is empowered to change the auditor of a Company in case of any

fraudulent activities by auditor.
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INTIMATION OF RESIGNATION
The auditor shall file within a period of 30 days from the date of resignation, a
statement in the prescribed form with (Form no.10.2):
a. the Company and
b. the Registrar and
c. the CAG (where applicable)
indicating the reasons and other facts (for resignation)
Non-compliance of it by the auditor:

Penalty Fine Rs.50,000 to Rs.5 lakhs
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ACCOUNTS
CS SHISHIR DUDEJA
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FINANCIAL STATEMENTs
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MEANING OF FINANCIAL STATEMENT

[Section 2(40)]
It includes:
a) Balance Sheet
b) Profit & Loss statement
c) Cash Flow statement
(not mandatory for small companies, OPCs & Dormant companies)
d) Statement of Changes in equity if applicable

e)Explanatory statement Note annexed to & forming part of Financial statements
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FINANCIAL YEAR
[Section 2(41)]
Period ending on 31st March every year, and where it has been incorporated on or after
the 1st day of January of a year, the period ending on the 31 st March of the following
year, in respect whereof financial statement of the company or body corporate is made
up:
Tribunal may, if it is satisfied, allow any period as its financial year to a Holding
company or a Subsidiary of a company incorporated outside India and is required to
follow a different financial year for consolidation of its accounts outside India,
whether or not that period is a year:
Company or body corporate, existing on the commencement of this Act, shall, within a
period of 2 years from such commencement, align its financial year as per the
provisions of this clause;
The Companies Act, 2013 does not provide for extension of FY
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Requirements of Financial Statement
[Section 129]
The FS shall give a true and fair view and comply with the AS & shall be in the
form as provided in Schedule III.
The FS shall be laid in the AGM of that FY.
The holding company shall in addition, prepare a CFS of the Company, all
subsidiaries, associates & joint ventures and lay before the AGM.
CS SHISHIR DUDEJA
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Re-opening of accounts on Courts or Tribunals orders

[Section 130]
This new Section provides for provisions relating to re-opening or re-casting of the
books of accounts of Company pursuant to order of Court or Tribunal on application
made by CG, any Statutory Authority or any person concerned if it was found that
earlier accounts were prepared in fraudulent manner or financial statements are not
reliable due to mismanagement of affairs of the company. The accounts so revised or
re-cast shall be final.
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Voluntary revision of FS or Boards report

[Section 131]
The directors to prepare revised financial statement or a revised Boards report of any
of the 3 preceding financial years only once in a FY, if it appears to them that they did
not comply with the requirement of Section129 or Section134 after obtaining
approval of the Tribunal.
Tribunal shall take into account the representations if any, of the CG and of the IT
Department.
Such revised financial statement or report shall be subject to rules prepared by CG.
CS SHISHIR DUDEJA
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CG to prescribe Accounting Standards

[Section 133]
This Section provides that the CG may, after consultation with NFRA, prescribe the
Accounting Standards as recommended by the ICAI for adoption by companies.
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BOD shall approve Financial Statements

[Section 134]
This Section provides that the FS should be approved by the BOD before they are
signed and submitted to auditor. The Boards Report & Auditors Report are to be
attached with every FS before it is issued.
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Copy of FS to be filed with Registrar

[Section 137]
This Section provides that a copy of FS, auditors report etc shall be filled with the
Registrar within 30 days.
In case a company does not hold an AGM or the AGM has been adjourned in any
year, a statement of facts and reasons along with FS and attachment has to be filed
with the Registrar.
In case the accounts are not adopted at AGM or adjourned meeting, the unadopted
accounts shall be filed with ROC who shall take them in his records as provisional
till final accounts are filed.
One Person Co. (OPC) is required to file the FS with the Registrar within 180 days
from the date of meeting.
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Internal Audit
[Section 138]
This new Section provides for conduct of internal audit of prescribed class or classes
of companies. Manner of conducting internal audit shall be prescribed by the CG.
CS SHISHIR DUDEJA
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DEPRECIATION
Dep. = (Cost Residual Value)/Useful life
Schedule II introduced
Depreciation to be based on useful life & residual value
Useful lives of various tangible assets prescribed
Residual Value not more than 5% of the original cost of the asset
From the date Schedule II becomes effective carrying amount of the asset shall be
depreciated over the remaining useful life of the asset
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SCHEDULE II (See section 123)

