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key observations and action
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Companies Act 2013Key Observations and Our Approach
CA Shelly GuptaGoldman Group190, m block, new Rajinder nagarMob.: 9968498865E-mail : [email protected]
Contents► The companies act, 2013 - Overview
► The companies act, 2013 - Notified Sections –Key Impact
► The companies act, 2013 – Key impact area
► Accounting
► Audit
Page 2
► Audit
► Governance
► Mergers & Acquisitions
► Key Action areas
► Financial Accounting Advisory Services (FAAS)
► Knowledge and Thought Leadership
► 29 Chapters, 470 Clauses,7 Schedules
► Various new concepts /definitions introduced –
• one man company• Independent directors,• CEO, CFO,• Class action lawsuits,• Small companies,• Dormant companies,• Woman director
► 98 sections notified
► Sixth set of draft rules aremade available for publiccomments
Highlights of the Companies Act 2013
► Significant changes in financial reporting requirements –Moved closer to International best practices
► Significant change in auditors reporting requirements and alsomaking auditor rotations mandatory
► Significant responsibilities on Independent directors andrestrictions on certain transactions with directors.
► Corporate social responsibility rules are defined which in away mandates the prescribed class of companies to spend2% of net profits on social cause
► Significant penalties and imprisonment is prescribed atseveral places
► Rules on Mergers and Acquisitions are simplified as well asredefined
Companies Act 2013 - Overview
Page 3
► 29 Chapters, 470 Clauses,7 Schedules
► Various new concepts /definitions introduced –
• one man company• Independent directors,• CEO, CFO,• Class action lawsuits,• Small companies,• Dormant companies,• Woman director
► 98 sections notified
► Sixth set of draft rules aremade available for publiccomments
Highlights of the Companies Act 2013
► Significant changes in financial reporting requirements –Moved closer to International best practices
► Significant change in auditors reporting requirements and alsomaking auditor rotations mandatory
► Significant responsibilities on Independent directors andrestrictions on certain transactions with directors.
► Corporate social responsibility rules are defined which in away mandates the prescribed class of companies to spend2% of net profits on social cause
► Significant penalties and imprisonment is prescribed atseveral places
► Rules on Mergers and Acquisitions are simplified as well asredefined
Page 4
Notified Sections – Key Impact
The Companies Act, 2013 – Notified sections– Key ChangesSection Topic Description
2-18/19 CEO/CFO Statutory recognition to Chief Executive Officer (CEO) and Chief Financial Officer (CFO).Shall be considered as Key Managerial Personnel (KMP) and Related party too.
2-27 Control Definition broadened. Substance based approach.► Right to appoint majority directors OR► Control the management or policy decisionsAligned to SEBI takeover regulation 2011
2-87 SubsidiaryCompany orSubsidiary
“’Subsidiary company’ or ‘subsidiary,’ in relation to any other company (that is to say theholding company), means a company in which the holding company:(i) Controls the composition of the board of directors, or(ii) Exercises or controls more than one-half of the total share capital either at its own ortogether with one or more of its subsidiary companies.”
Page 5
SubsidiaryCompany orSubsidiary
“’Subsidiary company’ or ‘subsidiary,’ in relation to any other company (that is to say theholding company), means a company in which the holding company:(i) Controls the composition of the board of directors, or(ii) Exercises or controls more than one-half of the total share capital either at its own ortogether with one or more of its subsidiary companies.”
2-76 Relatedparty
More transparent -► Approval for RPT is required from board unless its ordinary course of business and at
arm’s length► Special resolution in cases where transaction exceed certain sum
2-77 Relative Certain deletions and new additions in the list of relatives
180 Power ofboard
‘Restriction on power of board’ in relation to transfer / sale of undertaking, borrowingpowers, etc.
The Companies Act, 2013 – Notified sections– Key Changes
Section Topic Description185 Loan to directors No loans/guarantees, unless ordinary course of business and at RBI rates.
Covered person are directors and the person in whom directors areinterested.
192 Non-cash transactionswith directors
Non-cash transactions with Directors requiring prior approval ofshareholders in general meeting.
194 Prohibition on forwarddealings in securities ofcompany by director orkey managerial personnel
Directors are prohibited from dealing with forwards of securities. This is amatter of compliance.
Page 6
Prohibition on forwarddealings in securities ofcompany by director orkey managerial personnel
Directors are prohibited from dealing with forwards of securities. This is amatter of compliance.
195 Prohibition on insidertrading in securities
Insider trading applies to all companies now including listed companies.
447 Punishment for fraud Definition of fraud has been incorporated. This has impact on the auditorfrom a liability perspective and also from a reporting perspective in theCARO report.
Page 7
The Companies Act,2013 Key Impact and Interpretation matters
The Companies Act, 2013 – Key impact area
Chapters Areas Potential Impact*
FinancialAccounting
Fixed Assets – Depreciation and component HighConsolidated financial statement HighChange in the definition of control HighAuthentication of BOD report and FS HighUtilisation of Security premium HighRight to Copies of Audited FS MediumDeclaration and payment of dividend Medium
Page 8
FinancialAccounting
Declaration and payment of dividend MediumRegistered Valuer MediumNational Financial Reporting Authority (NFRA) MediumUniform financial year - April to March LowPreparation of Financial statement LowReopening of accounts LowAcceptance of public deposit LowIssues of bonus shares Low
*Impacts shall depend upon the complexity of operations in an entity
The Companies Act, 2013 – Key impact area
Chapters Areas PotentialImpact*
Audit andAuditors
Appointment of Auditor HighRotation of auditor HighProhibited services HighReporting responsibilities HighReporting on Internal Financial Control System (IFSC) HighFraud reporting responsibilities HighPenalties on auditor HighCost audit Medium
Page 9
Cost audit MediumInternal audit Medium
CorporateGovernance
Corporate social responsibility HighDirectors HighIndependent directors HighLoan to Directors and Subsidiaries HighLoans and investments by company HighRestrictions on non-cash transactions involving directors MediumAudit Committee MediumOther Committee Medium
*Impacts shall depend upon the complexity of operations in an entity
The Companies Act, 2013 – Key impact area
Chapters Areas Potential Impact*
CorporateGovernance
Class action HighRelated party definition HighRelated party transactions HighVigil Mechanism HighManagement remuneration MediumDisclosure of interest by directors MediumInbound and outbound cross-border transactions Medium
Page 10
Mergers &Acquisitions
Inbound and outbound cross-border transactions MediumScheme should be in compliance with notifiedaccounting standards Medium
Auditors report MediumSimplified procedures in case of holding andwholly owned subsidiaries, and small companies Medium
*Impacts shall depend upon the complexity of operations in an entity
Page 11
Accounting
Fixed Assets:► Fixed Assets:► Component approach mandatory► Depreciation schedule II prescribed lives to be
used which are significantly different thanexisting rates under Schedule XIV.
