Tuesday, 10 May 2016

Knowledge about Companies Act 2013 and Balance Sheet

The Balance Sheet and Profit & Loss account of companies mandated several disclosure requirements under the Companies Act, 2013 and the manner of providing depreciation on assets changed from straight line and WDV basis to concept of useful life of assets and residual value for class of assets, moving towards the convergence to International Financial Reporting Standards or IFRS.  Consolidation of accounts of holding company with its subsidiary and associate companies, presentation of cash flow statement and compliance with accounting standards made robust.  Aside this there was change in rates of depreciation of various class of assets linked to its useful life. 

Provisions for setting up of the National Company Law Tribunal to look after specified corporate matters, approvals, compounding, reliefs which were hitherto dealt with by the Board for Industrial and Financial Reconstruction (BIFR), Company Law Board, Hon’ble High Courts were specified with provisions for appeal against orders passed by NCLT with the National Company Law Appellate Tribunal (NCLAT) and further appeal to Hon’ble Supreme Court.   Steps are on for making NCLT and NCLAT operational after the landmark Hon’ble Supreme Court judgment lead by Hon’ble Mr. Justice A.K. Sikri. Other authorities under the Companies Act include the Regional Directors, the Registrar of Companies, Special Courts, NFRA, Adjudicating Officer, Mediation and Conciliation Panel, SFIO etc.

There was major advancement towards protection of rights of shareholders and stakeholders, provisions related to oppression and mismanagement under company law  was revamped with enhanced rights of shareholders to initiate proceedings for oppression and mismanagement of the affairs of the Companies before the National Company Law Tribunal (currently before the Company Law Board) even by fewer members who even not qualify the requisite 100 members mark or 10% of the paid-up share capital requirement. Taking a clue from the Satyam case where large number of shareholders lost heavily, Class Action Suit provision has been introduced which allows the shareholder and deposit holders to bring in class action suits representing the entire class of shareholders or deposit holders.  Concept of fair valuation has been introduced for most matters under the Companies Act i.e. fund raising, providing exit to shareholders, 

Fraud related provision has also been introduced with hefty fines and imprisonment ranging from 6 months to 10 years.  Monetary penalties has increased several fold in most cases of non compliance or default with more offences under the Companies Act 2013 becoming non compoundable or compoundable with the permission of Court. 

No comments:

Post a Comment