USEFUL LIVES TO COMPUTE DEPRECIATION
PART A
1. Depreciation is the systematic allocation of the depreciable amount of an asset
over its useful life. The depreciable amount of an asset is the cost of an asset or
other amount substituted for cost, less its residual value. The useful life of an
asset is the period over which an asset is expected to be available for use by an
entity, or the number of production or similar units expected to be obtained from
the asset by the entity.
2. For the purpose of this Schedule, the term depreciation includes amortisation.
CS SHISHIR DUDEJA
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(Contd.)
3. Without prejudice to foregoing provisions of paragraph 1,
(i)
In case of such class of companies, as may be prescribed and whose financial

statements comply with the accounting standards prescribed for such class of
companies under section 133 the useful life of an asset shall not normally be
different from the useful life and the residual value shall not be different from
that as indicated in Part C, provided that if such a company uses a useful life or
residual value which is different from the useful life or residual value indicated
therein, it shall disclose the justification for the same.
(ii) In respect of 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.
CS SHISHIR DUDEJA
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(Contd.)
(iii) For intangible assets, the provisions of the Accounting Standards mentioned under
sub-para (i) or (ii), as applicable, shall apply.
PART B
4. The useful life or residual value of any specific 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.
PART C
5. Subject to Parts A and B above, the Nature of various Tangible Assets and their
useful life are given in the Section.
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Constitution of
National Financial Reporting Authority
[Section 132]
This Section provides that the CG may by notification constitute the NFRA
to advice on Accounting Standards (AS) & Auditing Standards(SA),
to monitor, enforce, compliance and overseeing the quality of service of associated
professionals. .
The authority shall have power to investigate the matters of misconduct committed by
any member of ICAI or any other prescribed profession and pass order which may be
appealed to Appellate Authority to be constituted by CG.
Qualifications, terms and conditions of appointment of the chairperson and members
of the Appellate Authority have also been provided.
CS SHISHIR DUDEJA
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National Company Law Tribunal

&
National Company Law Appellate Tribunal
Central Government shall, by notification, constitute with effect from such date
as may be specified therein, a Tribunal to be known as the National Company
Law Tribunal. (Section 408)
The establishment of NCLT /NCALT shall offer various opportunities to CS as

they have been authorized to appear before he Tribunal/ Appellate Tribunal.
Areas opened up for Company Secretaries in under NCLT are stated hereunder:
Compromise and Arrangement
Sick Companies
Winding up
Reduction of Capital
PCS as Member of NCLT
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CLASS ACTION SUITS

[Section 245]
Suit may be filed by members or depositors or any class of them;
If management or conduct of the affairs of the company are being conducted in a
manner prejudicial to the interest of the company, its members or depositors;
Suit may be filed by more than : 100 in number ;or
More than a percentage of total number of depositors, whichever is less, or
Any depositor or depositors to whom the company owes such percentage of
total deposits of the company.
Damages or compensation or any other suitable action from or against
The company or its directors for any fraudulent, unlawful or wrongful act or
omission.
Any expert or advisor or consultant or any other person for any incorrect or
misleading statement or for any fraudulent, unlawful or wrongful act or
conduct.
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MISCELLANEOUS
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RULES PERTAINING TO COMPANIES ACT, 1956

Application of section 159 to Foreign Companies Rules, 1975
Companies (Acceptance of Deposits) Rules 1975
Companies (Application for Extension of time or Exemption under sub- section (8) of section 58A)
Rules, 1979
Companies (Appointment & Qualifications of Secretary) Rules, 1988
Companies (Appointment of Sole Agents) Rules, 1975
Companies (Appointment of the small Shareholders Director) Rules, 2001
Companies (Auditors Report) Order, 2003
Companies (Branch Audit Exemption) Rules, 1961
Companies (Compliance Certificate) Rules, 2001
Companies (Declaration of Beneficial Interest in Shares) Rules, 1975
Companies (Disqualification of Directors under section 274(1)(g) of the Companies Act, 1956) Rules,
2003
Companies (Issue of Share Capital with Differential Voting Rights) Rules, 2001
Companies (Issue of Share Certificates) Rules, 1960
Companies (Official Liquidators Account) Rules, 1965
Companies (Particulars of Employees) Rules, 1975
Companies (Preservation and Disposal of Records) Rules, 1966
Companies (Transfer of Profits to Reserves) Rules, 1975
Companies Unpaid Dividend (Transfer to General Revenue Account of the Central Government) Rules,
1978
Companies (Court) Rules, 1959
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RULES PERTAINING TO COMPANIES ACT, 1956 Contd...!!!