► Useful lives prescribed for tangible assets only.For intangibles notified accounting standard togovern the same.
► No separate rate for double and triple shifts,increase by 50% and 100% respectively.
► No specific requirement to charge 100%depreciation on assets whose actual cost doesnot exceed Rs.5 thousand
Security premiumCan be utilized only against:► Issue of fully paid preference shares as bonus
shares► Writing off equity share issue expenses► Buy-back of its own shares or other securities
Potential Impact *:
► Change in useful life of asset needs tobe assessed carefully as it may impactincome statement significantly.
► Assessment of impact due to componentapproach shall be required.
► Restriction on utilization of securitypremium may impact future transactions.
Accounting Audit Governance M&A
Page 12
Fixed Assets:► Fixed Assets:► Component approach mandatory► Depreciation schedule II prescribed lives to be
used which are significantly different thanexisting rates under Schedule XIV.
► Useful lives prescribed for tangible assets only.For intangibles notified accounting standard togovern the same.
► No separate rate for double and triple shifts,increase by 50% and 100% respectively.
► No specific requirement to charge 100%depreciation on assets whose actual cost doesnot exceed Rs.5 thousand
Security premiumCan be utilized only against:► Issue of fully paid preference shares as bonus
shares► Writing off equity share issue expenses► Buy-back of its own shares or other securities
Potential Impact *:
► Change in useful life of asset needs tobe assessed carefully as it may impactincome statement significantly.
► Assessment of impact due to componentapproach shall be required.
► Restriction on utilization of securitypremium may impact future transactions.
*Impacts shall depend upon the complexity ofoperations in an entity
Consolidation:
► Consolidated Financial Statements (CFS) to beprepared in Indian GAAP including at intermediateparent level
► Definition of subsidiary and control has beenbroadened (Notified)
► Term associate has been introduced which refersto “significant influence” over other entity
Authentication of FS & BOD report:
► Directors responsibility Statement to additionallyinclude:-► Internal Financial Control Systems (IFCS),► Compliance with all laws,► Corporate Social Responsibility (CSR) policy,► Related Party Transactions (RPT),► Risk management policies,► Material changes affecting financial performance and
many more
Potential Impact*:
► Indian GAAP consolidated financialstatement to be prepared at group andintermediate parent level. Since Indianlisted companies are already requiredto prepare CFS at group level as perlisting requirement this may not haveimpact however for intermediate parentlevel an entity still needs to prepareCFS.
► Strategic investments to be evaluatedfrom control definition perspective.
► The term associate needs to beanalyzed carefully on existing and newinvestments.
► Directors report shall be exhaustive,significant amount of additional detailsshall required to be included.
Accounting Audit Governance M&A
Page 13
Consolidation:
► Consolidated Financial Statements (CFS) to beprepared in Indian GAAP including at intermediateparent level
► Definition of subsidiary and control has beenbroadened (Notified)
► Term associate has been introduced which refersto “significant influence” over other entity
Authentication of FS & BOD report:
► Directors responsibility Statement to additionallyinclude:-► Internal Financial Control Systems (IFCS),► Compliance with all laws,► Corporate Social Responsibility (CSR) policy,► Related Party Transactions (RPT),► Risk management policies,► Material changes affecting financial performance and
many more
Potential Impact*:
► Indian GAAP consolidated financialstatement to be prepared at group andintermediate parent level. Since Indianlisted companies are already requiredto prepare CFS at group level as perlisting requirement this may not haveimpact however for intermediate parentlevel an entity still needs to prepareCFS.
► Strategic investments to be evaluatedfrom control definition perspective.
► The term associate needs to beanalyzed carefully on existing and newinvestments.
► Directors report shall be exhaustive,significant amount of additional detailsshall required to be included.
*Impacts shall depend upon the complexity ofoperations in an entity
Other issues:
► Uniform accounting year from April toMarch.
► Reopening/revision of FinancialStatements (FS) is allowed voluntary aswell as in case tribunal orders.
► Right to copies of audited Financialstatements is provided to members.
► Dividend – transfer to reserves is optional► Registered Valuer for asset (i.e. property,
stock etc) valuation is required
Potential Impact *:
► Reopening/revision shall be usefulincase of restructuring scheme infuture.
► Company has to provide copies ofaudited financial statements includingaudited FS of its subsidiaries on itswebsite.
► Provisions relating to dividenddeclaration has been relaxed.
► Registered Valuer shall be required forvaluation for assets such as stocks,property, shares, debentures goodwilletc.
Accounting Audit Governance M&A
Page 14
Other issues:
► Uniform accounting year from April toMarch.
► Reopening/revision of FinancialStatements (FS) is allowed voluntary aswell as in case tribunal orders.
► Right to copies of audited Financialstatements is provided to members.
► Dividend – transfer to reserves is optional► Registered Valuer for asset (i.e. property,
stock etc) valuation is required
Potential Impact *:
► Reopening/revision shall be usefulincase of restructuring scheme infuture.
► Company has to provide copies ofaudited financial statements includingaudited FS of its subsidiaries on itswebsite.
► Provisions relating to dividenddeclaration has been relaxed.
► Registered Valuer shall be required forvaluation for assets such as stocks,property, shares, debentures goodwilletc.
*Impacts shall depend upon the complexity ofoperations in an entity
Page 15
Audit
Appointment and Rotation:
► Appointment for a five-year term► Appointment to be ratified in every AGM► Mandatory rotation of auditors after 5 years for
individual CA and 10 years in case of CA firm.► Rotation requirement will apply retrospectively► Internal, cost and secretarial audit are
mandatory
Additional reporting responsibilities
► Material Fraud – Directly reported to CentralGovernment. (CG)
► Internal Financial Control System –Reporting ondesign and operating effectiveness
► Observations that have adverse effect onfunctioning of the company
Potential Impact *:
► Audit scope and effort is likely to increasefor the Company as well as Auditor.
► Company and auditor has to ensurecompliance with additional restrictions onauditors to avoid potential issues.
► Additional compliance for cost andsecretarial audit.
► Auditors report shall include observationson additional items which shall requiresetting up or appropriate systems andcontrols in places. This may result inadditional efforts.
► Management may have to institute a fraudrisk management framework, includingfraud risk identification, assessment,evaluation and mitigation controls- willhelp auditors review and reportingregarding fraud
Accounting Audit Governance M&A
Page 16
Appointment and Rotation:
► Appointment for a five-year term► Appointment to be ratified in every AGM► Mandatory rotation of auditors after 5 years for
individual CA and 10 years in case of CA firm.► Rotation requirement will apply retrospectively► Internal, cost and secretarial audit are
mandatory
Additional reporting responsibilities
► Material Fraud – Directly reported to CentralGovernment. (CG)
► Internal Financial Control System –Reporting ondesign and operating effectiveness
► Observations that have adverse effect onfunctioning of the company
Potential Impact *:
► Audit scope and effort is likely to increasefor the Company as well as Auditor.
