Highlights of Companies Bill, 2011

The Companies Bill, 2011 that has been passed by the Loksabha on December 18, 2012 has introduced certain new features. New concepts of One Person Company, Corporate Social Responsibility ( CSR), Dormant Companies, Having Woman director and E-governance have been introduced.

A private company can now have a maximum of 200 members, up from 50 in the Companies Act, 1956. All companies are to follow a uniform financial year, running from April to March. Exceptions to be made only for certain companies with the approval of National Company Law Tribunal (NCLT). Spend on CSR has been made compulsory for certain kind of companies. Individual auditors are to be compulsorily rotated every 5 years and audit firm every 10 years in listed companies & certain other classes of companies, as may be prescribed.The Bill also has p rovisions for re-opening or re-casting of the books of accounts of a company.

Prescribed class or classes of companies are required to appoint at least one woman director. A company cannot, unless otherwise prescribed, make investment through more than 2 layers of investment companies. No central government approval required for entering into any related party transactions or for appointment of any director or any other person to any office or place of profit in the company or its subsidiary.

The Act prohibits forward dealings in securities of company by any director or key managerial personnel. It also prohibits insider trading in the company. At least one-third of the total number of directors of a listed public company should be independent directors. Existing companies to get a transition period of one year to comply.