Key Highlights/Points of the Companies Act, 2013
I. Business Friendly Corporate Regulations/ Pro-Business Initiatives
Provision of self-regulation with disclosures/transparency instead of 'Government approval based regime'.
Automation of corporate records/meetings statutory recognition to (i) maintenance of documents by companies in electronic form, (ii) 'video-conferencing' as a mode of conducting Board meetings etc.
Faster mergers and acquisitions including short form of mergers and cross border mergers.
Summary liquidation: For companies having net assets of Rs. 1 crore or less, Official Liquidators (OLs) are empowered with adjudicatory powers.
Time bound approvals through National Company Law Tribunal (NCLT).
Concept of 'dormant companies' introduced (Companies not engaged in business for two consecutive years are declared as dormant).
Concept of One Person Company (OPC) introduced.
II. Good Corporate Governance and Corporate Social Responsibility
Concept of Independent Directors (IDs) included as a statutory requirement u/s 149(4).
Provision for constitution of several Committees of the Board (Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee and CSR Committee).
Woman Director for prescribed class of companies.
Mandatory provision for constitution of CSR Committee and formulation of CSR Policy, with mandatory disclosure, for prescribed class of companies.
III. Enhancing Accountability of Management
The term 'Officer in Default' has been reviewed to make it more relevant.
Terms 'Key Managerial Personnel' (KMP) and 'Promoter' defined to affix responsibility on key functionaries of the company.
Duties of Directors defined, including to shareholders, employees, the community and environment.
Cap on number of Directorships: 20 companies, of which 10 can be public companies.
IV. Strengthened Enforcement
The Central Government to have powers to order investigation, suo-motu, in public interest.
Statutory recognition of Serious Fraud Investigation Office (SFIO).
Provision for creation of Special Courts.
Search and seizure of documents, during investigation, without an order from a Magistrate.
Freezing of assets or disgorgement of illegal gains of company under investigation.
Recognition of accounting and auditing standards.
Stricter disqualification norms for auditors.
Auditor not to perform specified non-audit services.
Tenure or rotation of auditors prescribed.
Internal audit for bigger companies.
Substantial civil and criminal liability for an auditor in case of non-compliance.
Tribunal empowered to direct a change of auditor in case of a fraud detected.
Cost records and cost audit for prescribed class of companies.
Secretarial audit for prescribed class of companies.
National Financial Reporting Authority (NFRA) to be constituted.
Protection of Minority Shareholders
Exit option provided, if there is dissent to change in Object clause, or during compromises etc.
Valuation mandated during compromise, arrangements etc.
Effect of merger on minority shareholding to be disclosed.
Listed companies to have one Director representing small shareholders.
VI. Investor Protection
Stringent norms for acceptance of deposits from the public.
Strengthened role of Investor Education and Protection Fund (IEPF)
No time bar on claims of dividends from IEPF.
Class Action Suits recognized.
Enhanced powers to Tribunal for protection of minority rights.
Ref: MCA Annual Report 2015-16
Companies Act 2013
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