► Company and auditor has to ensurecompliance with additional restrictions onauditors to avoid potential issues.
► Additional compliance for cost andsecretarial audit.
► Auditors report shall include observationson additional items which shall requiresetting up or appropriate systems andcontrols in places. This may result inadditional efforts.
► Management may have to institute a fraudrisk management framework, includingfraud risk identification, assessment,evaluation and mitigation controls- willhelp auditors review and reportingregarding fraud
*Impacts shall depend upon the complexity ofoperations in an entity
Prohibited Services
► Additional services needs to be approved bythe board/ audit committee.
► Auditor is not allowed to render certainservices either directly or indirectly to thecompany, its holding or subsidiary companyincluding:► Accounting and book keeping services► Internal audit► Design and implementation of any
financial information system► Actuarial services► Investment advisory services► Investment banking services► Rendering of outsourced financial services► Management services► Any other kind of services as may be
prescribed
Potential Impact*:
► Audit committee approval processneeds to be put in place for any nonaudit services by the auditor.
► To ensure prescribed services are notrendered by auditor to ensure potentialissue related to conflict.
Accounting Audit Governance M&A
Page 17
Prohibited Services
► Additional services needs to be approved bythe board/ audit committee.
► Auditor is not allowed to render certainservices either directly or indirectly to thecompany, its holding or subsidiary companyincluding:► Accounting and book keeping services► Internal audit► Design and implementation of any
financial information system► Actuarial services► Investment advisory services► Investment banking services► Rendering of outsourced financial services► Management services► Any other kind of services as may be
prescribed
*Impacts shall depend upon the complexity ofoperations in an entity
Page 18
Governance
Company Parameters >1 DirectorResident inIndia>182
days
>1Woman
Director*
> 1/3rd
ID*Committees
Audit* Nomination &Remuneration*
Shareholder
Listed √ √ √ √ √ √
Unlisted(All) √
- Share Capital > INR1b/100Cr
√ √ √ √
Mandatory Director Appointment
Accounting Audit Governance M&A
Page 19
- Share Capital > INR1b/100Cr
√ √ √ √
- Turnover >INR 3Billion/300Cr
√ √
- Loans/ Debentures/Deposits > INR 2Billion/200Cr
√ √ √
>1,000 shareholder,debenture holders or anyother security holders
√
*public company only
Directors
► Wide powers with some restrictions► Maximum 15 directors – may increase with
shareholders approval through a specialresolution
► At least one resident director (182 days)► At least one woman director for specified
companies► Directorship in maximum 20 companies,
maximum 10 can be public.► Duties of directors have been defined
particularly► Small shareholder director – optional with
the small shareholder► Related Party Transactions may result into
disqualification from appointment
Potential Impact *:
► Certain transactions can be done withapproval in meetings such asborrowing money, related partytransactions, issuance of security etc.
► Eligibility of directors has to beassessed based on new requirements(i.e. composition of public/privatecompanies in a directors portfolio)
► Company may have to keep track ofcompliance on regular basis in order toavoid any defaults.
► Appointment of woman director
Accounting Audit Governance M&A
Page 20
Directors
► Wide powers with some restrictions► Maximum 15 directors – may increase with
shareholders approval through a specialresolution
► At least one resident director (182 days)► At least one woman director for specified
companies► Directorship in maximum 20 companies,
maximum 10 can be public.► Duties of directors have been defined
particularly► Small shareholder director – optional with
the small shareholder► Related Party Transactions may result into
disqualification from appointment
Potential Impact *:
► Certain transactions can be done withapproval in meetings such asborrowing money, related partytransactions, issuance of security etc.
► Eligibility of directors has to beassessed based on new requirements(i.e. composition of public/privatecompanies in a directors portfolio)
► Company may have to keep track ofcompliance on regular basis in order toavoid any defaults.
► Appointment of woman director
*Impacts shall depend upon the complexity ofoperations in an entity
Accounting Audit Governance M&A
Directors – Penal provisions- offences non-compoundable in nature
Consequences
Purchase or loan for its ownshares (Sec 67-5)
Loans and investment (Sec 186-13)
Imprisonment upto 3 years and finefrom Rs. 1 lakh and upto Rs. 25 lakh
Upto 2 years and fine upto Rs. 1 lakh
Page 21
Consequences
Fraud (Sec 447)
Class action suit (Sec 245)
Upto 6 months to 10 years and fineupto 3 times of amount involved
Upto 3 years and fine upto Rs. 1 lakh
Accounting Audit Governance M&A
Directors – Penal provisions- offence compoundable in nature with powerof Special court
Consequences
Provisions relating to auditors (Sec139 – 147)
Financial statement and Board’sreport (Sec 134-8)
upto 1 year or fine Rs. 10,000 upto Rs. 1lakh or with both
Imprisonment upto 3 years or fine Rs.50,000 to Rs. 5 lakhs or with both (for
every director)
Page 22
Consequences
Loans, guarantee or security (Sec185-2)
upto 6 months or fine Rs. 5 lakh upto Rs.25 lakh or with both
Related party transaction in caseof listed company (Sec 188-5)
upto 1 year or fine Rs. 25,000 upto Rs. 5lakh or with both
Director interest & Participation inBoard meeting by interested
director (Sec 184-4)
upto 1 year or fine Rs. 50,000 upto Rs. 1lakh or with both
Accounting Audit Governance M&A
Directors – Penal provisions- offence compoundable in nature with powerof Special court
Consequences
Consequences
Transfer and transferee companyin case of merger or amalgamation
(Sec 232-8)Imprisonment upto 1 year or fine Rs. 1 lakh
upto Rs. 3 lakh or with both
Forward dealing in securities of thecompany (Sec 194-2)
upto 2 years or fine Rs. 1 lakh upto Rs. 5lakh or with both
Page 23
Consequences
Related party transaction in caseof other company (Sec 188-5) – by
Regional directorFine not less than Rs. 25,000 upto Rs. 5
lakh
Forward dealing in securities of thecompany (Sec 194-2)
upto 2 years or fine Rs. 1 lakh upto Rs. 5lakh or with both
Independent Directors
► For prescribed class of companies at least1/3rd of the total number of directors will beindependent directors.
