Immediate action points under Companies Act 2013 for Pvt Ltd Companies

Immediate action points under Companies Act 2013 for Private Limited Companies

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S.No	Immediate actions	Actions to be taken
1	Alteration of Memorandum (MOA) and Articles of Association (AOA)	To amend the existing MOA and AOA to incorporate the provisions of the new Companies Act; Option to include entrenchment provisions, if any, in the Articles of Association for strict compliance. (An entrenchment clause is a provision which makes further amendments to AOA more difficult. such provision enables a company to follow a more restrictive procedure than passing a special resolution for altering a specific clause of AOA. Entrenchment clause may prevent unilateral amendments to the AOA which may be a joint venture company.)
2	Printing of new Stationary of the Company	Disclosure of the following on the letterhead / bills or other official communications such as name (including previous name for upto 2 years), registered address, Corporate Identity Number(CIN), Telephone No., Fax No., website address email address, if any; (In case the letterheads already printed, please affix a rubber stamp to comply with additional disclosures.)
3	Resident Director	At least one of the directors who is resident in India shall be appointed on the Board of every company.
4	Disqualification of directors	Every director shall inform to the company concerned about his disqualification under sub-section (2) of section 164, if any, in Form DIR-8 before he is appointed or re-appointed. (Similar to disqualification u/s 274(1)(g) of the Old Act) In addition to the disqualification provided under section 274 of the Old Act, following new sections have been provided: -A person convicted of any offence and sentenced in respect thereof to imprisonment for a period extending upto seven years or more; - A person convicted of the offence dealing with related party transactions at any time during the last preceding five years; -A person who has not been allotted DIN. Whenever a company fails to file the financial statements or annual returns, or fails to repay any deposit, interest, dividend, or fails to redeem its debentures, as the company shall immediately file the details of all directors in prescribed form (Form DIR-9), to the ROC furnishing therein the names and addresses of all the directors of the company during the relevant financial years. When a company fails to file such details within a period of thirty days of the failure that would be treated as the disqualification and officers of the company shall be treated as the officers in default. Any application for removal of disqualification of directors shall be made in the prescribed form (Form DIR-10).
5	Disclosures by a director of his interest	Every director shall disclose his concern or interest in any company or companies or body corporate (including shareholding interest), firms or other association of individuals, by giving a notice in writing in Form MBP 1 (earlier it was form 24AA).
6	To take note of duties of Directors	New Act provides duties of directors under the Act and Rules. The Company should take the note of the same in the ensuing Board meeting (preferably in first quarter of 2014).
7	Board Meetings (to take note for all ensuing board meeting)	New act allows participation of Directors in Board Meeting through video conferencing and through other audio visual means by complying the prescribed procedures; At-least 7 days notice to be given for Board meeting; Notice of Board meeting may be given by electronic mode; Not more than 120 days shall be intervene between 2 consecutive board Meetings; Participation through video conferencing shall be counted for quorum; The Rules provided certain matters which cannot be dealt with in a meeting through video conferencing or other audio visual means. At least one meeting in a period of 12 months has to be physically attended by every director Director will Vacate the office if he is absent from all Meetings of the Board during 12 months with or without leave of absence (Attending one BM in a period of 12 months is must).
8	Resolution by Circulation	Under the new Act, resolution by circulation has to be approved if it is consented by majority of directors in contrast to corresponding provision of the Old Act, which required consent of all directors present in India or majority by them. Ratification of circular resolution shall be noted at a subsequent board meeting and shall be made part of the minutes of such Board meetings. Where more than1/3 of the total director of the company requires, resolution to be passed at a Board Meeting, the same shall not be passed by circulation.
9	Power of Board (to take note for all)	New powers are added in the list of powers which can be exercised by the Board only by passing a resolution at Board meeting. The Company should take the note of the same in the ensuing Board meeting (preferably in first quarter of 2014). Now, certain Board resolutions are also required to be filed with the ROC in form MGT-14 within 30 days.
10	Loans to Directors	Now, also applicable to private companies; Total prohibition on prescribed transactions; Imprisonment could not be avoided by fully repaying the loan.
