It’s been three months since the new Companies Act, 2013 has been made effective and we have been informing about certain immediate changes required since then.
We are providing a quick ‘recap‘ of certain changes that may have required restructuring of the Organization and Management structure thus aligning to new legal requirements.
We have been providing professional services in this regard, as implementation partners, to help our clients be updated of all required provisions. A checklist based walkthrough has helped concluding this activity before end of 1st quarter.
| Redefining Corporate Structure | · Identification and mapping of Holding, Subsidiary, Associate Companies keeping in view the new limits of share capital as defined under the Companies Act, 2013
· Noting of all transactions entered between among above mentioned type of companies either in Board meeting or Shareholder’s meeting, as applicable |
| Alteration of Charter Documents | · Amendment of existing Memorandum (MOA) and Articles of Association (AOA) to incorporate the relevant provisions of the Companies Act, 2013
· In case of Private Companies, entrenchment provisions can be adopted in the Articles of Association to make compliances more explicit. · Alteration of MOA of the Company to remove the ‘other objects’. |
| Amendment of official stationery | Every Company must disclose following mandatory information in all its official stationery, such as, Letterhead/ Invoice/ Debit Note/ e-mails or other documents used for official communications:
· Full name of the company · In case of change of name within preceding 2 years, previous name should also be disclosed · Registered Office address · Corporate Identity Number (21 digit CIN number allotted by Ministry of Corporate Affairs) · Telephone number · e-mail ID, if any · Corporate Office address, if any · Fax number, if any · Website address, if any |
| Auditor Appointment | · Appointment of Auditor for 5 years of tenure (one-term) subject to ratification in every Annual General Meeting
· Compulsory rotation of auditors in certain classes of Companies · Review of eligibility of Auditor to continue services in the Company · Review of other services provided by the Auditor · Appointment of Cost Auditor, if applicable · Appointment of Secretarial Auditor, if applicable · Appointment of Internal Auditor, if applicable · Minimum 5 years cooling off period after two consecutive terms |
| Financial Statements | · Adoption of uniform Financial Year i.e. 01st April to 31st March (12 month period)
· Financial Statement shall include the Cash Flow Statement · Safekeeping of Books of Accounts in electronic mode and to be made available for inspection in legible form · Preparation of Consolidated Financial Statement in case of one or more subsidiaries · Calculation of Depreciation as per Schedule II of Companies Act, 2013 · Review of Accounting Policies and processes |
| Updation of Statutory Registers | · Maintenance of Register of Members as per new format
· Maintenance of Register of Directors as per new format · Review of Fixed Asset Register to include life of Assets · Review and updation of other Statutory Registers to comply with provisions of Companies Act, 2013 |
| Reconstitution of Board and its Committees | · Reconstitution of Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, if applicable
· Appointment of Women Director, if applicable · Appointment of Independent Director, if applicable · Identification and re-designation of Key Managerial Personnel · Separation of position of Chairman and Managing Director · Determining Directors liable by rotation · Mandatory appointment of atleast one Resident Director |
| Board Management | · Drafting of certain key policies, like, Remuneration Policy, Whistle Blower Policy, Corporate Social Responsibility Policy, etc
· Obtaining Director’s Disqualification and Disclosures as per the new formats · Noting of duties of Directors · Assessment of remuneration limits for Directors and Key Managerial Personnel · Compulsorily indication of Director Identification Number (DIN) of every document that needs to be signed in capacity of a Director · Independence Certificate by each Independent Director · Identification of all related parties as per the definition of Companies Act, 2013 and ratification of transactions entered with such related parties in Board or Shareholders Meeting, whichever is applicable · Passing of Special Resolution for increase in borrowing limits or investment limits, if any · Tracking of number of Directorships held by each Director so as to keep them under the limits defined in Companies Act, 2013 · Prohibition of providing any loans to Directors |
Hope the above information would have given some insight on adherence to critical changes that required immediate attention. Our team is prepared to take care of the implementation of these changes and help regularize the gaps, if any.
You may get back to us for any more details on above provisions or any other matter related to Companies Act, 2013 at below mentioned contact details-
Malavika Bhatia | <malavika.bhatia@bluelotusstrategy.com> | M +91 98733 18440
Monika Bhardwaj | <monika.bhardwaj@bluelotusstrategy.com> |M +91 98915 60525
We will do our best to assist you with the compliances and removal of doubts / queries. However, please note that since the Act is new, certain clarifications are needed as there are lot many areas where operational issues are to be sorted out.
In case of queries that require clarification from Ministry of Corporate Affairs, we will come back to you after seeking necessary clarifications from the Ministry.
