INDIACSR News Network
The Companies Act 1956 is all set to be replaced by the Companies Bill 2012 which was passed by the Lok Sabha on 18th December 2012.
Here are new provision added in the Company Bill 2012:
1. Inclusion of whole-time director in the definition of ‘key managerial personnel’.
2. The term ‘private placement’ has been defined to bring clarity.
4. Provisions relating to voluntary rotation of auditing partner (in case of an audit firm) modified to provide that members may rotate the partner at such interval as may be resolved by members instead of every year as in the Companies Bill 2011 earlier.
5. The limit in respect of maximum number of companies in which a person may be appointed as auditor has been changed to 20 companies. The limit, in case of firm, is made applicable to each partner.
6. Appointment of auditors for five years shall be subject to ratification by members at every Annual General Meeting.
7. Companies provided 1 year period for complying with new provisions relating to composition of Board of Directors.
8. The rate of interest on inter corporate loans will be the prevailing rate of interest on dated Government Securities.
9. Where an auditor has been convicted he shall be liable to pay for damages to the company, statutory bodies or authorities or to any other persons for loss arising out of incorrect or misleading statements of particulars made in his audit report. Under the Companies Bill 2012, the Central Government shall, by notification, specify any statutory body or authority or an officer for ensuring prompt payment of damages to the company or the other specified persons and such body, authority or officer shall after payment of damages to such company or persons file a report with the Central Government in respect of making such damages in such manner as may be specified in the said notification.
10. Exclusion of independent directors from retirement by rotation – Independent Directors ‘ shall be excluded for the purpose of computing’ one third of retiring Directors.
11. Provisions relating to separation of office of chairperson and managing director ( MD) or the chief executive officer (CEO). The Companies Bill, 2012 does not permit the same person to be appointed as the chairperson as well as the MD or CEO unless where the articles of association clearly provide. Further, the restriction of appointing the same person to be the chairperson as well as the MD or CEO has also been eased in the case of those classes of companies engaged in multiple businesses and which have appointed one or more CEOs for each such class of businesses.