► Tenure 5 +5 years, 3 years cooling off► Prospective applicability► Not entitled to stock options► Class action suit► Held liable only for acts occurred with his
knowledge, or consent.► Independent director to give declaration of
independence every year.► Nominee director cannot be an ID
Potential Impact *:
► Independent director clause isapplicable to listed and prescribedclasses of companies (which includescompanies with paid up capital of 100Cr. Or turnover of 300 Cr Oroutstanding loans and borrowings ofmore than 200 Cr.
If a company fulfills the criteria it shallrequired:► To ensure compliance with new law
with respect to appointments and otherissues.
► A policy may need to be drafted todefine code of conduct for ID’s basedon the guidance available in ScheduleIV.
Accounting Audit Governance M&A
Page 24
Independent Directors
► For prescribed class of companies at least1/3rd of the total number of directors will beindependent directors.
► Tenure 5 +5 years, 3 years cooling off► Prospective applicability► Not entitled to stock options► Class action suit► Held liable only for acts occurred with his
knowledge, or consent.► Independent director to give declaration of
independence every year.► Nominee director cannot be an ID
Potential Impact *:
► Independent director clause isapplicable to listed and prescribedclasses of companies (which includescompanies with paid up capital of 100Cr. Or turnover of 300 Cr Oroutstanding loans and borrowings ofmore than 200 Cr.
If a company fulfills the criteria it shallrequired:► To ensure compliance with new law
with respect to appointments and otherissues.
► A policy may need to be drafted todefine code of conduct for ID’s basedon the guidance available in ScheduleIV.
*Impacts shall depend upon the complexity ofoperations in an entity
Individually
► Act in good faith in 'bestinterest' of stakeholders
► Avoid conflict of interest► Avoid undue
gain/advantage personally► Exercise diligence and
reasonable care on duty
As part of Audit and other Committees
► Monitoring independence/effectiveness of auditors
► Approving related partytransactions
► Monitoring inter-corporateloans and investments
► Undertaking/asset valuation► Evaluation of internal
financial controls► To undergo annual
performance evaluation bynomination andremuneration committee.
► Operational effectiveness ofpolicies
As part of the Board
► Boards will now beanswerable to wider range ofstakeholders beyond onlyshareholders
► Development andimplementation of riskmanagement policy
► Governance andperformance are the drivingforces
Accounting Audit Governance M&A
Independent directors - Duties and responsibilities
► Act in good faith in 'bestinterest' of stakeholders
► Avoid conflict of interest► Avoid undue
gain/advantage personally► Exercise diligence and
reasonable care on duty
► Monitoring independence/effectiveness of auditors
► Approving related partytransactions
► Monitoring inter-corporateloans and investments
► Undertaking/asset valuation► Evaluation of internal
financial controls► To undergo annual
performance evaluation bynomination andremuneration committee.
► Operational effectiveness ofpolicies
► Boards will now beanswerable to wider range ofstakeholders beyond onlyshareholders
► Development andimplementation of riskmanagement policy
► Governance andperformance are the drivingforces
Goldman Group
► Schedule IV (Code for Independent Directors)defines the qualitative characteristics of ID.
► The ID’s shall hold at least one meeting in ayear, without the attendance of non-independentdirectors (Non-ID’s) and members ofmanagement to review :► performance of Non-IDs and BoD as a whole► performance of the Chairman taking into
consideration views of NEDs/ EDs► quantity/quality/flow of information from the
management to the Board to effectivelyperform the duty.
► Evaluation Mechanism for the Directors’performance .
Potential Impact*:► Disclosure with respect to employee
compensation may become publicinformation
► Performance evaluation for directorsperformance
Accounting Audit Governance M&A
► Devote sufficient time and attention forinformed and balanced decision making andexercise due care
► Bring independent and objective view
► Refrain from any action that would lead to lossof his independence
► Assist the company in implementing the bestcorporate governance practices and act inbest interest of the company
Independent directors - Duties and responsibilities
Page 26
► Schedule IV (Code for Independent Directors)defines the qualitative characteristics of ID.
► The ID’s shall hold at least one meeting in ayear, without the attendance of non-independentdirectors (Non-ID’s) and members ofmanagement to review :► performance of Non-IDs and BoD as a whole► performance of the Chairman taking into
consideration views of NEDs/ EDs► quantity/quality/flow of information from the
management to the Board to effectivelyperform the duty.
► Evaluation Mechanism for the Directors’performance .
*Impacts shall depend upon the complexity ofoperations in an entity
Directors’ sitting fees increased from INR 20,000 to a maximum of Rs.100,000
► Devote sufficient time and attention forinformed and balanced decision making andexercise due care
► Bring independent and objective view
► Refrain from any action that would lead to lossof his independence
► Assist the company in implementing the bestcorporate governance practices and act inbest interest of the company
Corporate Social Responsibility
► Mandatory contribution► 2% of avg. net profit for 3 years. 2012-2014 is
defined as first block of 3 years.► Company can exclude profit from outside India
branches► CSR committee – 3 directors (1 ID)► Directors responsibility statement should discuss
CSR related details► Activities listed in Schedule VII► Tax deductibility?
Potential Impact *:
► Additional expenditure on CSR mayneed to be incurred.
► To frame a policy to comply with thenew requirements and to assesswhether the existing activities will fallunder the Schedule VII activities list ornot.
► Detailed disclosures / discussions to beincluded in CSR.
Accounting Audit Governance M&A
Page 27
Corporate Social Responsibility
► Mandatory contribution► 2% of avg. net profit for 3 years. 2012-2014 is
defined as first block of 3 years.► Company can exclude profit from outside India
branches► CSR committee – 3 directors (1 ID)► Directors responsibility statement should discuss
CSR related details► Activities listed in Schedule VII► Tax deductibility?
Potential Impact *:
► Additional expenditure on CSR mayneed to be incurred.
► To frame a policy to comply with thenew requirements and to assesswhether the existing activities will fallunder the Schedule VII activities list ornot.
► Detailed disclosures / discussions to beincluded in CSR.
