The New Companies Bill was finally passed in Rajya Sabha on 8th August 2013, making it mandatory for profit making companies to spend on activities related to Corporate Social Responsibility (CSR).
With the new legislation, India would possibly become the first country to have Corporate Social Responsibility (CSR) spending through a statutory provision.
The bill will now go for presidential assent. The lower house of parliament Lok Sabha cleared the bill Dec 18 last year.
Below are the Highlights of New Companies Bill 2012:
Maximum number of directors in a private company increased from 12 to 15 which can be increased further by special resolution.
The limit in respect of maximum number of companies in which a person may be appointed as auditor has been proposed as 20.
Companies are required to spend at least two per cent of their net profit on Corporate Social Responsibility.
To help in curbing a major source of corporate delinquency, introduces punishment for falsely inducing a person to enter into any agreement with bank or financial institution, with a view to obtaining credit facilities.
Independent directors' shall be excluded for the purpose of computing 'one third of retiring directors'.
Appointment of auditors for 5 years shall be subject to ratification by members at every Annual General Meeting.
'Whole-time director' has been included in the definition of the term 'key managerial personnel'.
The term 'private placement' has been defined to bring clarity.
Financial Year of any company can end only on March 31 and only exception is for companies, which are holding/subsidiary of a foreign entity requiring consolidation outside India, can have a different financial year with the approval of Tribunal.
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