Investment Valuation in India

Applicability: Section 138 shall apply only to such class or classes of companies as may be prescribed. As per Rule 13 of The Companies (Accounts) Rules, 2014, following class of companies shall be covered under section 138: Every listed company Every unlisted public company having-  Paid up share capital of Rs. 50 crore or more during the preceding financial year; or Turnover of Rs. 200 crore or more during the preceding financial year; or Outstanding loans or borrowings from banks or public financial institutions exceeding Rs. 100 crore or more at any point of time during the preceding financial year; or Outstanding deposits of Rs. 25 crore or more at any point of time during the preceding financial year. Every Private company having -  Turnover of Rs. 200 crore or more during the preceding financial year; or Outstanding loans or borrowings from banks or public financial institutions exceeding Rs. 100 crore or more at any point of time during the preceding

Section 202 of the Companies Act, 2013 deals with Compensation for loss of office of managing director (MD) or whole-time director (WTD) or manager Reasons for payment of compensation: (a) for loss of office; or (b) as consideration for retirement from office; or (c) in connection with such loss or retirement. Compensation can be paid only to : (a) MD; or (b) WTD; or (c) Manager. Amount of compensation: Permissible period: Lower of- Ø   The unexpired tenure of directorship; or Ø   3 years. Basis: ‘ Average remuneration’ actually earned during- Ø   3 years immediately preceding the date of cessation of office; or Ø   Such shorter period for which the director has held his office. Prohibition of compensation in certain cases: (a) reconstruction or amalgamation of company takes place. As a result of such reconstruction or amalgamation, the director resigns from the company, but is appointed as MD or manager or any other officer of the

The Lok Sabha, the lower house of the Parliament, has passed the Companies (Amendment) Bill, 2014, which will make it easier for corporates to do business and to ensure severe punishment for illegal money pooling activities, among other things. The amendments have been proposed in order to address some concerns raised by stakeholders. The major concerns raised by the stakeholders included protecting confidentiality of board resolutions, as well as the provision of auditors being required to report suspected frauds at the companies audited by them. Under the new norms, frauds beyond a certain threshold would need to be mandatorily reported by the auditors to the government, while cases below this threshold will be reported to the audit committee of the company’s board. Also, the corporates have been exempted from the need of obtaining approvals of shareholders in the case of related party transactions valued lower than Rs. 100 or 10 percent of net worth. As per the

The provisions related to rotation of auditor are applicable to those companies which are prescribed in Companies (Audit and Auditors) Rules, 2014, which prescribes the following classes of companies excluding one person companies and small companies , namely: (a) all unlisted public companies having paid up share capital of rupees ten crore or more ; (b) all private limited companies having paid up share capital of rupees twenty crore or more ; (c) all companies having paid up share capital of below threshold limit mentioned in (a) and (b) above, but having public borrowings from financial institutions, banks or public deposits of rupees fifty crores or more . As per section 139(2) of the Companies Act, 2013, no listed company or a company belonging to such class or classes of companies as mentioned above, shall appoint or re-appoint- (a) an individual as auditor for more than one term of 5 consecutive years; and (b ) an audit firm as auditor

According to Companies Act, 2013, no person including any director or key managerial personnel (KMP) of a company shall enter into insider trading.  However, as usual, n othing contained shall apply to any communication required in the ordinary course of business or profession or employment or under any law. Meaning of ‘insider trading’- a) An act of subscribing, buying, selling, dealing or agreeing to subscribe, buy, sell or deal in any securities by any director or KMP or any other officer of a company either as principal or agent if such director or KMP or any other officer of the company is reasonably expected to have access to any non-public price sensitive information in respect of securities of company, or b) An act of counselling about, procuring or communicating directly or indirectly any non-public price sensitive information to any person. Price Sensitive Information refers to  any information which relates, directly or indirectly, to a company an