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

COMPA PANY S Y SECRETARY RY 25/09/2013 1

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INDEX Elevated Horizon An Era of Opportunities Challenges Nonetheless People say… Opportunity lost Opportunities Unlimited 25/09/2013 3

ELEVATED HORIZON More opportunities: • Legal Interpretation • Strategic Advisory • Litigation Consultancy • Compliance Consultancy 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 25/09/2013

ELEVATED HORIZON 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 25/09/2013 5

AN ERA OF OPPORTUNITIES 6 25/09/2013

COMPANY SECRETARY 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 25/09/2013 7

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. 8 25/09/2013

EXPERT 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 Definition of the “expert” is not provided under the Companies Act 1956. 9 25/09/2013

AMBIT OF ‘EXPERT’ 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 10 25/09/2013

SECRETERIAL AUDIT 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 . 25/09/2013 11

SECRETARIAL STANDARDS Every company to observe secretarial standards with respect to General and Board In case of default, company meetings specified by the liable to pay a penalty of twenty- Institute of Company five thousand rupees and every Secretaries of India officer of the company who is in default shall be liable to a penalty of Rs. 5000 12 25/09/2013

FUNCTIONS OF COMPANY SECRETARY Functions of CS to include— Reporting to the Board about compliance with the provisions of this Act, Rules and other laws applicable to the company; Ensuring that the company complies with the applicable secretarial standards; Discharging other duties. 13 25/09/2013

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. 14 25/09/2013

FAST TRACK MERGER Fast track mergers are mergers of • Two or more small companies ; or • A holding company and its wholly owned subsidiary . Approval required by : • members /class of members holding at least 90% of shares • majority representing 9/10 th in value of the creditors or class of creditors • ROC and Official Liquidator, without requiring the approval of NCLT However the companies are required to file the statement of solvency as well 25/09/2013 15

CROSS BORDER MERGERS Merger of an Indian company with a Foreign Company and vice versa , subject to: Jurisdiction of Foreign Company to RBI approval be notified by Central Government Consideration to be paid to the shareholders of the transferor company in cash and/ or depository receipts . 16 25/09/2013

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 17  Such other matters as may be prescribed. 25/09/2013

ANNUAL RETURN The return to be Company to prepare signed by a Director an annual return per and the CS , or where the status on the close there is no CS, by a of the financial year CS in practice 18 25/09/2013

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 19 25/09/2013

CONSOLIDATION OF FINANCIAL STATEMENTS  Mandatory requirement of presenting consolidated financial statements of 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 20 25/09/2013

DORMANT COMPANY  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 25/09/2013 21