LIMIT CHART OF PROVISIONS OF COMPANIES ACT, 2013

APPLICABLITY OF PROVISIONS UNDER COMPANIES ACT­, 2013

 

1.   Applicability of XBRL (Extensible Business Reporting): 

General Circular No. 16/2012 Dated: 06.07.2014.  

Vide Companies (Filing of documents and forms in Extensible Business Reporting Languag) Rules, 2011 notified vide GSR No. 748E dated 5.10.2011, following class of Companies are required to file their Balance Sheet and Profit & Loss Account and other documents as required u/ s 220 of Companies Act, 1956 with the Registrar of Companies for the financial year ending on or after 31 st March, 2011 in XBRL format. 

a) All companies listed with any Stock Exchange(s) in India.  

b) Subsidiaries on any company listed with any Stock Exchange(s) in India. 

c) All companies having Paid up Capital of Rupees 5 Crore (five crore) and above. 

d) All companies having Turnover of Rupees 100 Crore (one hundred) crore and above.

 

Companies Exempt from XBRL requirements: 

a) Banking Companies­ that are regulated by RBI 

b) Insurance Companies­ that are regulated by IRDA 

c) Power Companies 

d) Non-­Banking Financial Companies

 

MCA FAQ’S:

1.       If a Company had done voluntary filing in XBRL mode last year (FY 2010­11), though the same was not required to be done by the company. Whether now it is compulsory for the company to file its financial statements in XBRL?

 

Sol.MCA recommends that a company which has done filing in XBRL mode last year on voluntary basis should continue to do so in subsequent years as well. However in case the company does not want to voluntarily file in XBRL for FY 2011-12, then it may request for exemption from the Ministry.

2.      Does the subsidiary of a subsidiary of a listed company also need to file in XBRL?

Sol: Yes, all Indian subsidiaries (including subsidiary of a subsidiary) of a listed company are mandated to file their financial statements in XBRL.

 

3.      Is the consolidated financial statement of a listed holding company alone is required to be filed in XBRL or the subsidiaries also need to file their financials in XBRL?

Sol: The listed holding company has to file its standalone and consolidated financial statement (if applicable) in XBRL. Its Indian subsidiaries also need to file their financial statements in XBRL.

 

4.       What about non exempt subsidiary of exempt holding company?

Sol: Non-exempt subsidiaries of exempt parents (e.g. shared service center or broking subsidiary of a bank) are covered since such companies file Schedule VI financial statements and are covered by the current taxonomy.

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2.   Applicability of CASH FLOW STATEMENT: 

Before applicability of Companies Act-2013

 

a) All companies whose equity or debt securities listed with any Stock Exchange(s) in India or outside India.

b) Company which is in the process of listing their equity or debt securities as evidenced by the board of Director’s resolution in this regard.

c)  A Bank includes Co-operative Bank.

d)  Financial Institutions.

e)  Insurance Company.

f) Whose turnover (excluding other income) exceed rupees fifty crore in the immediately preceding accounting year;

g) Which have borrowings (including public deposits) in excess of rupees ten crore at any time during the immediately preceding accounting year;

h)  Holding or Subsidiary company of a company which is not a small and medium sized Company.

 

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Under Companies Act-2013

 

As per Provisions of sub section 40 of Section 2 of Companies Act, 2013 financial statements would include Cash Flow Statements.

 

Therefore as per 2(40) “EVERY COMPANY” required to prepare “CASH FLOW STATEMENT” along with Balance Sheet & Statement of Profit & Loss.

 

All the company except mentioned below required to prepare Cash Flow Statement for the Financial year 01st April, 2014 to 31st March, 2015.

 

Companies Exempt from Cash Flow requirements:

a) One Person Company

b) Small company – As defined below*    

c) Dormant company

 

Sec 2(85) defines Small Companies as:

‘‘small company’’ means a company, other than a public company,—

 

(i) Paid-up share capital of which does not exceed Rs 50 Lakhs or such higher amount as may be prescribed which shall not be more than Rs 5 Crores ; and

 

(ii) Turnover of which as per its last profit and loss account does not exceed Rs 2 crores or such higher amount as may be prescribed which shall not be more than Rs 20 Crores:

 

Provided that nothing in this clause shall apply to—

 

(A) A holding company or a subsidiary company;

(B) A company registered under section 8; or

(C) A company or body corporate governed by any special Act;

 

 

 

 

3.   Applicability of INTERNAL AUDITOR:   

As per Provisions of sub section ‘1’ of Section 138 of Companies Act, 2013

 

As per Provisions of Section 138 of Companies Act, 2013 read with sub rule 1 of Rule 13 Chapter IX, Companies (Accounts) Rules, 2014.