Companies (Electronic Filing and Authentication of Documents) Rules 2006
Companies (Issue of Indian Depository Receipts) Rules, 2004
Company Law Settlement (Jammu And Kashmir) Scheme, 2003
Company Law Settlement Scheme, 2010
Easy Exit Scheme, 2010
Producer Companies (General Reserves) Rules, 2003
Scheme For Filing of Statutory Documents And Other Transactions By Companies In Electronic Mode
Simplified Exit Scheme, 2005
Investor Education and Protection Fund (Awareness and Protection of Investors) Rules 2001
Private limited company and unlisted public limited company (Buy-Back of Securities) Rules, 1999
Unlisted Companies (Issue of Sweat Equity Shares) Rules, 2003
Companies (Cost Accounting Records) Rules, 2011
Companies (Cost Audit Report) Rules, 2011
Companies (Director Identification Number) Rules 2006
Directors Relative (Office or Place of Profit) Rules, 2011
Cost Audit Report Rules, 2001
Companies (Passing of the Resolution by Postal Ballot) Rules, 2011
Companies (Fees on Applications) Rules 1999
The Cost Accounting Records (Electricity Industry) Rules 2011
The Cost Accounting Records (Fertilizer Industry) Rules 2011
The Cost Accounting Records (Petroleum Industry) Rules 2011
The Cost Accounting Records (Pharmaceutical Industry) Rules 2011
The Cost Accounting Records (Sugar Industry) Rules 2011
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RULES PERTAINING TO COMPANIES ACT, 1956

Contd...!!!
Companies (Declaration of Dividend out of Reserves) Rules 1975
Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988
Company Law Board (Fees on Applications and Petitions) Rules 1991
Companys Liquidation Accounts Rules, 1965
Public Companies (Terms of Issue of Debentures and of Raising of Loans with option to Convert such
Debentures or Loans into Shares) Rules, 1977
Unlisted Public companies (Preferential allotment) Rules 2003
Companies (Filing of Documents and Forms in Extensible Business Reporting Language) Rules 2011
Company Board (Group B Post- Section Officer) Recruitment Rules 2013
Company Law Board (Qualifications Experience and Other Conditions of Service of Members) Rules
1993
Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed
amounts lying with companies) Rules 2012
Cost Accounting Records (Steel Plant) Rules,1990
Cost Accounting Records (Motor Vehicles) Rules,1997
Cost Accounting Records (Engineering Industries) Rules,1984
The Cost Accounting Records (Telecommunication Industry) Rules, 2011
The Cost Accounting Records (Plantation Products) Rules, 2002
Cost Accounting Records (Electronic products) Rules, 2001
Cost Accounting Records (Mining and Metallurgy) Rules, 2001
Directors Relatives (Office or Place of Profit) Rules, 2003
CS SHISHIR DUDEJA
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COSTING STANDARD
CAS-1 - Classification Of Cost
CAS-2 - Capacity Determination
CAS-3 - Overheads
CAS-4 - Cost Of Production For Captive Consumption
CAS-5 - Determination Of Average (Equalized) Cost Of Transportation
CAS-6 - Material Cost
CAS-7 - Employee Cost
CAS-8 - Cost Of Utilities
CAS-9 - Packing Material Cost
CAS-10 - Direct Expenses
CAS-11 - Administrative Overheads
CAS-12 - Repairs & Maintenance Cost
CAS-13 - Cost Of Service Cost Centre
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SECRETARIAL STANDARDS
SS-1 : Secretarial Standard on Meetings of the Board of Directors
SS-2 : Secretarial Standard on General Meetings
SS-3: Secretarial Standard on Dividend
SS-4: Secretarial Standard of ICSI on Registers and Records
SS-5: Secretarial Standard on Minutes
SS-6: Secretarial Standard on Transmission of Shares and Debentures
SS-7: Secretarial Standard on Passing of Resolutions by Circulation
SS-8: Secretarial Standard on Affixing of Common Seal
SS-9: Secretarial Standard on Forfeiture of Shares
SS-10: Secretarial Standard on Boards Report
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ACCOUNTING STANDARDS
AS 1 Disclosure of Accounting Policies
AS 2 Valuation of Inventories
AS 3 Cash Flow Statements
AS 4 Contingencies and Events Occurring After the Balance Sheet Date
AS 5 Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting
Policies
AS 6 Depreciation Accounting
AS 7 Construction Contracts
AS 9 Revenue Recognition
AS 10 Accounting for Fixed Assets
AS 11 The Effects of Changes in Foreign Exchange Rates
AS 12 Accounting for Government Grants
AS 13 Accounting for Investments
AS 14 Accounting for Amalgamations
AS 15 Employee Benefits
Amended vide G.S.R. 212(E) 27.03.2008 - Companies (Accounting Standards) \
Amendment Rules, 2008
CS SHISHIR DUDEJA
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ACCOUNTING STANDARDS Contd!!!

