Rajya Sabha Passed Companies Bill, 2012
Rajya Sabha has passed much awaited Companies Bill 2012 which will become Companies Act, 2013 as soon as it gets stamped and signed by President of India. It will replace Companies Act, 1956 (Full Bill can be downloaded from here)
Following are the key highlights of Companies Bill, 2012
1. Companies reporting Rs.5 crore or more profits in last three years, require to spend at least 2% of their average profits in last three towards Corporate Social Responsibilities (CSR). Companies who are unable to fulfill CSR requirement requires to give explanation to avoid penalty.
2. The new bill also mandates the rotation of auditors every five years, while an audit firm cannot have more than two terms of five consecutive years. It also makes auditors subject to criminal liability if they knowingly or recklessly omit certain information from their reports.
3. The term for independent directors have been fixed for five years too. The maximum number of directors in a private company has been increased from 12 to 15, which can be increased further by special resolution.
4. There should be at least One Woman Director to be appointed in BOD with one-third of the board comprises independent directors to ensure transparency.
5. Induction of One Person Company that is to say a Private Company.