*Impacts shall depend upon the complexity ofoperations in an entity
Vigil mechanism► Mandatory for:
► Every listed company► Companies which accept public deposits AND► Companies which have borrowed money from
banks and public financial institutions in excessof 50 crores
► Audit Committee to operate the mechanism► Company to provide for adequate safeguards
against victimisation of persons who use suchmechanism
► Company to create provision for direct access to thechairperson of the Audit Committee in appropriate orexceptional cases
► Disclosure of details of establishment of suchmechanism by the company on its website, if any,and in the Board’s report
► Audit committee or the director to take suitableaction against repeated frivolous complaints
Potential Impact:► Company will have to develop and
implement vigil mechanism, including► Policy & procedures► Fraud response plan
► Audit committee / Director may have tonominate a sub-committee (e.g. EthicsCommittee) to manage the mechanism
► Company will have to conduct trainingand awareness sessions foremployees
► Have adequate documentation withregard to the mechanism and casesreported concerns
Accounting Audit Governance M&A
Page 28
Vigil mechanism► Mandatory for:
► Every listed company► Companies which accept public deposits AND► Companies which have borrowed money from
banks and public financial institutions in excessof 50 crores
► Audit Committee to operate the mechanism► Company to provide for adequate safeguards
against victimisation of persons who use suchmechanism
► Company to create provision for direct access to thechairperson of the Audit Committee in appropriate orexceptional cases
► Disclosure of details of establishment of suchmechanism by the company on its website, if any,and in the Board’s report
► Audit committee or the director to take suitableaction against repeated frivolous complaints
Potential Impact:► Company will have to develop and
implement vigil mechanism, including► Policy & procedures► Fraud response plan
► Audit committee / Director may have tonominate a sub-committee (e.g. EthicsCommittee) to manage the mechanism
► Company will have to conduct trainingand awareness sessions foremployees
► Have adequate documentation withregard to the mechanism and casesreported concerns
Duties of independent directors:► Ascertain & ensure that the company has an
adequate and functional vigil mechanism► Ensure that interests of a person using this
mechanism are not prejudicially affected
Loan to Directors/Subsidiaries
► Restriction on advancing of loan / guarantee/ providing security to any director or anyperson in whom director is interested.
► No exemption available for holding to itssubsidiary
► Restrictions does not apply for WTD/MD ifits part of service conditions or provided inthe ordinary course of business at RBI bankrates
NOTIFIED- 12th September 2013
Potential Impact *:
► Strictly prohibited and notified henceexisting transactions should beevaluated and appropriate action to betaken to avoid any default with respectto compliance.
*Impacts shall depend upon the complexity ofoperations in an entity
Accounting Audit Governance M&A
Page 29
Loan to Directors/Subsidiaries
► Restriction on advancing of loan / guarantee/ providing security to any director or anyperson in whom director is interested.
► No exemption available for holding to itssubsidiary
► Restrictions does not apply for WTD/MD ifits part of service conditions or provided inthe ordinary course of business at RBI bankrates
NOTIFIED- 12th September 2013
Loans/ Investment by Co.
► Cannot make more than 2 layers ofinvestment companies except acquiringexisting company based out of India
► Cannot provide loans/ guarantees/security toother corporate or acquiring securities ofother corporate exceeding higher of :► 60% of paid up capital, free reserves and
securities premium or► 100% of free reserves and securities
premium► Prevailing market interest rate
Restrictions on Directors (Notified)
► Restriction on non cash transactions► Prohibition on forward contracts► Insider trading
Potential Impact*:
► Existing transactions should beevaluated and appropriate action to betaken to avoid any default.
► Appropriate policies need to be framedto comply with all the requirements ofAct with respect to loans andinvestments.
► Policy for non cash transactions,forward contracts and insider trading.Appropriate mechanism to be set totrack defaults if any made.
Accounting Audit Governance M&A
Page 30
Loans/ Investment by Co.
► Cannot make more than 2 layers ofinvestment companies except acquiringexisting company based out of India
► Cannot provide loans/ guarantees/security toother corporate or acquiring securities ofother corporate exceeding higher of :► 60% of paid up capital, free reserves and
securities premium or► 100% of free reserves and securities
premium► Prevailing market interest rate
Restrictions on Directors (Notified)
► Restriction on non cash transactions► Prohibition on forward contracts► Insider trading
Potential Impact*:
► Existing transactions should beevaluated and appropriate action to betaken to avoid any default.
► Appropriate policies need to be framedto comply with all the requirements ofAct with respect to loans andinvestments.
► Policy for non cash transactions,forward contracts and insider trading.Appropriate mechanism to be set totrack defaults if any made.
*Impacts shall depend upon the complexity ofoperations in an entity
Other Committee
► Audit Committee► Nomination and Remuneration
Committee (NRC)► CSR committee► Stakeholder Relationship Committee
(SRC)► Vigil mechanism for directors and
employees
Other Matters
► Disclosure of interest by directors► Managerial remuneration► CFO/CEO statutory recognition and will
be treated as KMP and related parties► Class action► Serious Fraud Investigation Office
(SFIO)
Potential Impact*:
► With respect to vigil mechanism and CSRcommittee requirements, additionalcompliance shall need to assessed.
► Directors are required to disclose theirinterest and transactions with relatedparties.
► Transactions with CEO/CFO shall betreated as RPT hence appropriate careshould be taken to comply with therequirements of the Act.
► Requisite number of members/depositorsmay file and application to NationalCompany Law Tribunal (NCLT).
Accounting Audit Governance M&A
Page 31
Other Committee
► Audit Committee► Nomination and Remuneration
Committee (NRC)► CSR committee► Stakeholder Relationship Committee
(SRC)► Vigil mechanism for directors and
employees
Other Matters
► Disclosure of interest by directors► Managerial remuneration► CFO/CEO statutory recognition and will
be treated as KMP and related parties► Class action► Serious Fraud Investigation Office
(SFIO)
Potential Impact*:
► With respect to vigil mechanism and CSRcommittee requirements, additionalcompliance shall need to assessed.
► Directors are required to disclose theirinterest and transactions with relatedparties.
► Transactions with CEO/CFO shall betreated as RPT hence appropriate careshould be taken to comply with therequirements of the Act.
► Requisite number of members/depositorsmay file and application to NationalCompany Law Tribunal (NCLT).
*Impacts shall depend upon the complexity ofoperations in an entity
Related Party Transactions
► Change in the definition of relative► Director his relatives, firm in which director
or his relative is partner, any other partner inthe firm, Private company of which thedirector is a member or director.
► KMP to be treated as related parties► Almost every transaction is covered► Board Resolution required for all
transactions► For specific companies previous special
resolution is required► Member who is a related party cannot vote
at GM► Transaction at arms length not covered► All transactions to be reported to
shareholders in Board report
Potential Impact*:
► No need to take approval from CentralGovernment for related partytransactions. Passing a specialresolution at the general meeting isenough if certain criteria are met.
► Interested members shall not beentitled to vote in such meetings
► Transactions at arm’s length shall needto be discussed in board report withjustification for the same.
Accounting Audit Governance M&A
Page 32
Related Party Transactions
► Change in the definition of relative► Director his relatives, firm in which director
or his relative is partner, any other partner inthe firm, Private company of which thedirector is a member or director.
► KMP to be treated as related parties► Almost every transaction is covered► Board Resolution required for all
transactions► For specific companies previous special
resolution is required► Member who is a related party cannot vote
at GM► Transaction at arms length not covered► All transactions to be reported to
shareholders in Board report
Potential Impact*:
► No need to take approval from CentralGovernment for related partytransactions. Passing a specialresolution at the general meeting isenough if certain criteria are met.