AS 16
AS 17
AS 18
AS 19
AS 20
AS 21
AS 22
AS 23
AS 24
AS 25
AS 26
AS 27
AS 28
AS 29
Borrowing Costs
Segment Reporting
Related Party Disclosures
Leases
Earnings Per Share
Consolidated Financial Statements
Accounting for Taxes on Income
Accounting for Investments in Associates in Consolidated Financial Statements
Discontinuing Operations
Interim Financial Reporting
Intangible Assets
Financial Reporting of Interests in Joint Ventures
Impairment of Assets
Provisions, Contingent Liabilities and Contingent Assets
CS SHISHIR DUDEJA
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GUIDELINES
Voluntary Guidelines for Companies for providing general information on their websites
Name Availability Guidelines, 2011
Corporate Social Responsibility Voluntary Guidelines 2009
Guidelines for Corporate Governance for CPSEs 2010
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NOTIFIED SECTION CA, 2013

Chapter I -Preliminary (1 - 2)
Section 1- Short title, extent, commencement and application.
Section 2- Definitions.
Chapter II -Incorporation of Company and Matters Incidental Thereto (3 - 22)
Section 19- Subsidiary company not to hold shares in its holding company.
Section 21- Authentication of documents, proceedings and contracts.
Section 22- Execution of bills of exchange, etc.
Chapter III -Prospectus and Allotment of Securities (23 - 42)
Section 23- Public offer and private placement.
Section 24- Power of Securities and Exchange Board to regulate issue and transfer of securities, etc.
Section 25- Document containing offer of securities for sale to be deemed prospectus.
Section 29- Public offer of securities to be in dematerialized form.
Section 30- Advertisement of prospectus.
Section 31- Shelf prospectus.
Section 32- Red herring prospectus.
Section 33- Issue of application forms for securities.
Section 34- Criminal liability for mis-statements in prospectus.
Section 35- Civil liability for mis-statements in prospectus.
Section 36- Punishment for fraudulently inducing persons to invest money.
Section 37- Action by affected persons.
Section 38- Punishment for personation for acquisition, etc., of securities.
Section 39- Allotment of securities by company.
Section 40- Securities to be dealt with in stock exchanges.
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NOTIFIED SECTION CA, 2013 Contd!!!

