25/09/2013 1 25/09/2013 2 INDEX Elevated Horizon An Era of - - PowerPoint PPT Presentation

COMPA PANY S Y SECRETARY RY

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INDEX

Elevated Horizon An Era of Opportunities Challenges Nonetheless People say… Opportunity lost Opportunities Unlimited

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• Legal Interpretation
• Strategic Advisory
• Litigation Consultancy
• Compliance Consultancy

More opportunities: Act defines the term “Company Secretary” Definition of “Expert” includes Company Secretary Act introduces the term “Key Managerial Personnel” which includes CS Secretarial Audit made compulsory. Statutory recognition to Secretarial Standards. Enhanced Corporate Governance to widen the ambit of functioning of Company Secretary

ELEVATED HORIZON

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Increased opportunities by establishment of National Company Law Tribunal (NCLT). Increased role of CS in Winding up of companies . Increased role of CS in Restructuring of companies . Stringent punishment for violation will stimulate the role of CS. Requirement of enhanced Disclosures & Transparency in board’s report Annual return to be signed by CS

ELEVATED HORIZON

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AN ERA OF OPPORTUNITIES

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The New Act provides definition of Company Secretary

Section 2 (24) “Company secretary” or “secretary” means a company secretary as defined in clause (c) of sub-section (1) of section 2 of the Company Secretaries Act, 1980 who is appointed by a company to perform the functions of acompany secretary under this Act.

• Now apart from person a who is a member of the ICSI, any other individual

possessing prescribed qualifications as earlier, shall not be deemed to be a Company Secretary

• Certain companies to mandatorily appoint a Company Secretary

COMPANY SECRETARY

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KEY MANAGERIAL PERSONNEL

Section 2(51)

The company secretary in employment holds the position of key managerial person in the company with his functions explicitly defined, the term “key managerial personnel” in relation to the company means

• The chief executive officer or the managing director or the manager.
• The company secretary.
• The whole time director.
• Chief financial officer.
• Such other officer as may be prescribed.

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EXPERT

Definition of the “expert” is not provided under the Companies Act 1956.

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As per the new law Company Secretary in practice shall now also be considered an expert.

“Expert” includes an engineer, a valuer, a chartered accountant, a company secretary, a cost accountant, and any other person who has the power or authority to issue a certificate in pursuance of any law for the time being in force

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A company secretary being an expert can :-

• Serve as member of SFIO
• Advise on Matters to be stated in prospectus
• Advise and/or represent the company before NCLT on the matters of

Amalgamations/Arrangements

• Provide Professional assistance To Company Liquidator
• Advise Company Administrator on internal management issues
• Act as Mediator & Conciliator
• Advise on other applicable laws

AMBIT OF ‘EXPERT’

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Compulsory Secretarial Audit (CSA) by certain class of Companies CSA report is to be annexed with the Board Report, which is circulated to all the shareholders. Will widen the scope of practise of company secretary. Explanation in board’s report of every qualification, reservation or adverse remark or disclaimer made in the Secretarial Audit Report. Penalty for Contravention: Every officer of the Company or CS in Practice, who is in default, shall be punishable with fine which shall not be less than One Lakh Rupees but which may extend to Five Lakh Rupees.

SECRETERIAL AUDIT

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SECRETARIAL STANDARDS

Every company to observe secretarial standards with respect to General and Board meetings specified by the Institute of Company Secretaries of India In case of default, company liable to pay a penalty of twenty- five thousand rupees and every

• fficer of the company who is in

default shall be liable to a penalty of Rs. 5000

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FUNCTIONS OF COMPANY SECRETARY

Functions of CS to include—

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Reporting to the Board about compliance with the provisions of this Act, Rules and

• ther laws applicable to the company;

Ensuring that the company complies with the applicable secretarial standards; Discharging other duties.

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EVOLUTION OF NCLT

• Constitution of NCLT to bring new opportunities for CS –
• Advise and represent companies before the Tribunal on matters of Amalgamation /

Mergers, Sick companies rehabilitation, winding up of companies.

• CS in practice for at least 15 yrs (25 years for NCLAT) eligible for appointment as technical

member of NCLT / NCLAT {provision not present in Companies Act 1956}

• Winding up: Appointment of Company Secretary as provisional liquidator
• Revival/ Rehabilitation: Company Secretary to be appointed as Interim / company

administrator by the Tribunal

• CS can also act as Receiver of company.
• In case of implementation of Scheme of Merger : Certification by CS in Practice, whether the

scheme is complied in accordance with the orders of the Tribunal or not.

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FAST TRACK MERGER

• Two or more small companies; or
• A holding company and its wholly owned subsidiary.