► Interested members shall not beentitled to vote in such meetings
► Transactions at arm’s length shall needto be discussed in board report withjustification for the same.
*Impacts shall depend upon the complexity ofoperations in an entity
Relatives
► A person should be deemed to be relative of other if he or she is related infollowing manner► Spouse► Father, including step father► Mother, including step mother► Grand father (Paternal and maternal)► Grand mother (Paternal and maternal)► Son, including step son► Daughter in law► Grand son & daughter ( only Paternal)► Daughter► Son in law► Brother, including step brother► Sister, including step sister
Accounting Audit Governance M&A
Page 33
► A person should be deemed to be relative of other if he or she is related infollowing manner► Spouse► Father, including step father► Mother, including step mother► Grand father (Paternal and maternal)► Grand mother (Paternal and maternal)► Son, including step son► Daughter in law► Grand son & daughter ( only Paternal)► Daughter► Son in law► Brother, including step brother► Sister, including step sister
Who are related parties ?Nature of relationships Act AS 18
KMP and relatives Yes Yes
Holding, subsidiary, associate, Joint venture Yes# Yes
Individuals holding >20% and their relatives in a Co Yes *** Yes
Directors and their relatives Yes No *
Entities with common KMP Yes** Yes
Director or relative is a partner in a Firm Yes No
Accounting Audit Governance M&A
Page 34
Director or relative is a partner in a Firm Yes No
BC – Accustomed to act in accordance with Director/KMP Yes No##
Any person under who directions directors/KMP act Yes Yes##
Director / KMP (or relative) of Holding, subsidiary or associate Yes No
Members of Core Management Team (other than BoD) Yes No
*Only if they are able to affect policies of both enterprises** Only if KMP is a director*** Sufficient for director, KMP to be a member or director or hold 2% in public co. But a shareholder individual who is not aKMP or Director is not RPT for the Act but for AS 18# Joint venture not covered in Act for RPT## Only if control or significant influence is proved
Page 35
Mergers & Acquisitions
Mergers & Acquisitions
► Inbound and Outbound cross bordertransactions are allowed
► Scheme should be in compliance withAccounting Standards
► Auditors report► Simplified procedures in case of holding and
wholly owned subsidiary, and smallcompanies
► Minority squeeze outs and dissents► Prohibition on non cancellation of treasury
shares► Capital reduction► Corporate debt restructuring
Potential Impact*:
► Cross border transaction shall be easyto execute.
► Mandatory compliance with accountingstandards.
► Easy compliance for holding andsubsidiary transactions
Accounting Audit Governance M&A
Page 36
Mergers & Acquisitions
► Inbound and Outbound cross bordertransactions are allowed
► Scheme should be in compliance withAccounting Standards
► Auditors report► Simplified procedures in case of holding and
wholly owned subsidiary, and smallcompanies
► Minority squeeze outs and dissents► Prohibition on non cancellation of treasury
shares► Capital reduction► Corporate debt restructuring
Potential Impact*:
► Cross border transaction shall be easyto execute.
► Mandatory compliance with accountingstandards.
► Easy compliance for holding andsubsidiary transactions
*Impacts shall depend upon the complexity ofoperations in an entity
Potential Impact*:
► Prohibition on creation of treasuryshares in mergers / amalgamations –Holding of treasury shares through atrust, recognition of dividend income onsuch shares, etc., will not be permitted.
► No clarity with respect to compliancewith AS for schemes filed and pendingfor approval at the date of enactment ofthe 2013 Act.
► The 2013 Act may not have any impacton accounting prescribed in the earlierapproved schemes which are not asper AS
Accounting for Mergers and Amalgamations
Overview of key changes► Compliance with notified accounting standard will be
mandatory for all companies – transitionrequirements still unclear.
► Demerger accounting prescribed – As per section2(19AA) of the Income-tax Act► Demerged company
► Derecognize book value of assets/ liabilities► Difference as goodwill/ capital reserve
► Resulting company► Recognize assets/ liabilities at book value► Shares issued at face value► Difference as goodwill/ capital reserve.
Accounting Audit Governance M&A
Page 37
Potential Impact*:
► Prohibition on creation of treasuryshares in mergers / amalgamations –Holding of treasury shares through atrust, recognition of dividend income onsuch shares, etc., will not be permitted.
► No clarity with respect to compliancewith AS for schemes filed and pendingfor approval at the date of enactment ofthe 2013 Act.
► The 2013 Act may not have any impacton accounting prescribed in the earlierapproved schemes which are not asper AS
*Impacts shall depend upon the complexity ofoperations in an entity
Accounting for Mergers and Amalgamations
Overview of key changes► Compliance with notified accounting standard will be
mandatory for all companies – transitionrequirements still unclear.
► Demerger accounting prescribed – As per section2(19AA) of the Income-tax Act► Demerged company
► Derecognize book value of assets/ liabilities► Difference as goodwill/ capital reserve
► Resulting company► Recognize assets/ liabilities at book value► Shares issued at face value► Difference as goodwill/ capital reserve.
Mergers & Acquisitions
► Inbound and Outbound cross bordertransactions are allowed
► Scheme should be in compliance withAccounting Standards
► Auditors report► Simplified procedures in case of holding and
wholly owned subsidiary, and smallcompanies
► Minority squeeze outs and dissents► Prohibition on non cancellation of treasury
shares► Capital reduction► Corporate debt restructuring
Accounting Audit Governance M&A
Potential Impact*:
► Cross border transaction shall be easyto execute.
► Mandatory compliance with accountingstandards.
► Easy compliance for holding andsubsidiary transactions
Page 38
Mergers & Acquisitions
► Inbound and Outbound cross bordertransactions are allowed
► Scheme should be in compliance withAccounting Standards
► Auditors report► Simplified procedures in case of holding and
wholly owned subsidiary, and smallcompanies
► Minority squeeze outs and dissents► Prohibition on non cancellation of treasury
shares► Capital reduction► Corporate debt restructuring
Potential Impact*:
► Cross border transaction shall be easyto execute.
► Mandatory compliance with accountingstandards.
