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“It has incorporated new provisions that reflect globally accepted best corporate governance practices, and best regulatory frameworks,” Joseph said, while addressing members of the Bangalore Chamber of Industry and Commerce (BCIC) and Institute of Companies Secretaries of India (ICSI), Bangalore Chapter, on Friday.
He noted that for private companies, it has been proposed to allow exemptions/modifications from the provisions relating to types of share capital and voting rights; certain requirements for acceptance of deposits, limits on number of audit, restriction on powers of the board and certain aspects of related party transactions.
“We expect this exercise to be completed during the ensuing winter session of parliament. The draft notifications broadly seek to extend exemptions available to relevant companies under the 1956 Act with minor modifications keeping in view the intent of the new law,” Joseph said,
The Ministry has proposed under section 462 various exemptions for private companies and other classes of companies from some compliance related requirements of the new law. The draft notifications proposing these exemptions are required statutorily to be placed first in both houses of Parliament for its approval before final notification in the gazette.
For the government companies including in certain cases, to wholly-owned government companies, exemptions/modifications are proposed from provisions relating to disqualification of directors in certain cases, rotation of directors, nomination and remuneration committee, related party transactions and others.
The Ministry is presently examining suggestions relating to applicability of private placement provisions on offer of foreign currency convertible bonds (FCCB) and foreign currency non-convertible bonds to foreign nationals, remuneration of professional and non-executive directors under Schedule 5, specification of secretarial standards under the Act, manner and frequency of approval of related party transactions by the audit committee and thresholds for fraud reporting by auditors to the central government.
BCIC Finance and Corporate Affairs Expert Committee Chairman N Venkatakrishnan said, “An essential issue is that one broad brush is required irrespective of different types of companies to have common procedures. Treat MSMEs differently and provide them a better platform.”
“As it took 57 years for government to amend new Companies Act 2013, still there is lot of uncertainty,” Venkatakrishnan added.
Wipro Technologies GM – Financial Reporting & Assurance Hemanth Vepa said, “Companies Act 2013 contains significant changes to financial reporting disclosures and audit requirements for companies which will need to address important matters such as consolidated accounts, internal financial controls, fraud reporting, auditor appointment and rotation, among other changes.”
Grant Thornton Partner Yogesh Sharma said, “In many ways the corporate governance principals laid down by the companies act is the visionary and focussed on investor protection. However, implementation will continue to be a challenge considering that this is one act for without differentiating the nature, size and needs of different corporate affairs.”
Deloitte Haskins and Sells Partner V Balaji said, “MCA has provided the deferment on reporting on internal financial controls to the auditors. However, the same has not been extended to the companies, especially the boards of listed companies.
“The current exemption provided to companies who do not have subsidiaries but have only one or more associates or joint ventures is available only for the financial year ending March 31, 2015. Such exemption needs to be considered for succeeding financial years too,” Balaji added.
The article appeared in the Deccan Herald. The article can be found here.