UPDATE: on 30th August 2013: Companies Bill 2012 became the Companies Act, 2013 (Act 18 of 2013).
[NOTE: The law stated in this post is effective from 1st April 2014 till 11th September 2018. For the law applicable from 12th September 2018, please visit here]
Managing Director is Key Managerial Personnel of utmost importance. He is the face of a company and its decision-making mechanism. A person gains significant advantages as Managing Director which may not be there, in case of his appointment as Manager or Chief Executive Officer. While Chief Executive Officer has no special advantage except his clubbing as Key Managerial Personnel with Manager and Managing Director, Manager has some. Their definitions speak themselves. Appointment of Managing Director, Whole – Time Director and Manager is governed by the provision of Section 196 of the Bill. They all are a different class of Key Managerial Personnel and has the specific provision of appointment in addition to Section 203, discussed in an earlier post.
Posted in Chapter XIII - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility
Tagged Board Committee, Board of Directors, Companies Bill 2012, CorpGov, CorpLaw, Corporate Governance, Corporate Law, Director, India, Key managerial personnel, Legal Reforms, Manager, Managerial Remuneration, Managing Director, Ministry of corporate affairs, Reforms, Whole – time Director
UPDATE: on 30th August 2013: Companies Bill became the Companies Act, 2013 (Act 18 of 2013).
In my last post, I stopped myself from further reading midway due to length of the post “Appointment and Qualification of Director”. Now, this is time to resume reading. Let us start with Additional Director, Alternate Director and Nominee Directors.
Posted in Chapter XI - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility
Tagged Additional Director, Alternate Director, Board of Directors, Companies Bill 2012, CorpGov, CorpLaw, Corporate Law, Director, Director in Casual Vacancy, Duties of Directors, Independent Director, India, Legal Reforms, Ministry of corporate affairs, Nominee Director, Reforms, Removal of Director, Resignation of Director, Vacation of Office of Director, Whole – time Director
UPDATE: on 30th August 2013: Companies Bill 2012 became the Companies Act, 2013 (Act 18 of 2013).
I discussed in my last post that it is first time that concept of “Key Managerial Personnel” has been introduced in India. Hopefully, present Companies Bill will change status of Corporate Governance in India. The qualified Directors and transparency in appointment of directors is single most important key for success of public corporate and corporate governance. As I discussed, appointment of “Key Managerial Personnel” is discussed in Section 203 but specific provisions of Chapter XI should be taken care of in case of appointment of Directors as they are specific provisions for them. Chapter XI consists of 23 Section from Section 149 to Section 172.
Posted in Chapter XI - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility
Tagged Board of Directors, Companies Bill 2012, Company Secretary, CorpGov, CorpLaw, Corporate Governance, Corporate Law, Director, Disqualification of Directors, Key managerial personnel, Legal Reforms, limit on directorship, Ministry of corporate affairs, Profession, Qualification of Directors, Reforms, Retiring Directors
Employee’s welfare is also a matter corporate social responsibility for all body corporate. During debate on corporate social responsibilities we heard a lot from all quarters.
Principle 3 of National Voluntary Guideline on Social, Environment, & Economic Responsibilities of Business issued by Ministry of Corporate Affairs say, ”Businesses should promote the well being of all Employees.” On page 17 of this guideline, it is mentioned that “…strongly believe that addressing health issues significantly contributes to the sustainability of their business operations and especially the health and welfare of their employees.” There is separate guideline issued by Government for Central Public sector Enterprises.
As a stakeholder, we have interest in measures taken by professional bodies under Ministry of Corporate Affairs. It is noteworthy to note, these professional bodies are very instrumental to spread awareness about corporate social responsibilities on behalf of government. I filed applications under three professional bodies and asked same questions:
Posted in Company Secretary, CorpGov, CSR, Governance and Responsibility, Institute of Company Secretaries of India - ICSI, Truth of Our Time
Tagged CorpGov, CorpLaw, Corporate, Corporate Governance, CSR, Employees Welfare, Health, ICAI, ICSI, India, Institute of Chartered Accountants of India, Institute of Company Secretaries of India, institute of Cost Accountants of India, Ministry of corporate affairs, RTI
(UPDATE: on 30th August 2013: Companies Bill became the Companies Act, 2013 (Act 18 of 2013).
In this series of my blog post related to Companies Bill, 2012; I am writing this post about provision relating to internal and cost audits. The manner of appointment of auditors may affect independence of cost audit and good corporate governance. The bill addresses this issue very well.
Posted in Chapter IX - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility
Tagged Accounts, Accounts and Audit, Appointment of Auditor, Auditor, Auditor Remuneration, Causal Vacancy, Companies Bill 2012, CorpGov, CorpLaw, Corporate Governance, Corporate Law, Cost Audit, Disqualification of Auditor, India, Internal Audit, Legal Reforms, Ministry of corporate affairs, Profession, Reforms, Removal of auditor, Resignation of Auditor
(UPDATE: on 30th August 2013: Companies Bill, 2012became the Companies Act, 2013 (Act 18 of 2013). )
In my last blog post auditor under companies Act, 2013: from appointment to removal, I discussed auditor his appointment, remuneration resignation and removal along with other incidental matters. In this post I will discuss power, duties and penalties related to auditors and audit report.