► Easy compliance for holding andsubsidiary transactions
*Impacts shall depend upon the complexity ofoperations in an entity
Recap
Recap
Co’s Act2013
BetterGovernance
Deal withredundancy
Enhancedaccountability
Co’s Act2013
Social cause&
empowerment
Simplifiedprocedures &
regulatoryintervention
Global trendsin financialreporting
Key Action Area
Companies Act Diagnostic Study – Key Action Area
ProposedActivities
1. Diagnostic of differences between Companies Act 1956 and CompaniesAct 2013 specific to your transactions
2. Documenting the impact of relevant sections on various work streams suchas accounting , governance and audit etc.
3. Input and recommendations on issues or complications arising from theimpacts identified
4. Summarize findings for each area in the diagnostic report with high,medium and low indicators specific to you
5. Document the suggested remedial actions with time frame for each such
1. Companies Act Diagnostic report with differences categorized in high,medium and low category specific to you
2. Priority wise action plan for each activity (i.e. depreciation impactcomputation to be done in next SIX months)
3. Suggested implementation plan categorised indicating if it can be doneinternally or may require external help
4. Annexures for certain computations such as depreciation impactcomputation, CSR applicability template, admissible activities for CSRsuggested code of conducts for ID’s (based on managementrecommendations) and list of entities in the group where CFS is mandatoryetc.
1. Diagnostic of differences between Companies Act 1956 and CompaniesAct 2013 specific to your transactions
2. Documenting the impact of relevant sections on various work streams suchas accounting , governance and audit etc.
3. Input and recommendations on issues or complications arising from theimpacts identified
4. Summarize findings for each area in the diagnostic report with high,medium and low indicators specific to you
5. Document the suggested remedial actions with time frame for each such
Deliverable/Output
Fixed Assets – Depreciation and Component
Proposed Activities
1. To assist in updating the fixedasset register with revised livesas defined in Schedule II
2. To assist in computing the impactof revised lives on transition dateand suggest example journalentries to income statement orretained earnings
3. To document the assets in orderto determine the applicability ofcomponents (based on industrynorms and with the help ofcompany’s internal experts)
Deliverable/Output
1. Updated Fixed Assets register2. Suggested actions to avoid
volatility with respect todepreciation charge on incomestatement (i.e. use of appropriatedepreciation method)
3. Impact of component approach*4. Impact of change in life and due
to component approach onfinancial statement on transitiondate and in near future.
*to be done by valuation experts
1. To assist in updating the fixedasset register with revised livesas defined in Schedule II
2. To assist in computing the impactof revised lives on transition dateand suggest example journalentries to income statement orretained earnings
3. To document the assets in orderto determine the applicability ofcomponents (based on industrynorms and with the help ofcompany’s internal experts)
1. Updated Fixed Assets register2. Suggested actions to avoid
volatility with respect todepreciation charge on incomestatement (i.e. use of appropriatedepreciation method)
3. Impact of component approach*4. Impact of change in life and due
to component approach onfinancial statement on transitiondate and in near future.
*to be done by valuation experts
Consolidation of Financial Statements
Proposed Activities
1. To identify the list of entities whichneeds to be consolidated
2. To determine the intermediatelevels/holding companies at whichCFS to be prepared
3. To prepare the consolidated financialstatements at each level
4. To evaluate and address the mattersarising out of consolidation i.e.uniform financial year, uniformaccounting policies etc
5. Develop or update the consolidationmanual/tool for timely preparation offinancial statements
Deliverable/Output
1. Identified list of entities to beconsolidated based on newdefinition
2. Number of CFS to be preparedwith respective holding company
3. Identification of consolidationissues and recommendations toimprove the same
4. Consolidated financialstatements at various levels
5. AUTOMATED IN-HOUSECONSOLIDATION TOOL
1. To identify the list of entities whichneeds to be consolidated
2. To determine the intermediatelevels/holding companies at whichCFS to be prepared
3. To prepare the consolidated financialstatements at each level
4. To evaluate and address the mattersarising out of consolidation i.e.uniform financial year, uniformaccounting policies etc
5. Develop or update the consolidationmanual/tool for timely preparation offinancial statements
1. Identified list of entities to beconsolidated based on newdefinition
2. Number of CFS to be preparedwith respective holding company
3. Identification of consolidationissues and recommendations toimprove the same
4. Consolidated financialstatements at various levels
5. AUTOMATED IN-HOUSECONSOLIDATION TOOL
Related party transactions
Proposed Activities
1. To identify and list down the relatedparties to the Company as per newdefinition/provision in the Act
2. To establish appropriate policies inplace to ensure transactions are madeat arms length and are routinebusiness transactions otherwiseappropriate approvals/resolutions arepassed to made such transactions
3. To set up policies and procedure inplace for audit committee and boardapproval
4. To set up mechanism for shareholdersapproval as may be required
Deliverable/Output
1. Documentation and identificationof related parties to the company
2. Documentation and identificationof related party transactions andfor which approval required ornot.
3. Relevant policies and procedureswith respect to related partytransactions
4. Sample disclosure of suchtransactions in the board reportsas may be relevant
1. To identify and list down the relatedparties to the Company as per newdefinition/provision in the Act
2. To establish appropriate policies inplace to ensure transactions are madeat arms length and are routinebusiness transactions otherwiseappropriate approvals/resolutions arepassed to made such transactions
