Impact of Companies Bill 2012 passed by Rajya Sabha on a
Private Limited Company
a. The maximum number of members in a private company has
been increased from 50 to 200. This will definitely cheer up the corporate
world as it enables the private companies to increase the number of members
without becoming a public company which has to follow more stringent norms.
b. 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.
c. The Bill provides for mandatory rotation of auditors
every five years.
d. 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.
e. Capping director’s remuneration at 5% of the net profits
of the company
f. The maximum number of directors in a private company has
been increased from 12 to 15, which can be increased further by special
resolution.
g. Companies will have to disclose ratio of remuneration of
each director on the board to the average of employees’ salary.
h. Every company with net worth of INR 5,000 million or more
or turnover of INR 10,000 million or more or a net profit of INR 50 million or
more during any financial year to constitute a CSR Committee consisting of
three or more directors, out of which at least one director shall be an
independent director. The Committee to recommend CSR policy and CSR expenditure
and to monitor the CSR policy.
i. Companies will be allowed to declare dividends out of
their current profits even when they have substantial accumulated losses of
earlier years.
j. Companies permitted to keep books of account or other
relevant papers in electronic mode in the prescribed manner.
k. Annual financial statements of every company (except one
person company, small company or dormant company) to include a cash flow
statement also.
l. Prohibition on auditor rendering specified non-audit
services to the auditee company/ its subsidiary/holding company e.g. accounting
and book keeping services, internal audit, design and implementation of any
financial information system, investment advisory services, investment banking
services, management services etc. Existing companies to get a transition
period of one year to comply.
m. Disqualification of directors under the present section
274(1) (g) extended to companies other than public companies also.
n. The office of a director would become vacant if he
remains absent for all meetings of the Board for a period of 12 months, even
where the leave of absence has been obtained.
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