Chapter IV -Share Capital and Debentures (43 - 72)
Section 44- Nature of shares or debentures.
Section 45- Numbering of shares.
Section 49- Calls on shares of same class to be made on uniform basis.
Section 50- Company to accept unpaid share capital, although not called up.
Section 51- Payment of dividend in proportion to amount paid-up.
Section 57- Punishment for personation of shareholder.
Section 58- Refusal of registration and appeal against refusal.
Section 59- Rectification of register of members.
Section 60- Publication of authorized, subscribed and paid-up capital.
Section 65- Unlimited company to provide for reserve share capital on conversion into limited company.
Section 69- Transfer of certain sums to capital redemption reserve account.
Section 70- Prohibition for buy-back in certain circumstances.
Chapter VI -Registration of Charges (77 - 87)
Section 86- Punishment for contravention.
Chapter VII -Management and Administration (88 - 122)
Section 100- Calling of extraordinary general meeting.
Section 102- Statement to be annexed to notice.
Section 103- Quorum for meetings.
Section 104- Chairman of meetings.
Section 105- Proxies.
Section 106- Restriction on voting rights.
Section 107- Voting by show of hands.
Section 111- Circulation of members' resolution.
Section 112- Representation of President and Governors in meetings.
Section 113- Representation of corporations at meeting of companies and of creditors.
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Section 114- Ordinary and special resolutions.
Section 116- Resolutions passed at adjourned meeting.
Section 91- Power to close register of members or debenture holders or other security holders.
Chapter VIII -Declaration and Payment of Dividend (123 - 127)
Section 127- Punishment for failure to distribute dividends.
Chapter IX -Accounts of Companies (128 - 138)
Section 133- Central Government to prescribe accounting standards.
Chapter XI -Appointment and Qualifications of Directors (149 - 172)
Section 161- Appointment of additional director, alternate director and nominee director.
Section 162- Appointment of directors to be voted individually.
Section 163- Option to adopt principle of proportional representation for appointment of directors.
Chapter XII -Meetings of Board and its Powers (173 - 195)
Section 176- Defects in appointment of directors not to invalidate actions taken.
Section 180- Restrictions on powers of Board.
Section 181- Company to contribute to bona fide and charitable funds, etc.
Section 182- Prohibitions and restrictions regarding political contributions.
Section 183- Power of Board and other persons to make contributions to national defense fund, etc.
Section 185- Loan to directors, etc.
Section 192- Restriction on non-cash transactions involving directors.
Section 194- Prohibition on forward dealings in securities of company by director or key managerial personnel.
Section 195- Prohibition on insider trading of securities.
Chapter XIII -Appointment and Remuneration of Managerial Personnel (196 - 205)
Section 202- Compensation for loss of office of managing or whole-time director or manager.
Chapter XXII-Companies Incorporated Outside India (379- 393)
Section 379- Application of Act to foreign companies.
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Section 382- Display of name, etc., of foreign company.
Section 383- Service on foreign company.
Section 386- Interpretation.
Chapter XXIII-Government Companies (394 - 395)
Section 394- Annual reports on Government companies.
Chapter XXV-Companies to Furnish Information or Statistics (405)
Section 405- Power of Central Government to direct companies to furnish information or statistics.
Chapter XXVII-National Company Law Tribunal and Appellate Tribunal (407 - 434)
Section 407- Definitions.
Section 408- Constitution of National Company Law Tribunal.
Section 409- Qualification of President and Members of Tribunal.
Section 410- Constitution of Appellate Tribunal
Section 411- Qualification of Chairperson and Members of Appellate Tribunal.
Section 412- Selection of Members of Tribunal and Appellate Tribunal.
Section 413- Term of office of President, Chairperson and other Members.
Section 414- Salary, allowances and other terms and conditions of service of Members.
Chapter XXVIII- Special Courts (435 - 446)
Section 439- Offences to be non-cognizable.
Section 443- Power of Central Government to appoint company prosecutors.
Section 444- Appeal against acquittal.
Section 445- Compensation for accusation without reasonable cause.
Section 446- Application of fines.
Chapter XXIX Miscellaneous (447 - 470)
Section 447- Punishment for fraud.
Section 448- Punishment for false statements.
Section 449- Punishment for false evidence.
Section 450- Punishment where no specific penalty or punishment is provided.
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Section 451- Punishment in case of repeated default.
Section 452- Punishment for wrongful withholding of property.
Section 453- Punishment for improper use of "Limited" or "Private Limited".
Section 456- Protection of action taken in good faith.
Section 457- Non-disclosure of information in certain cases.
Section 458- Delegation by Central Government of its powers and functions.
Section 459- Powers of Central Government or Tribunal to accord approval, etc., subject to conditions
and to prescribe fees on applications.
Section 460- Condonation of delay in certain cases.
Section 461- Annual report by Central Government.
Section 462- Power to exempt a class or classes of companies from provisions of this Act.
Section 463- Power of Court to grant relief in certain cases
Section 467- Power of Central Government to amend Schedules.
Section 468- Power of Central Government to make rules relating to winding up.
Section 469- Power of Central Government to make rules.
Section 470- Power to remove difficulties.
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DRAFT RULES & FORMS - CA, 2013
Chapter I -Preliminary (1 - 2)
Chapter II -Incorporation of Company and Matters Incidental Thereto (3 - 22)
Chapter III -Prospectus and Allotment of Securities (23 - 42)
Chapter IV -Share Capital and Debentures (43 - 72)
Chapter V -Acceptance of Deposits by Companies (73 - 76)
Chapter VI -Registration of Charges (77 - 87)
Chapter VII -Management and Administration (88 - 122)
Chapter VIII -Declaration and Payment of Dividend (123 - 127)
Chapter IX -Accounts of Companies (128 - 138)
Chapter X -Audit and Auditors (139 - 148)
Chapter XI -Appointment and Qualifications of Directors (149 - 172)
Chapter XII -Meetings of Board and its Powers (173 - 195)
Chapter XIII -Appointment and Remuneration of Managerial Personnel (196 - 205)
Chapter XIV -Inspection, Inquiry and Investigation (206 - 229)
Chapter XV -Compromises, Arrangements and Amalgamations (230 - 240)
Chapter XVI-Prevention of Oppression and Mismanagement (241 - 246)
Chapter XVII-Registered Valuers (247)
Chapter XVIII-Removal of Name of companies from the Register of Companies (248 - 252)
Chapter XIX-Revival and Rehabilitation of Sick Companies (253 - 269)
Chapter XXI -Companies Authorized to Register Under This Act & Winding Up of Unregistered Companies (366
378)
Chapter XXIV-Registration offices and fees (396 - 404)
Chapter XXVI-Nidhis (406)
Chapter XXIX Miscellaneous (447 - 470)
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THANK YOU FOR READING.!!!