3. To set up policies and procedure inplace for audit committee and boardapproval
4. To set up mechanism for shareholdersapproval as may be required
1. Documentation and identificationof related parties to the company
2. Documentation and identificationof related party transactions andfor which approval required ornot.
3. Relevant policies and procedureswith respect to related partytransactions
4. Sample disclosure of suchtransactions in the board reportsas may be relevant
Internal Financial Control Systems (IFCS)
Proposed Activities
Drafting and implementation of internalfinancial control systems policy toensure appropriate and effectivemechanism for the following activities: Compliance with internal policy and
procedures Safeguarding of assets Prevention and detection of fraud
and error Completeness and accuracy of
financial statements Timeliness of preparation of
financial statements
Deliverable/Output
1. Design of internal financial controlsystems commensurate with thesize and operations of entity
2. Implementation roadmap forinternal financial control systemsto ensure effective output
3. Testing of operating effectivenessof internal financial controlsystems
Drafting and implementation of internalfinancial control systems policy toensure appropriate and effectivemechanism for the following activities: Compliance with internal policy and
procedures Safeguarding of assets Prevention and detection of fraud
and error Completeness and accuracy of
financial statements Timeliness of preparation of
financial statements
1. Design of internal financial controlsystems commensurate with thesize and operations of entity
2. Implementation roadmap forinternal financial control systemsto ensure effective output
3. Testing of operating effectivenessof internal financial controlsystems
Compliance with laws and regulations
Proposed Activities
1. To put together a list of applicablecentral and state laws
2. To define the requirements with respectto particular law (i.e. prescribed forms,timelines, authority etc)
3. To assign responsibility for complianceto the designated officials
4. To establish a certification process forsuch compliance by respective officialsin a time bound manner
5. To set up the escalation process in theevent on any non compliance
6. To list down the consequential penaltiesin case of non-compliance
Deliverable/Output
1. To set up a process to ensurecompliance with all the laws andregulations in the country
2. To set up a periodic reportingmechanism to ensureappropriate reporting are doneto BoD. Report shall highlightthe list of non-compliance andtheir impact in terms of high,medium and low
3. Online access of reports at pre-authorized levels and timelyreminder for escalation toappropriate authorities
1. To put together a list of applicablecentral and state laws
2. To define the requirements with respectto particular law (i.e. prescribed forms,timelines, authority etc)
3. To assign responsibility for complianceto the designated officials
4. To establish a certification process forsuch compliance by respective officialsin a time bound manner
5. To set up the escalation process in theevent on any non compliance
6. To list down the consequential penaltiesin case of non-compliance
1. To set up a process to ensurecompliance with all the laws andregulations in the country
2. To set up a periodic reportingmechanism to ensureappropriate reporting are doneto BoD. Report shall highlightthe list of non-compliance andtheir impact in terms of high,medium and low
3. Online access of reports at pre-authorized levels and timelyreminder for escalation toappropriate authorities
Risk Management Framework
Proposed Activities
1. To identify and analyze entities toexposure to various risks, whichmay include financial and Non-financial risks
2. Examine the risk managementtechniques and select mostappropriate to the company
3. Assist in implementing thetechnique as may be suitable
4. Define a process to monitor results
Deliverable/Output
1. Policy on development ofrobust risk managementframework relevant to thecompany
2. Drafting of risk managementframework most relevant toexisting conditions of the entity
1. To identify and analyze entities toexposure to various risks, whichmay include financial and Non-financial risks
2. Examine the risk managementtechniques and select mostappropriate to the company
3. Assist in implementing thetechnique as may be suitable
4. Define a process to monitor results
1. Policy on development ofrobust risk managementframework relevant to thecompany
2. Drafting of risk managementframework most relevant toexisting conditions of the entity
Vigil Mechanism
Proposed Activities
► Ascertain & ensure that thecompany has an adequate andfunctional vigil mechanism
► Draft of policy to establish a vigilmechanism: for ‘genuine concerns’ allow direct access to the audit
committee chairman as required► Disclosure of Mechanism► Monitoring by the audit committee
and the board
Deliverable/Output
1. Report on vigil mechanism,including: Policy & procedures Fraud response plan
2.Recommendations toestablish or improve existinginfrastructure to effect the vigilmechanism
► Ascertain & ensure that thecompany has an adequate andfunctional vigil mechanism
► Draft of policy to establish a vigilmechanism: for ‘genuine concerns’ allow direct access to the audit
committee chairman as required► Disclosure of Mechanism► Monitoring by the audit committee
and the board
1. Report on vigil mechanism,including: Policy & procedures Fraud response plan
2.Recommendations toestablish or improve existinginfrastructure to effect the vigilmechanism
Corporate Governance
Proposed Activities
1. Listing of requirements with respectto number of directors, womendirectors, independent directors etc.based on the complexity and size ofoperations
2. Drafting policy to list down issue to betaken care while appointment orresignation of directors etc.
3. Drafting of policy to effect evaluationof Board performance
4. Drafting of policies and procedures toset up mechanism for variouscommittees such as audit, NRC,shareholders, CSR etc.
Deliverable/Output
1. Comprehensive documentto list down all therequirements of the Act inthis regards.
2. To draft organization chartto assign responsibility ofactivities to respectivepersonnel
1. Listing of requirements with respectto number of directors, womendirectors, independent directors etc.based on the complexity and size ofoperations
2. Drafting policy to list down issue to betaken care while appointment orresignation of directors etc.
3. Drafting of policy to effect evaluationof Board performance
4. Drafting of policies and procedures toset up mechanism for variouscommittees such as audit, NRC,shareholders, CSR etc.
1. Comprehensive documentto list down all therequirements of the Act inthis regards.
2. To draft organization chartto assign responsibility ofactivities to respectivepersonnel
Directors – Code of Conduct
Proposed Activities
1. To draft document on to ensureappropriate code of conducts are inplace and existing ones are updatedas well
2. Eligibility for appointment3. Company policy and procedures4. Changes to the article of association
of the company5. Declaration of independence by the
independent director
Deliverable/Output
1. To set up several code ofconduct and updating ofexisting policy framework
1. To draft document on to ensureappropriate code of conducts are inplace and existing ones are updatedas well
2. Eligibility for appointment3. Company policy and procedures4. Changes to the article of association
of the company5. Declaration of independence by the
independent director
1. To set up several code ofconduct and updating ofexisting policy framework
Corporate Social Responsibility
Proposed Activities
1. Corporate Social ResponsibilityCommittee to be formed. Committeeresponsible for Formulation of CSR policy Regular monitoring of CSR
initiatives. Board to be responsible for;
• Approving and disclosing CSRpolicy
• Ensuring implementation of CSRactivities
Deliverable/Output
1. Policy on system andprocess around CorporateSocial responsibility
2. List of activities maysuitable to entity’srequirements with respect tocompliance with CSRschedule
1. Corporate Social ResponsibilityCommittee to be formed. Committeeresponsible for Formulation of CSR policy Regular monitoring of CSR
initiatives. Board to be responsible for;
• Approving and disclosing CSRpolicy
• Ensuring implementation of CSRactivities
1. Policy on system andprocess around CorporateSocial responsibility
2. List of activities maysuitable to entity’srequirements with respect tocompliance with CSRschedule
Audit Related Matters
Proposed Activities
1. Audit of consolidated financialstatements for unlisted companies(including intermediate holdingcompanies)
2. Additional auditors reportingresponsibility: Design adequacy and operating
effectiveness of internal financialcontrols system Financial transactions or matters
which have any adverse effect onthe functioning of the Company Material frauds to be reported to
central government
Deliverable/Output
1. Policy on processes toensure completion of auditactivity in a timely manner
2. Designing of FinancialStatement ClosureProcess to help identifyinggaps
1. Audit of consolidated financialstatements for unlisted companies(including intermediate holdingcompanies)
2. Additional auditors reportingresponsibility: Design adequacy and operating
effectiveness of internal financialcontrols system Financial transactions or matters
which have any adverse effect onthe functioning of the Company Material frauds to be reported to
central government
1. Policy on processes toensure completion of auditactivity in a timely manner
2. Designing of FinancialStatement ClosureProcess to help identifyinggaps
Thank YouThank You
Goldman Fincorp Private Limited190, Lower Ground Floor, M Block, DDA Site I,New Rajendra Nagar, New Delhi 110060.Office: +91 28741408 | Fax: +91 28741408 |[email protected] Phone: +91 9871012936. Website: www.goldmangroup.in
Goldman Fincorp Private Limited190, Lower Ground Floor, M Block, DDA Site I,New Rajendra Nagar, New Delhi 110060.Office: +91 28741408 | Fax: +91 28741408 |[email protected] Phone: +91 9871012936. Website: www.goldmangroup.in