The following class of companies shall be required to appoint an internal auditor or a firm of internal auditors, namely:-

 

a) All Listed Companies

b) Every unlisted PUBLIC company having:

 

    Paid up Share capital of 50 Crore (Fifty crore) rupees or more during the preceding financial year;

 

    Turnover of 200 Crore (two hundred crore) rupees or more during the preceding financial year;

 

   Outstanding loans or borrowings from banks or public financial institutions exceeding 100 Crore

   (One hundred crore) rupees or more at any point of time during the preceding financial year; or

 

   Outstanding Deposits of 25 Crore (twenty Five) crore rupees or more at any point of time during the

   Preceding financial year; and

 

c) Every Private Company having

   Turnover of 200 Crore (two hundred crore) rupees or more during the preceding financial year; or

 

   Outstanding loans or borrowings from banks or public financial institutions exceeding 100 Crore

   (one hundred crore) rupees or more at any point of time during the preceding financial year

 

Transitional Period: Existing Company covered under any of the above criteria shall comply with the requirements within six months of from 01st April, 2014.

 

*Note 1. The internal auditor may or may not be an employee of the company;

 

           2.  The term chartered accountant shall mean a Chartered Accountant whether engaged in  

             Practice or not

 

 

 

 

 

4.   Applicability of CARO:

The Ministry of Corporate Affairs, on 10th April, 2015, notified the Companies (Auditor’s Report) Order, 2015 (CARO, 2015). It shall apply to every company including a foreign company as defined in clause (42) of section 2 of the Companies Act, 2013. It is, however, provided that this order will apply to following companies:

 

a)     All companies listed with any Stock Exchange(s) in India.

 

b)     All Public Limited Companies.

 

c)      Private Limited Company if fulfill any of below mentioned condition:

·   its paid up capital and reserves exceed Rs.50 lacs;

·   its turnover exceed Rs.5 Crores;

·   its outstanding loan from any bank or financial institution exceeds Rs.25 lacs.

 

Companies Exempt from CARO requirements:

a) A banking company

b) An insurance company

c) A company registered u/s.8of the Act

d) A Private Limited Company if not satisfy all criteria given above

 

NOTE:

Financial Year start on or after 01/04/2014

MATTERS TO BE INCLUDED IN THE AUDITOR’S REPORT:

The auditor’s report on the account of a company to which this Order applies shall include a statement on the following matters, namely:-

 

(i)  FIXED ASSETS

      (a) whether the company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets;

(b)  whether these fixed assets have been physically verified by the management at reasonable intervals; whether any material discrepancies were noticed on such verification and if so, whether the same have been properly dealt with in the books of account;

(Note: Requirement to report disposing off of substantial part of fixed assets during the year is not required now)

 

(ii)  INVENTORY

(a)  whether physical verification of inventory has been conducted at reasonable intervals by the  management;

(b)  are the procedures of physical verification of inventory followed by the management reasonable and adequate in relation to the size of the company and the nature of its business. If not, the inadequacies in such procedures should be reported;

(c)     whether the company is maintaining proper records of inventory and whether any material discrepancies were noticed on physical verification and if so, whether the same have been properly dealt with in the books of account;

 

(iii) LOANS AND ADVANCES

whether the company has granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act. If so,

(a)   whether receipt of the principal amount and interest arc also regular; and

(b)   if overdue amount is more than rupees one lakh, whether reasonable steps have been taken by the company for recovery of the principal and interest;

(Note: Reporting of loans taken by the Company not included in CARO, 2015.)

 

(iv) INTERNAL CONTROL

         is there an adequate internal control system commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. Whether there is a continuing failure to correct major weaknesses in internal control system.

(Note: Reporting on sale of services also included under CARO, 2015)

 

(v) DEPOSITS

           in case the company has accepted deposits, whether the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act and the rules framed there under, where applicable, have been complied with?

If not, the nature of contraventions should be stated; If an order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal, whether the same has been complied with or not?