DISCLAIMER: The views expressed in this presentation are the views of the author and do not
necessarily reflect the views or policies related to any statutory body. The matter used in this
presentations are intended for discussion & knowledge share purposes only. Author of this
presentation does not guarantee the accuracy of the data included examples, images and accepts
no responsibility for any consequences of its use. For detailed information on any topic, Kindly
refer to THE COMPANIES ACT, 2013, THE COMPANIES ACT, 1956 , Rules & Notifications.
CS ShiShir Dudeja
Cell : +91-9910938312
E-mail : shishirdudeja@live.com
CSshishirdudeja@gmail.com
LinkedIn: http://in.linkedin.com/in/shishirdudeja
Twitter: https://twitter.com/DudejaShiShir
FB: https://www.facebook.com/shishir.dudeja
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THE COMPANIES ACT, 2013

(Lets have some discussion)

Presented by: CS ShiShir Dudeja

Introduced Companies Bill 2011 in December 2011

Received assent of Honble President - 29th August 2013

Bill withdrawn due to numerous amendments.

CA, 2013 JOURNEY TILL TODAY!!!

08th AUGUST 2013

29th AUGUST 2013

09th SEPTEMBER 2009

18th DECEMBER 2012

09th SEPTEMBER 2013

21stst OCTOBER 2013

31st AUGUST 2010

26th JUNE 2012

12th SEPTEMBER 2013

24th SEPTEMBER 2013

14th DECEMBER 2011

05th JANUARY 2012

CS SHISHIR DUDEJAEmail: CSshishirdudeja@gmail.com,

20th SEPTEMBER 2013

COMPANIES ACT, 1956

COMPANIES ACT, 2013

Introduced on 1st April, 1956

Introduced as CB, 2011 in Dec2011

(EXCEPT SikkimCompanies Act)

Notified 98 Sections w.e.f. 12th September,

WHATS IN & OUT

Small & Big

PROVISIONS CITED IN COMPANIES ACT-2013

Requirement to constitute Remuneration and Nomination Committee and

Issued by The Institute of Company Secretaries of India

CS SHISHIR DUDEJA Email: CSshishirdudeja@gmail.com,

One Person Company

Background of One Person Company (OPC)

2004: Government on India constituted an Expert Committee on Company Law under

Separate legal entity

registered as PRIVATE Company with ONE

enter into minutes

COMPANIES LAW PROVISIONS w.r.t. OPC

Section 2 (62): Definition of "One Person Company

COMPANIES LAW PROVISIONS w.r.t. OPC Contd!!!

Section 98 : Power of Tribunal to call meetings of members, etc.

Restricts the right to transfer its shares;

Prohibits any invitation to public to subscribe for any securities of the

PRIVATE LTD COMPANIES HAVING TURNOVER UPTO

PRIVATE LTD COMPANIES HAVING TURNOVER UPTO

PRIVATE LTD COMPANIES SHOULD BE

We can plan accordingly and take benefit.

KEY MANAGERIAL PERSONNEL

KEY MANAGERIAL PERSONNEL

KEY MANAGERIAL PERSONNEL Contd!!!

Key managerial personnel includes:

Section 21 interestingly provides that any Document/Contract requiring

Relatives of KMP to not be appointed as auditors

Register of KMP along with securities held by them in the company to be

KEY MANAGERIAL PERSONNEL Contd!!!

WOMAN DIRECTOR Contd!!!

Other Public Company having

Within 3 Years from the

Shall have one

Within 1 Year from the