Fast track mergers are mergers of

• members /class of members holding at least 90% of shares
• majority representing 9/10th in value of the creditors or class of

creditors

• ROC and Official Liquidator, without requiring the approval of NCLT

Approval required by :

However the companies are required to file the statement of solvency as well

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CROSS BORDER MERGERS

Consideration to be paid to the shareholders of the transferor company in cash and/ or depository receipts. Merger of an Indian company with a Foreign Company and vice versa, subject to:

RBI approval Jurisdiction of Foreign Company to be notified by Central Government

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ANNUAL RETURN

• Contents of Annual Return:
• Registered office, principal business activities, particulars of its holding, subsidiary and associate

companies;

• Shares, debentures and other securities and shareholding pattern;
• Indebtedness;
• Members and debenture holders;
• Promoters, directors, key managerial personnel ;
• Meetings of members;
• Meeting of board and its various committees
• Remuneration of directors and key managerial personnel;
• Penalty or punishment imposed on the company, its directors or officers and details of compounding
• Matters relating to certification of compliances, disclosures
• Details of shares held by or on behalf of the Foreign Institutional Investors
• Such other matters as may be prescribed.

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Company to prepare an annual return per the status on the close

• f the financial year

The return to be signed by a Director and the CS, or where there is no CS, by a CS in practice

ANNUAL RETURN

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BOARD’S REPORT

• Board’s report made comprehensive by inserting more disclosures and transparency

requirements

• Contents of Board Report:
• Extract of the Annual Return
• Number of Board meetings
• Voting rights not being exercised directly by the employees in respect of shares held

by trustees

• Reasons of voluntary revision of financial statements or Board’s report.
• Contracts or arrangements with related parties
• Declaration by independent directors.
• Particulars of loans, guarantees or investments
• Statement indicating development & implementation of risk management policy for

the company.

• Policy on Corporate Social Responsibility and initiatives taken
• Other matters as may be prescribed

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• Mandatory requirement of presenting consolidated financial statements
• f all subsidiaries including associate and joint venture companies
• Mandatory requirements:

a) Financial statements of the company b) Separate Financial statements of its subsidiary or subsidiaries c) Accounts of Foreign Subsidiaries

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CONSOLIDATION OF FINANCIAL STATEMENTS

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• Application to be made to ROC for availing Dormant Status.
• Power vested with ROC for grant of status of ‘dormant company’.
• Criteria for being under the Dormant Shadow :
• Companies registered for a future Project with no significant accounting

transactions

• Companies registered to hold an asset or Intellectual Property with no significant

accounting transactions

• Companies not carrying on any business or operation, or
• Companies not having made any significant accounting transaction during last 2

financial years,

• Companies not having filed financial statements and annual returns during last 2

financial years. Non- Compliance of the provision may result in striking off the name of Company from the register of dormant companies

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DORMANT COMPANY

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• Every company having net worth of Rs. 500 cr. or more, or turnover of Rs. 1000 cr. or

more or a net profit of Rs. 5 cr. or more during any FY to constitute a CSR Committee.

• Composition of committee : 3 or more directors, out of which at least one director shall

be an Independent Director.

• The Board’s report to disclose the composition of the CSR Committee
• Board to ensure that the activities as are included in CSR Policy of the company are

undertaken by the company

• Board to ensure that at least 2% of average net profits of the company made during

three immediately preceding financial years is spent in every financial year on CSR

• Board to specify reasons for not spending the amount on CSR in its report.

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CORPORATE SOCIAL RESPONSIBILITY

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CLASS ACTION SUITS

• Suit may be filed by members or depositors or any class of them;
• If management or conduct of the affairs of the company are being conducted in a

manner prejudicial to the interest of the company, its members or depositors;

• Suit may be filed by more than
• 100 in number or
• more than a percentage of the total number of depositors, whichever is less,
• r any depositor or depositors to whom the company owes such percentage of

total deposits of the company.

• Damages or compensation or any other suitable action from or against—
• The company or its directors for any fraudulent, unlawful or wrongful act or
• mission.
• Any expert or advisor or consultant or any other person for any incorrect or

misleading statement or for any fraudulent, unlawful or wrongful act or conduct.

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CHALLENGES NONETHELESS

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Criminal liability for fraud for mis- statement in prospectus- every person who authorizes issue

• f

misleading prospectus. Promoter, director, expert or any other person who has either assented to be director of the company or who has authorized the issuance of prospectus, to be held liable for fraud. Definition “Officer in Default” includes Key managerial personnel which includes CS In case of frauds, all the professionals and experts rendering independent services to the Company are to be held liable.

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PEOPLE SAY… OPPORTUNITY LOST

Mandatory appointment of CS under S.383A done away with. Requirement of Compliance Certificate done away with . Annual Return now to be signed by PCS in case of certain companies. NCLT work will be grabbed by Advocates. Annual Filing requirements by One Person Company uncertain.

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BUT I SAY OPPORTUNITIES

UNLIMITED

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Opportunity comes to those who are prepared. Prepare yourself for greater things! Be excited, Be expectant and Expand.

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• Anonymous

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THANK YOU..

Co Corporate Pr Professi ssionals ls Ca Capit ital Pr l Priv ivate L Lim imit ited

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