AVERY C.S. STUDENT MUST READ SOME HIGLIGHTS OF COMPANY BILL2012 The Bill was to be taken up for discussion in the Rajya Sabha on December 20 but has now been postponed until the next session. Serious Fraud Investigation Office • The provision for establishment of Serious Fraud Investigation Office (SFIO) by the Central Government is another significant feature of the Bill. • Clause 212 empowers the Central Government to assign the investigation into the affairs of the said company to the SFIO. CLASS ACTION SUITS • The concept of class action suits has been introduced by Clause 245. • The said clause empowers the shareholders or depositors or any class of them to file an application before NCLT if they are of the opinion that that the management or conduct of the affairs of the company are being conducted in a manner prejudicial to the interests of the company or its members or depositors. • The clause also provides the number of such members or depositors required to file such suit. ONE PERSON COMPANY • The concept of One Person Company has been introduced. Clause 3(1)(c) provides for the same. • Clause 2(62) defines a One Person Company as a company which has only one person as a member. • Number of permissible members in a private company has been raised to 200 from 50 by vitue of clause 2 (68) (ii)Private Placement • Provisions for offer or invitation for subscription of securities on private placement basis have been revised to ensure more transparency and accountability. • Clause 42 lays down that an offer or invitation of securities through private placement may be made in the form and manner prescribed subject to compliance with the following conditions prescribed: (a) the offer or invitation in a financial year, shall be made to such number of persons, excluding qualified institutional buyers, and on such conditions (including the maximum amount to be raised) as may be prescribed; (b) the value of such offer or invitation shall be with an investment size of such amount as may be prescribed; and (c) the company shall not issue any prospectus for such offer or invitation and such offer or invitation shall be made through a private placement offer letter REGISTERED VALUERS • The concept of Registered Valuers has been introduced. • Where any valuation is required to be made of any property, stocks, shares, debentures, securities or goodwill or any other assets (herein referred to as the assets) or net worth of a company or its liabilities under the provision of this Act , it shall be valued by a person having such qualifications and experience and registered as a Valuer in such manner, on such terms and conditions as may be prescribed and appointed by the audit committee or in its absence by the board of directors of that company. Registered Valuers WINDING UP • Changes have also been made to the grounds for winding up a company SOME OTHER FEATURES of the Bill include: • The Concept of Dormant Company has been introduced Share Capital • Clause 58(2) of the Bill provides that the securities of a public company shall be freely transferable subject to the provisions that any contract or arrangement between two or more persons shall be enforceable as contract. • By virtue of clause 53, companies are prohibited from issuing shares at discount except in case of issue of sweat equity shares. • Clause 66 deals with reduction of share capital. It mandates approval of National Company Law Tribunal (NCLT) for the same. Further, in case of listed companies, NCLT will give notice of every application made to it for reduction of share capital to the Central Government, Registrar, SEBI and creditors of the company for taking into consideration any representation on the proposed reduction. • Introduction of a class of companies (to be specified by the Govt) where at least 1 woman director to be there on the board. • Every company shall have at least one director who has stayed in India for a total period of not less than one hundred and eighty-two days in the previous calendar year Committees of Board of Directors • The Board of Directors is required to constitute an Audit Committee (Clause 177), Nomination and Remuneration Committee [Clause 178 (a)] and Stakeholders Relationship Committee [Clause 178 (5)]. • These committees shall have Independent Directors/non-executive directors to bring more independence in the functioning of the Board and for protection of interests of minority shareholders. Committees of Board of Directors • The Board of Directors is required to constitute an Audit Committee (Clause 177), Nomination and Remuneration Committee [Clause 178 (a)] and Stakeholders Relationship Committee [Clause 178 (5)]. • These committees shall have Independent Directors/non-executive directors to bring more independence in the functioning of the Board and for protection of interests of minority shareholders. • An independent director shall hold office for a term up to five consecutive years on the Board of a company, but shall be eligible for re- appointment on passing of a special resolution by the company. Auditors • Clause 139 (3) empowers members of the company to decide by resolution that the auditing partner and his team (of an audit firm appointed by the company) shall be rotated every year or that audit shall be conducted by more than one auditor. Corporate Social Responsibility • By virtue of Clause 135, the most debated concept of corporate social responsibility (CSR) has been introduced. • Accordingly, 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.5 crore or more during any financial year is required to constitute a Corporate Social Responsibility Committee. • The Corporate Social Responsibility Committee will formulate a Corporate Social Responsibility Policy. • Such a company is required to spend at least two per cent of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy. • If the company fails to spend such amount the Board shall give in its report the reasons for the same making it a binding obligation on the Board. Amalgamation and Arrangements • Merger of Indian companies with foreign companies incorporated in certain notified countries has now been permitted.
Posted on: Fri, 09 Aug 2013 05:58:19 +0000
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