( Note: order has been passed by National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal, whether the same has been complied with or not? included under CARO, 2015)

 

(vi) COST ACCOUNTING RECORDS

       where maintenance of cost records has been specified by the Central Government under sub-section (1) of section 148 of the Companies Act, whether such accounts and records have been made and maintained;

 

(vii)  STATUTORY DUES

(a) is the company regular in depositing undisputed statutory dues including provident fund, employees’ state insurance, income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues with the appropriate authorities and if not, the extent of the arrears of outstanding statutory dues as at the last day of the financial year concerned for a period of more than six months from the date they became payable, shall be indicated by the auditor.

 

(b)in case dues of income tax or sales tax or wealth tax or service tax or duty of customs or duty of excise or value added tax or cess have not been deposited on account of any dispute, then the amounts involved and the forum where dispute is pending shall be mentioned. (A mere representation to the concerned Department shall not constitute a dispute).

 

(c) whether the amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder has been transferred to such fund within time.

 

(Note: Reporting on Service Tax and Value added tax also included under CARO, 2015, the reporting whether amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under has been transferred to such fund within time)

 

(viii) LOSS MAKING COMPANIES

whether in case of a company which has been registered for a period not less than five years, its accumulated losses at the end of the financial year are not less than fifty per cent of its net worth and whether it has incurred cash losses in such financial year and in the immediately preceding financial year;

 

(ix) REPAYMENT OF DUES

    whether the company has defaulted in repayment of dues to a financial institution or bank or debenture holders? If yes, the period and amount of default to be reported;

 

(x)  GUARANTEE GIVEN

    whether the company has given any guarantee for loans taken by others from bank or financial institutions, the terms and conditions whereof are prejudicial to the interest of the company;

 

(xi) USE OF FUNDS

whether term loans were applied for the purpose for which the loans were obtained;

 

(xii) FRAUD

    whether any fraud on or by the company has been noticed or reported during the year; If yes, the nature and the amount involved is to be indicated.

 

 

 

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5.     Applicability of SECRETARIAL AUDIT:  

As per Provisions of sub section ‘1’ of Section 204 of Companies Act, 2013:

As per Provisions of Section 204 of Companies Act, 2013 read with Rule 9 Chapter XIII, Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

 

The following class of companies shall be required to Annex Secretarial Audit Report with Director Report, namely:-

a)     All Listed Companies

b)     Every Public Company having a Paid-Up Share Capital of Rs. 50 Crore (fifty crore rupees) or more

c)      Every Public Company having a Turnover of Rs. 250 Crore (two hundred fifty crore rupees) or more

 

6.    Applicability of Managing Director/ Whole Time Director:

As per Provisions of sub section ‘1’ of Section 203 of Companies Act, 2013:

As per Provisions of Section 203 of Companies Act, 2013 read with Rule 8 Chapter XIII, Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

 

The following class of companies shall be required to Appoint MD/ WTD/ CEO/ and CFO, namely:-

a)     All Listed Companies

b)     Every Public Company having a Paid-Up Share Capital of Rs. 10 Crore (Ten crore rupees) or more.

c)      Companies which do not fall in above limits can also appoint MD and WTD by follow the procedure given under Section 196 of Companies Act, 2013.

 

 

 

7.   Applicability of KEY MANAGERIAL PERSONNEL:

As per Provisions of sub section ‘1’ of Section 203 of Companies Act, 2013:

As per Provisions of Section 203 of Companies Act, 2013 read with Rule 8 & 8A Chapter XIII, Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

 

The following class of companies shall be required to Appoint Key Managerial Personnel, namely:-

a)     All Listed Companies

b)     Every Public Company having Paid-Up Share Capital of Rs. 10 Crore (Ten crore rupees) or more.

c)      *Every Private Limited Company having Paid-Up Share Capital of Rs. 5 Crore (five crore rupees) or more required to appoint Company Secretary and designate as Key Managerial Personnel.

Note* A company other than a company covered under rule 8 which has a paid up share capital of five crore rupees or more shall have a whole time company secretary.

