PHD Chamber of Commerce and Industry is organizing Seminar on ‘New Company’s Bill 2013 The way forward’ on Saturday 26 October, 2013 at 10.00 am at Hotel Madhuban, Rajpur Road, Dehradun.
By Anil Taneja
Corporate governance is a multi-level and multi-tiered process that is distilled from an organization’s culture, its policies, values and ethics, especially of the people running the business and the way it deals with various stakeholders.
After almost six decades the corporate governance will see a new dawn of the modern global corporate world. The New Companies Act 2013 got presidential assent on 29th August 2013. Eager audience are waiting to witness the revolutionary changes the bill is expected to bring through a number of new concepts and rules encompassed in the bill. As per the ministry, by 2013 end, a majority of the sections will be notified and the balance will be notified by the end of the fiscal year – March 31, 2014.
As an institution for the corporate, PHD Chamber of Commerce and Industry an apex body since 1905, highly value this as one of the latest and major milestone decision by govt. of India in the initiatives took by the corporate world since 1997 encouraging a holistic development, by urging all Corporate Karma to be more responsible. To propagate this and make the stakeholders aware of the spirit and the content of the new initiatives by Govt. of India “ Ministry of Corporate Affairs” and the global best practices, we have planned this Awareness campaigns, for the corporate world in the state of Uttarakhand. The seminar is organized by PHD Chamber in collaboration with The Indian Institute of Corporate Affairs.
The overall objective of the bill which seems to be the forte of all the changes is to bring in transparency, accountability and inclusive growth enabling corporate to be socially responsible and garner a healthy corporate environment. It uses new parameters, terminologies also provides about three dozen new definitions, including for terms such as frauds, promoters, turnover, small companies, associate companies and employee stock options.
By sensitizing our business fraternity about the implications of the new approach through the new companies Act 2013 in line with the global practices, we are pleased to take this opportunity to invite the stakeholders and those holding positions of responsibilities in the corporate world to join us on the platform where the experts from the institute of corporate affairs and professionals in corporate governance would enlighten us on the subject to enhance our competence.
Some of the important concepts in focus in the new Act :
An Emphasis on Corporate Social Responsibility: CSR budget is no more a prerogative of the company’s Management. The Bill mandates 2 percent of the company’s average net profits (preceding three years) to be spent on corporate social responsibility .
Impact: Global best practices of the socially responsible corporate.
Concern: The activities that would define Corporate Social Responsibility are not specified.
Strict Rules for Auditors: Impact: A superior and reliable audit function with enhancement of scope of auditors functioning and imposing a civil liability.
Concern : conflicts in draft and act related to rotation of auditors in listed and in certain class of companies to be specified.
Impact: An active and observant board.
Concern: the definition and role of independent directors.
Stringent Statutory Rules
The Fraud Investigation Office has gained the power to arrest offenders and exclusivity on any case they take up.
Impact: An effective and purposeful investigation of cases.
Impact: Expected to promote comprehensive growth.
One-Man Army and Class Action Suits
It allows a single individual to set up a one-person company. And shareholders could now file class action suits.
Impact: The Bill is encouraging the small investors but holding promoters and management more accountable.
Concern: A doubt though lingers on the mind whether government can be sued by the shareholders of government owned companies.
Concern: How independent can IDs be when they are appointed and paid for by the promoters? How ID will justifiably manage 20 other directorship positions?
Limitation on Number of Investment Subsidiaries
Impact: A command over companies creating several layers of subsidiaries to fulfill ulterior motives.
Presence of Women Directors
Impact: Better representation to women in corporate decision-making.
Introduction of Separate Tribunal
Impact: More importance on employee rights than on creditors.
Financial Year to end on March 31
Impact: Expected to bring uniformity.
Simple, Concise and Easy to Understand
In total 309 pages, 700 clauses have been replaced by only 470 clauses. The Bill has come up with 33 new definitions. And 7 schedules have replaced 16 schedules from the old bill.
Impact: Governance simplified for all listed and unlisted companies in India.