11	Loans & Investments by Company	A company shall not make investment through not more than 2 layers of investment company; Giving any loan or guarantee or providing any security or the acquisition by company exceeds 60% of paid up share capital, free reserves and share premium account or 100% of free reserves and share premium account, whichever is more, requires prior approval of the company by special resolution. Now, loans and investment by holding company to/in its wholly owned subsidiary is not exempted.
12	Related party transactions	Companies need to evaluate the related party transactions and have to take necessary approval prescribed under the Act. Requirement of obtaining Central Government approval has been withdrawn but more compliances has been introduced in the Act as well through the Rules.
13	To take note of duties of company secretary	New Act provides duties of company secretaries under the Act and Rules. The Company should take the note of the same in the ensuing Board meeting (preferably in first quarter of 2014).
14	Preparation of statutory Registers	The Companies has to maintain all the statutory registers as per the new prescribed format under the new Act and Rules.
15	Appointment of Auditors	Appointment of auditor for 5 years of tenure subject to ratification in every annual general meeting; Compulsory rotation of auditors for certain classes of companies as may be prescribed in the Rules; Term for individual auditor shall not be more than 5 consecutive years; Term for audit firm not more than 2 terms for 5 consecutive years; 5 years cooling off period for rotated individual auditor/audit firm.
16	Audit of Branch Office	Under the new Act, Audit of Branch Office has been introduced, now where the company has a branch office, the accounts of that office shall be audited by the Auditor. The Branch auditor shall submit his report to the Company’s auditors.
17	Accounts (for financial year 2013-14-as per Old Act For financial year 2014-15-as per New Act)	Company can keep the books of accounts in electronic mode as prescribed under the New Act and Rules; Salient features of financial statement of a company’s subsidiary company or subsidiaries, associate company or joint venture shall be filed separately in prescribed form. Consolidation of financial statement of the Company shall be made in accordance with the provisions of the Act.
18	Corporate Social Responsibility	Under the New Act, the Companies on which CSR provisions are applicable, has to spend 2% of average net profits for last 3 years and comply with the provisions of the Act and CSR Rules. CSR applies to the following companies having: - Net worth of INR 500 Crore or more; or Turnover of INR 1,000 Crore or more; or Net profit of INR 5 Crore or more.
19	Acceptance of deposits/unsecured loan	Company cannot accept any kind of deposit/unsecured loan from relative of director. All new deposits accepted from ‘Member’ are subject to certain terms, conditions and procedures. Company can accept deposits from director during the tenure of his directorship. Following compliance has to be followed in case of outstanding deposits as on 31st March 2014– - File a return of such deposits/loans till 30th June 2014, AND - Repay all such deposits/loans on or before 31st March 2015.
20	Filing of Annual Return and Disclosures to be made therein	Under the New Act, every company shall prepare a return in the prescribed form containing the particulars as on the date of end of the financial year. Following disclosures should be made in the Annual return: - Principal business activities, particulars of its holding, subsidiary and associate companies; - Details of shares, debentures and other securities with shareholding pattern; - Indebtedness; - Members and debenture holders with changes therein; - Promoters, directors, KMP with changes therein; - Meetings of members or class thereof, board and other committees and details of attendance - Remuneration of directors and KMP; - Penalties imposed on the company, its directors or officers and details of compounding of offence; - Shares held by FIIs.
21	Additional Disclosures in Explanatory Statement	Nature of concern or interest, financial or otherwise, of director, manager, KMP and relatives of directors, manager and KMP; Any other information and facts that may enable members to understand the meaning, scope and implications of the items of business; Failure to make such disclosure – promoter, director, manager liable to compensate the company to the extent of the benefits derived by them.
22	Complied with Secretarial Standard	The New Act provides that every company shall observe “Secretarial Standards to Minutes” with respect to general and board meetings specified by the Institute of Company Secretaries of India.
23	Obligation to indicate DIN	Every person or Company should mention the DIN in all forms, information or particulars which relates to the director or containing any reference of any director while furnishing the same.
24	Certification of Annual Return	The annual return of the following companies, shall be certified by a Company Secretary in Practice: - listed company; - a company having paid-up share capital of INR 10 Crore or more; or - a company having turnover of INR 50 Crore or more.
25	Revised Fee for filing	Under the New Act revised fee shall be applicable for all filings. The Company shall evaluate the Table of Fees pursuant to rule 12 of the Companies (Registration of Offices and Fees) Rules, 2014).

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