Posted in Chapter IX - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility
Tagged Accounting, Accounting Standard, Accounts and Audit, Audit, Audit Report, Auditor, Branch Audit, CA, Chartered Accountant, Companies Act 2013, Companies Bill 2012, Comptroller and Audit General of India, CorpGov, CorpLaw, Corporate Governance, Corporate Law, General Meeting, Government Companies, ICAI, India, Institute of Chartered Accountants of India, Legal Reforms, Ministry of corporate affairs, Profession, Reforms, Statutory Audit
(UPDATE: on 30th August 2013: Companies Bill 2012 became the Companies Act, 2013 (Act 18 of 2013).
Corporate Governance is a fundamental structure of all recent companies’ laws globally. True and fair Audits are core concern for corporate world and its regulators. While I was writing my earlier blog post “Footsteps of Corporate Governance in Companies Bill 2012 Companies Act, 2013”, I noticed that the Companies Bill, 2012 Act, 2013 has special concern for quality of audits. In my post “National Financial Reporting Authority” you may feel the depth of concern of our law makers about audits, which have already been forced accounting and auditing regulator, the Institute of Chartered Accountants of India, for introspection.
In this series of my blog post related to Companies Bill, 2012 Act, 2013; I am writing about provision relating to auditors. The manner of appointment of auditors may affect independence of audit. The bill Act addresses this issue very well.
Posted in Chapter IX - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility
Tagged Accounts, Accounts and Audit, Auditor, Causal Vacancy, Chartered Accountant, Companies Bill 2012, CorpGov, CorpLaw, Corporate Governance, Disqualification of Auditor, First Auditor, ICAI, India, Institute of Chartered Accountants of India, Profession, Reforms, Removal of auditor, Resignation of Auditor, Statutory Audit
I have a small piece in 109th edition of the e-Magazine from ICSI Mysore Chapter “Shareholders’ duty of to ask” I am thankful to my friends Ms. K Sarina Chouta Harish and Mr. Dattatri H M who made great afforts for editorial inputs. Here is full piece:
We are living in an era of corporate governance but who is really interested in it! All efforts by the corporate governance are directed at bringing more transparency to the stakeholders for enabling their participation in decision-making process. If that be the case on one hand, on the other, the age-old concept of fiduciary relationship of board of directors, our law and law enforcement agencies render protection to the right of the board of directors to maintain complete secrecy of its decision-making. I am afraid; something is wrongly settled as law. There has to be a reality check…..
(UPDATE: on 30th August 2013: Companies Bill became the Companies Act, 2013 (Act 18 of 2013). Post updated accordingly)
One of the foremost step for improving corporate governance since birth of concept of corporate governance is improving quality of accounting and auditing of companies. Audit Committee is one of these measures, which has been taken to improve standard of financial reporting. But concerns related to quality of financial reporting are not new. We can trace these concerns in earlier legislation, all earlier versions of the Companies Act in general and the Chartered Accountants Act, 1949. Without going deep in these laws, we simply say; what was otherwise need to enact such Act to regulate a profession of accounting and auditing, standardizing whole process of accounting and auditing.
The National Financial Reporting Authority is a quasi – judicial body to regulate matters related to accounting and auditing. With increasing demand of non – financial reporting, I may safely predict, a National Business Reporting Authority to regulate standards of all kind of reporting, financial as well as non – financial, from companies in near future.
Posted in Chapter IX - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility
Tagged Accounting Standards, Accounts, Accounts and Audit, Appellate Authority, Auditor, CA, Chartered Accountants, Companies Act 2013, Company Bill 2013, CorpGov, Corporate Governance, Corporate Law, ICAI, India, Institute of Chartered Accountants of India, National Financial Reporting Authority, NFRA, Profession, Reforms
After introduction and passing of Companies Bill 2012 in Lok Sabha, many changes in corporate governance scenario is bound to happen. Many provisions of Clause 49 of listing agreement, which deals with corporate governance in listed companies, are being brought into main law to fill governance gap between listed companies and their other counterparts. Following provisions have been added into present Companies Bill:
Posted in Companies Act 2013, CorpGov, Governance and Responsibility, SEBI
Tagged Adi Godrej Committee, Adi Godrej Committee on Corporate Governance, Companies Bill 2012, comply or explain, Consultative Paper On Review Of Corporate Governance Norms In India, CorpGov, Corporate Governance, Independent Directors, OECD, OECD Principles of Corporate Governance, Principle based approach, regulatory frameworks, Rule based Approach, SEBI
This guideline is voluntarily applicable for a company having paid up capital not less than Rs. 10 crore (Rs.10,00,00,000/- or more) or having more than 100 members. (Though, I could not understand, why MCA selected a class of company for this voluntary guideline. Whether, they will prosecute other companies if they want to follow these guidelines. In my views, the class of companies mentioned in these guidelines should be under “Comply or Explain” and other companies need no explanation, if they choose not to follow these guidelines.)
[UPDATE: There is nothing to suggest that these guideline are in force after the Companies Act, 2013 and Rules made there under. The Act, otherwise, has own list of compliances for providing information on websites.]
Law gives legal status to Company Secretary but not business feasibility for the appointment of a Company Secretary in employment of an organisation. Business feasibility could be measured in term of value addition to the organisation not legal addition to the organisation. The value addition may be in form of increased profitability, wealth creation or confidence building among its stakeholders. These stakeholders measure success not in financial terms but through confidence towards an organisation amongst them.
We have completed many stages; clerk, manager, general manager, decision maker, managerial personal, Key managerial personnel and next step the conscience keeper. Every height we gain always stands on a solid foundation of a concrete mix customised for individual need. So we need to look into basic foundation of our profession. The litmus test to judge strength of basic foundation of any profession is not its education, crowd of its student, number of its members, this and that legal recognition, written ethical value codes and International codifications but confidence put by its real paymaster, the stakeholders.
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AishMGhrana 