New Indian Company Law - Major Highlights

Individual auditors are to be compulsorily rotated every 5 years and audit firm every 10 years in listed companies & certain other classes of companies, as may be prescribed. The objective is to curtail corporate fraud which might be going on due to collusion between auditor and Management .

The National Advisory Committee on Accounting Standards renamed as The National Financial Reporting Authority. The authority to advise on Auditing Standards and Accounting Standards.  All Auditor will be regulated by this authority.

The Bill provides provisions related to Corporate Social Responsibility (CSR) for certain category of Companies . 2% of average Net profit of last three years to be spend on CSR activity. This was the key point of delay in passing of this law .  

 Where any valuation is required to be made of any property, stocks, shares, debentures, securities or goodwill or any other assets or net worth of a company or its liabilities under the Act, it shall be valued by a registered valuer.

The Bill makes provision for cross border amalgamations between Indian companies and companies incorporated in the jurisdictions of such countries as may be notified from time to time by the central government.

The Bill provides for class action suit by specified number of members or depositors against the company except the banking company, which is prevalent in developed countries.

 Liability of independent directors and non-executive directors not being

promoter or key managerial personnel to be limited. Henceforth it is expected that Independent Director will come forward to take directorship  

 At least one-third of the total number of directors of a listed public company should be independent directors. Existing companies to get a transition period of one year to comply.

Some prescribed class or classes of companies are required to appoint at least one woman director.

 At least one director should be a person who has stayed in India for a total period of not less than 182 days in the previous calendar year.

All companies to follow uniform financial year, running from April to March

 Concept of dormant companies introduced.

        

        

A private company can have a maximum of 200 members, up from 50 members at present.

·         Concept of One Person Company introduced. It will be a private limited company. ·         ·         Interim dividend in a current financial cannot exceed the average rate of dividend of the preceding three years if a company has incurred loss up to the end of the quarter immediately preceding the declaration of such dividend.

·         ·        A company’s auditor shall not provide, directly or indirectly, the specified services to the company, its holding and subsidiary company.

·         ·