CA FINAL CORPORATE LAW AMENDMENTS FOR MAY 2016

Transcription

1 Section No. What is Amendment What is impact 123. Declaration of Dividend Just because of showing profit it unless previous year losses and depreciation losses were set off current year does not mean you against the profit of the current year, dividend cannot be paid. (applicable to all companies) can pay dividend. Adjust losses both depreciation and business losses 123. Declaration of Dividend Declaration of dividend out of reserves rules Not applicable for 100% government company 123. Declaration of Dividend Removed Rule 5 Adjust Depreciation loss / business loss which ever is less against amount withdrawn from reserves 129 CFS For the company which has only foreign subsidiary and no Indian subsidiary they need not consolidate for the year Financial Statement Follow Accounting standards while preparing it- F.S shall be in the form or forms as may be provided for different class or classes of companies in Schedule III For FY , if a company does not have subsidiary but has only associate they need not consolidate AS 17 segment reporting not applicable for government company engaged in defence XBRL filing (a) all companies listed with any Stock Exchange(s) in India and their Indian subsidiaries; or 134. Board report explanation on fraud identified during audit 134. Board report Explain (b) all companies having paid up capital of rupees five crore or above; (c) all companies having turnover of rupees hundred crore or above; Exempted companies: Banking, Insurance, Power sector, NBFC Details of fraud reported by auditors U/s. 143 (12) other than which are reportable to central government. not applicable to government co. 100% government company cannot declare dividend out of reserves. Now it is not necessary to adjust if the amount is taken out from reserves. It is enough that only if dividend is declared from Current year s profit adjustment is required. Segment reporting standard need not be followed for government company engaged in defence. If auditor identifies any fraud during his audit he will escalate to board U/s. 143 (12) They need not disclose their CA A.K.S. KRISHNAN, Chennai PLS FEEL FREE TO Page 1

2 Policy on directors appointment 136. Right of member to copies of audited financial statement send F.S - not less than twenty-one days before the date of the meeting 136. Company to circulate audited accounts 21 days before AGM 141 Ceiling Limit of companies for auditors. 143 Powers and duties of auditors. 143 (12) Auditor duty on report of fraud to Board/ CG a maximum of fifteen directors 149 (4-6) independent directorthe relative should not have pecuniary interest 152 (5) Director has to give consent to appoint as director in DIR 2 SEC. 152 (6), 152 (7) Concept of Rotational Directors. for company registered u/s. 8, instead of 21 days, 14 days has to be substituted from In case if the company gives shorter notice for AGM (less than 21 days). FS can also be circulated in shorter period. for counting ceiling limit of 20 companies do not consider - one person company, dormant company, small company and private company having paid up capital less than Rs. 100 crores whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls ( ) Within 2 days Auditor has to intimate Board/ Audit committee. Board has to give reply within 45 days. Auditor has to report about this within 60 days to CG. If fraud amount is more than Rs. 1 crore he shall intimate to CG also. this sub section is not applicable for sec. 8 companies. maximum directors is not applicable for government company where 100% shares are held by SG/ CG from june this clause is not applicable for 100% shares are held by SG/ CG not applicable for govt. company and section 8 companies is not applicable for government company where 100% shares selection process and all Now private limited companies which are having less than 100 crores paid up capital will not be considered in ceiling limit of 20. More responsibility for auditors i.e they can increase without spl. resol. Even a relative of a person if supplied to the company that person can stand for Independent director. They need not give consent 2/3 rd and 1/3 rd retirement / rotational conditions and all not CA A.K.S. KRISHNAN, Chennai PLS FEEL FREE TO Page 2

3 160. Right of persons other than retiring directors to stand for directorship 162. Appointment of directors to be voted individually 163. Director appointed in principal of Proportional Representation: 164 (2) Disqualification of directors in case of non filing of annual returns/ accounts or Defaulted in Interest/ redemption of Debentures/Deposits/ non payment of dividend are held by SG/ CG from this sections not applicable to private company & 100% shares are held by SG/ CG this section not applicable to private limited company & 100% shares are held by SG/ CG this section not applicable to private limited company & 100% shares are held by SG/ CG this subsection is not applicable to 100% shares are held by SG/ CG 165. Number of directorships This is not applicable to section 8 companies from. I.e sec. 8 companies will not be counted in counting directorships held Resignation Foreign Director 170. Register of directors and key managerial personnel and their shareholding 173. Meetings of Board interval between 2 meeting 174. Quorum for meetings of Board all companies 1/3 or 2 which ever is heigher DIR11 can be filed by authorised representative (CA/CS/CMA) of foreign director if he has given in writing. section 170 is not applicable for govt. company which 100% holding by SG/ CG in case of section 8 company at least 1 board meeting for every 6 months will satisfy sec. 173 in case of sec. 8 companiesinstead of 1/3 or 2 which ever is higher 8 directors/ 25% of broad which ever is less (subject to two number) has to be substituted from required. They need not deposit Rs. 1 lakh. Even in a single resolution more than one directors can be appointed by passing ordinary resolution. The directors of govt. company will not get affected. Because of which Sec. 167 (vacation) also not applicable for them. Even if a person already holds 20 directorships he can take up directorship in sec. 8 companies Register need not be maintained. CA A.K.S. KRISHNAN, Chennai PLS FEEL FREE TO Page 3

