HIGHLIGHTS OF NEW COMPANIES BILL
1.Companies are required to spend atleast two percent(2%) of their net profit for the three immediately preceding financial years on CSR,Corporate Social Responsibility. This is applicable to companies with a net worth of Rs500 crore or more,or Rs1,000 crore turnover or Rs 5crore net profits, who have to set up a corporate social responsibility committee.The companies will also have to give preference to the local area sof their operation for such spending.
2.To help in curbing a major source of corporate delinquency,introduces punishment for
falsely inducing a person to enter in to any agreement with bank or financial institution,
with a view to obtaining credit facilities.
3.The limit in respect of maximum number of companies in which a person may be appointed as an auditor has been proposed as 20.
4.Independent directors' shall be excluded for the purpose of computing' one third of retiring directors‘.
5.Appointment of auditors for 5 years shall be subject to ratification by members at every Annual General Meeting.
6.'Whole-timedirector'has been included in the definition of the term' key managerial
personnel'.
7.Maximum number of directors in a private company increased from 12 to 15 which can be increased further by special resolution.
8.Financial Year of any company can end only on March 31 and only exception is for
companies,which are holding/subsidiaryof a foreign entity requiring consolidation outside
India,can have a different financial year with the approval of Tribunal.
9.The concept of One Person Company has been introduced in the new company law.
10.The bill increased the number of members of private companies from50 to 200.This
allows companies access to large pool of capital without going public.
11.The new bill gives recognition to transfer restrictions on inter-se shareholders–‘Right of First Refusal’ will been forceable.This would clear existing ambiguity on legal
enforceability on transfer restrictions under JV / shareholder agreements.
12.While the old bill only permitted merger of a foreign company with an Indian company, the new bill allows merger of Indian companies into foreign companies which would aid in consolidation of cross-border businesses/assets.
13.The new bill permits merger of a listed company with an unlisted one, subject to exit
opportunity being offered to shareholders of the listed company.
14.While the old bill depended on precedents for merger of a subsidiary with aparent (or
between two small companies),the new bill provides a separate and simplified regime for
this without any approval from High Court.
15.The new bill also gives rights for objections to schemes to only creditors who owed over 5 per cent and minority shareholders with over 10 percent stake against no thresholds earlier.
16.The new bill also has a detailed mechanism for acquisition of shares by majority
shareholder from minority shareholders.
17.The bill restricts creation of multi-layered holding structures, prohibiting making
investments through more than two layer so finvestment companies.
18.The new bill bans holding ‘TreasuryStock’, which is often used by companies to increase shareholding or future monetization after consolidation.
19.The new bill asks that listed companies and other specified companies will have to change individual auditor after five years and audit firm after10 years.The old bill had no
provisions for this.
20.The new bill also requires companies to appoint one woman director.
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♥ Pulla Harsha Vardhan ♥
© pullaharshavardhan.blogspot.in ©
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1.Companies are required to spend atleast two percent(2%) of their net profit for the three immediately preceding financial years on CSR,Corporate Social Responsibility. This is applicable to companies with a net worth of Rs500 crore or more,or Rs1,000 crore turnover or Rs 5crore net profits, who have to set up a corporate social responsibility committee.The companies will also have to give preference to the local area sof their operation for such spending.
2.To help in curbing a major source of corporate delinquency,introduces punishment for
falsely inducing a person to enter in to any agreement with bank or financial institution,
with a view to obtaining credit facilities.
3.The limit in respect of maximum number of companies in which a person may be appointed as an auditor has been proposed as 20.
4.Independent directors' shall be excluded for the purpose of computing' one third of retiring directors‘.
5.Appointment of auditors for 5 years shall be subject to ratification by members at every Annual General Meeting.
6.'Whole-timedirector'has been included in the definition of the term' key managerial
personnel'.
7.Maximum number of directors in a private company increased from 12 to 15 which can be increased further by special resolution.
8.Financial Year of any company can end only on March 31 and only exception is for
companies,which are holding/subsidiaryof a foreign entity requiring consolidation outside
India,can have a different financial year with the approval of Tribunal.
9.The concept of One Person Company has been introduced in the new company law.
10.The bill increased the number of members of private companies from50 to 200.This
allows companies access to large pool of capital without going public.
11.The new bill gives recognition to transfer restrictions on inter-se shareholders–‘Right of First Refusal’ will been forceable.This would clear existing ambiguity on legal
enforceability on transfer restrictions under JV / shareholder agreements.
12.While the old bill only permitted merger of a foreign company with an Indian company, the new bill allows merger of Indian companies into foreign companies which would aid in consolidation of cross-border businesses/assets.
13.The new bill permits merger of a listed company with an unlisted one, subject to exit
opportunity being offered to shareholders of the listed company.
14.While the old bill depended on precedents for merger of a subsidiary with aparent (or
between two small companies),the new bill provides a separate and simplified regime for
this without any approval from High Court.
15.The new bill also gives rights for objections to schemes to only creditors who owed over 5 per cent and minority shareholders with over 10 percent stake against no thresholds earlier.
16.The new bill also has a detailed mechanism for acquisition of shares by majority
shareholder from minority shareholders.
17.The bill restricts creation of multi-layered holding structures, prohibiting making
investments through more than two layer so finvestment companies.
18.The new bill bans holding ‘TreasuryStock’, which is often used by companies to increase shareholding or future monetization after consolidation.
19.The new bill asks that listed companies and other specified companies will have to change individual auditor after five years and audit firm after10 years.The old bill had no
provisions for this.
20.The new bill also requires companies to appoint one woman director.
------------------------------------------------------------------------------------------
Subscribe And Be Updated Yourself
♥ Pulla Harsha Vardhan ♥
© pullaharshavardhan.blogspot.in ©
------------------------------------------------------------------------------------------
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