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The New Indian Company Law Highlights 2013
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Type of Companies
Maximum number of members in a private company increased from 50 to 200
Limit of the number of members in an association or partnership(without incorporation) increased up to100
New concepts of Small Company, One Person company (OPC), Associate Company and Dormant Company introduced.
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Share Capital
For defined infrastructural projects, preference shares can be issued for a period exceeding 20 years.
Shares cannot be issued at a discount except sweat equity shares.
Securities premium may also be applied for the purchase of a company‟s own shares or other securities.
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Audit & Accounting
To align with the provisions of the Income Tax Act, Companies to have a uniform financial year-ending on 31st March each year.
Consolidation of financial statements for a Company having a subsidiary, associate or a joint venture made mandatory.
National Financial Reporting Authority (NFRA) to be constituted by Central Government to provide for dealing with matters relating to accounting and auditing policies and standards to be followed by Companies and their auditors.
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Audit & Accounting
Mandatory auditors‟ rotation for listed and prescribed classes of Companies after every five years.
Mandatory transfer of profits to Reserves for dividend declaration dispensed with.
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Management, Administration & Corporate Governance
At least one Director of a Company shall be a person who has stayed in India for 182 days or more in the previous calendar year. This will make him „Resident‟ as per Income Tax Laws.
Listed and prescribed class of Companies to have at least one women Director .
Following Committees of the Board made mandatory for listed and prescribed classes of Companies: Audit Committee Stakeholder Relationship Committee Nomination and Remuneration Committee Corporate Social Responsibility Committee
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Management, Administration & Corporate Governance
Number of Directors: Minimum- Public 3, Private 2, OPC 1 Maximum – Limit increased to 15 from 12
Director to vacate office on remaining absent from all the meetings of the Board of Directors held during 12 months with or without obtaining leave of absence.
A person cannot be a Director in more than 20 Companies instead of present 15 and out of this 20, he cannot be a Director of more than 10 public Companies.
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Corporate Social Responsibility
Every Company having net worth of Rs.500 crore or more, or turnover of Rs.1000 crore or more or a net profit of Rs.5crore or more during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more Directors, out of which at least one Director shall be an independent director.
The CSR Committee shall formulate and recommend Corporate Social Responsibility policy which shall indicate the activity or activities to be undertaken by the Company as specified in Schedule VII and shall also recommend the amount of expenditure to be incurred on the CSR activities.
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Corporate Social Responsibility The Board of every Company shall ensure that the Company spends in every financial year at least 2% of the average net profits of the Company made during the three immediately preceding financial years in pursuance of its CSR policy.
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Financial Statement
For the first time, the term “financial statement” has been defined to include:
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A balance sheet as at the end of the financial year. A profit and loss account, or in the case of a company carrying on any activity not for profit, an income and expenditure account for the financial year. Cash flow statement for the financial year.
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Financial Statement
A statement of changes in equity, if applicable, and
Any explanatory note annexed to, or forming part of, any document referred to in sub-clause (i) to sub-clause (iv).
The financial statement, with respect to One Person Company, Small Company and Dormant Company, may not include the cash flow statement.
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C o n t a c t u s
Thank You
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