4 177. Audit Committee. For related party transaction Approval from audit committee (in case 177 applies to the company) is must. But they can give omnibus (blanket) approval 177. the recommendation for appointment, remuneration and terms of appointment of auditors of the company (1-4) Nomination and Remuneration Committee and Stakeholders Relationship Committee 179. Powers that can be exercised even by circular resolution 179. Powers of board borrow/ invest/ grant loans can be exercised in Board meeting or can be delegated by passing board resolution 180. Restrictions on powers of Board 184. Disclosure of interest by director for section 8 company in the audit committee need not have majority independent director for government company the word appointment will not come, rest and all same, because C & AG will take care of that. section 178 is not applicable to section 8 companies from [to approve quarterly, half yearly and annual accounts to take note in director s interest to appoint/ remove KMP or senior management (one level before KMP) Invite/ Accept and renew public deposits] in case of section 8 company these can be done even by passing circular resolution from. this section not applicable to private company from applicability of this clause to private company: - interested director can participate and vote in board meeting after disclosing his interest.. All powers can be exercised in Board meeting itself. No need for approval of General meeting by passing Special resolution. for section 8 company only if the interested transaction exceeds rs.1 lakh this section CA A.K.S. KRISHNAN, Chennai PLS FEEL FREE TO Page 4

5 185. Loan to directors, etc Loan to directors, etc Loans to Directors Loan and investment by company 186. Loans to employees - No member of the company shall vote on such resolution, to approve any contract or arrangement which may be entered into by the company, if such member is a related party: - No member of the company applies. this section is not applicable to private company from if: a. in whose share capital no other body corporate has invested money b. the borrowings made by the pvt. company from banks/ financial institution/ from other body corporate (icd) is less than 2 times of paid up capital or Rs. 50 crores which ever is lower c. no default has been made in repayment of borrowings mentioned in point b. above. this section is not applicable to government company in case it obtains SG/ CG approval. Exemption for giving loans/guarantee/ security: Wholly owned Subsidiary. Exemption for giving guarantee Subsidiary this section is not applicable for government company from in defence manufacturing and non listed government company which got approval from SG/ CG. Loans to employees other than MD / WTD will not be considered for calculating the limit of total loan a company can grant. this condition is not applicable to private limited company from Not applicable to government company which transact with Can give loans to directors / the person in whom director is having interest. Can give loans to directors / the person in whom director is having interest. Even interested members can vote in general meeting. Govt company to Govt. company 188 not apply. CA A.K.S. KRISHNAN, Chennai PLS FEEL FREE TO Page 5

6 shall vote on such resolution, to approve any contract or arrangement which may be entered into by the company, if such member is a related party: General meeting resolution is must in case the threshold limit crosses 188. Related party read with 2 (76) definition. (viii) any company which is (A) a holding, subsidiary or an associate company of such company; or (B) a subsidiary of a holding company to which it is also a subsidiary Co/ fellow subsidiary 196. Appointment of managing director, wholetime director or manager - Maximum of seventy years: 196. Remuneration: Subject to section Limit on Managerial Remuneration 203. Appointment of key managerial personnel MD/ CEO/ CFO/ CS etc., another government company and unlisted government company which obtains approval from government. all the resolution mentioned in this section is ordinary resolution from before this date it was special resolution. requirement of passing the General meeting resolution shall not be applicable for transactions entered into between a holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval. is not applicable for private company not applicable for government company and Private companies this point of this section is not applicable to private company Not applicable for government company this section is not applicable to government company from Earlier these approval requires spl. Resolution. Now it is ordinary resolution Holding to subsidiary is exempted. holding / subsidiary of Pvt. Company is not related to company No limit for remuneration in case of Inadequacy of profits. CA A.K.S. KRISHNAN, Chennai PLS FEEL FREE TO Page 6