The Consumer Financial Protection Bureau has ventured into automobile financing territory with a newly-adopted rule that allows the bureau to supervise the largest nonbank automobile finance companies—those that originate, acquire, or refinance more than 10,000 loans per year. I am pleased to highlight on some of the key changes and challenges the new Companies Act, 2013 has for the Corporates to face on (more specifically on the Private Companies). With permission of NCLT, different financial year can be had for companies which are holding or subsidiary of the company incorporated outside India. Definition of member now includes every person holding shares of the company as against Section 41 which only provided for persons holding equity shares of the company. The definition of a subsidiary is based on ownership of the total share capital which includes preference share capital.
Vide Circular No. 20/2013 dated December 27, 2013- Clarification with regard to holding of shares or exercising power in a fiduciary capacity – Holding and Subsidiary relationship under Section 2(87) of the Companies Act, 2013. By reason of which, now any increase in authorized capital of the Company would also call for a special resolution and filing of form 23 with Registrar of Companies (ROC). Public Companies issuing shares with DVR’s had to comply with the rules-which under the act were not applicable to Private Companies. Further notification on rules would suggest the compliances for Private Companies in issue of shares with DVR’s.
Act prohibits acceptance of deposits by companies other than (i) banking/ Non-banking finance companies (ii) class of companies which the Government will notify in consultation with RBI; (iii) deposits raised by companies from its shareholders. Quorum requirements for listed companies changed to (i) 5 members present if shareholders are < 1,000="" (ii)="" shareholders="">1,000 < 5,000-="" quorum="" of="" 15="" members="" (iii)="" shareholders="">5,000- quorum of 30 members.
Listed companies are required to file change in promoter shareholding & top 10 shareholders within 15 days of change with ROC. The 1956 Act required such a disclosure if director, manager or secretary holds 20 (twenty) percent or more in such other companies. The Act specifically provides that companies shall give preference to the local areas around it where it operates for spending amounts earmarked for the CSR activities.
Director’s Report to include amongst others, extract of the Annual Return, development and implementation of a risk management policy and CSR, related party contracts, certain loan / guarantees/investments and in case of listed and prescribed public companies – annual evaluation of the performance of the BOD. CSR provisions of Act apply to Companies with net-worth of Rs. 500 Cr. or net profit of Rs. 5 Cr. or turnover of Rs. 1,000 Cr. net profit as per financial statements of the Company.