Investment Valuation in India

Section 180 of the Companies Act, 2013 corresponds to section 293 of the companies Act, 1956 . Section 293 of the Companies Act, 1956 was applicable only to public companies i.e. private limited companies were exempted from this requirement and therefore they could borrow any sums of money up to any limit without the need of seeking any approval from the members of the company. Now, Section 180 is applicable to all companies i.e. public as well as private. So now onwards even private companies have to seek the approval of their members if they are intending to borrow monies in excess of their paid up share capital and free reserves.  According to section 180(1)(c) – The Board of directors of a company shall exercise the following power only with the consent of the company by a Special Resolution (SR): Borrowing of money if – Money already borrowed, together with moneys proposed to be borrowed will exceed the aggregate of paid-up share capital and free rese...

Restrictions and legal requirements : No company shall enter into an arrangement by which- (a) a director of the company or its holding, subsidiary or associate company or a person connected with him acquires or is to acquire assets for consideration other than cash, from the company; or (b) the company acquires or is to acquire assets for consideration other than cash, from such a director or person so connected, unless prior approval for such arrangement is accorded by a resolution of the company in general meeting (GM) and if the director or connected person is a director of its holding company, approval shall also be required to be obtained by passing a resolution in GM of the holding company. Requirements of notice: The notice for approval of the resolution by the company or holding company in GM shall include the particulars of the arrangement along with the value of the assets involved in such arrangement duly calculated by a registered valuer. Effects of contravent...

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 p...

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 oth...

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 c...

Hi, Do read my article on Independent Directors as mentioned in the Companies Bill 2011 (passed in Lok Sabha as of Dec 2012) Accountants' Adda | Companies Bill 2011 - Independent Directors

How many times have we felt that the meeting we just attended was a waste of time? Quite a few isn' it? Here are some essentials of an effective meeting. At least to avoid them being a waste of time. DEFINE A CLEAR PURPOSE OR OBJECTIVE: Ensure that the meeting starts with identification of the objective of the meeting. Let it be circulated amongst the participants before the meeting.  PREPARE AN AGENDA:  Ensure circulation of the meeting agenda along with the meeting invitation to let the participants know what is going to be discussed. At a minimum, circulate it at the beginning of the meeting.  MAINTAIN CONTROL: Ensure to keep the meeting on track that is, adhering to the objectives and agenda. Otherwise, meeting participants can ramble on and lose focus.  This can waste too much time. CONCLUDE POINTS: If you don't push for closure, people can debate something for way too long.  While coming to a decision may sometimes not be possible, but rememb...

With the increasingly competitive and globalised business environment, it becomes imperative for businesses to stay abreast with the what's happening around the world and keep evolving as the world transforms. One of the things that are equally important is the way companies communicate their financial reports to the users of financial statements. Different countries, different reporting standards and Generally Accepted Accounting Principles (GAAPs). For better integration came the International Financial Reporting Standards (IFRS). Then was the question of how should the numbers be communicated. The Medium? The answer was XBRL. What is XBRL? XBRL  is an acronym of eXtensible Business Reporting Language is an XML based technology standard set to improve the way in which the business financial information is created, stored and retrieved. It is a transformation of the business reporting framework which is changing the communication and reporting of ...