 

 

 

 

8.   Applicability of Independent Director:

As per Provisions of sub section ‘4’ of Section 149 of Companies Act, 2013:

As per Provisions of Section 204 of Companies Act, 2013 read with Rule 4 Chapter XI, Companies (Appointment and Qualification of Directors) Rules, 2014:

 

The following class of companies shall be required to Appoint Independent Director, namely:-

a) All Listed Companies

    If Public Company fulfill any requirement mentioned below then at least 2 (Two) Independent Director:

b) The Public Companies having Paid Up Share capital of Rs. 10 Crore (ten crore rupees) or more

c) The Public Companies having Turnover of Rs. 100 Crore (one hundred crore rupees) or more

d) The Public Companies which have, in aggregate, outstanding loans, debentures and deposits, exceeding Rs. 50 Crore (fifty crore rupees):

Transitional Period: Existing Company covered under any of the above criteria shall Comply with the requirements within One year from 01st April, 2014. (As per Section-149 sub section 5.)

 

 

 

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9.   Applicability of Women Director:

As per Provisions of sub section ‘1’ of Section 149 of Companies Act, 2013:

As per Provisions of Section 149 of Companies Act, 2013 read with Rule 3 Chapter XI, Companies (Appointment and Qualification of Directors) Rules, 2014:

 

The following class of companies shall be required to Appoint Women Director, namely:-

a)     All Listed Companies

b)     Every Public Company having a Paid-Up Share Capital of Rs. 100 Crore (One Hundred crore rupees) or more.

c)      Every Public Company having a Turnover of Rs. 300 Crore (Three Hundred crore rupees) or more

Transitional Period: Existing Company covered under any of the above criteria shall Comply with the requirements within One year from 01st April, 2014. (As per Section-149 sub section 5.)

 

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10       Applicability of AUDITORS COMMITTEE:

As per Provisions of sub section ‘1’ of Section 177 of Companies Act, 2013:

As per Provisions of Section 177 of Companies Act, 2013 read with Rule 6 Chapter XII, Companies (Meetings of Board and its Powers) Rules, 2014:

 

The following class of companies shall be required to Appoint Audit Committee, namely:-

a)     All Listed Companies

b)     Every Public Company having Paid-Up Share Capital of Rs. 10 Crore (Ten crore rupees) or more.

c)      The Public Companies having Turnover of Rs. 100 Crore (one hundred crore rupees) or more (AT LEAST 2 (TWO) INDEPENDENT DIRECTOR)

d)     The Public Companies which have, in aggregate, outstanding loans, debentures and deposits, exceeding Rs. 50 Crore (fifty crore rupees):

Explanation:

Ø  The paid up share capital or turnover or outstanding loans, or borrowings or debentures or deposits, as the case may be, as existing on the date of last audited Financial Statements shall be taken into account for the purposes of this rule.

Ø  The public company covered under this rule which were not required  to constitute audit committee under section 292A of the companies act 1956 shall constitute audit committee within 1 year from the date of commencement of the Act, 2013

 

11  Applicability of NOMINATION AND REMUNERATION COMMITTEE:

As per Provisions of sub section ‘1’ of Section 177 of Companies Act, 2013:

As per Provisions of Section 177 of Companies Act, 2013 read with Rule 6 Chapter XII, Companies (Meetings of Board and its Powers) Rules, 2014:

 

 

The following class of companies shall be required to Appoint Audit Committee, namely:-

a)     All Listed Companies

b)     Every Public Company having Paid-Up Share Capital of Rs. 10 Crore (Ten crore rupees) or more.

c)      The Public Companies having Turnover of Rs. 100 Crore (one hundred crore rupees) or more (AT LEAST 2 (TWO) INDEPENDENT DIRECTOR)

d)     The Public Companies which have, in aggregate, outstanding loans, debentures and deposits, exceeding Rs. 50 Crore (fifty crore rupees):

Explanation:

Ø  The paid up share capital or turnover or outstanding loans, or borrowings or debentures or deposits, as the case may be, as existing on the date of last audited Financial Statements shall be taken into account for the purposes of this rule.

 

 

12  Applicability of Vigil Mechanism:

As per Provisions of sub section ‘9’ of Section 177 of Companies Act, 2013:

As per Provisions of Section 177 of Companies Act, 2013 read with Rule 7 Chapter XII, Companies (Meetings of Board and its Powers) Rules, 2014:

 

a) All Listed Companies

b) The Company which accept deposits from the public;

c) The companies which have borrowed money from banks and public financial institutions in excess of Rs. 50 crore (Rupees Fifty Crore only)

Explanation:

Ø  The paid up share capital or turnover or outstanding loans, or borrowings or debentures or deposits, as the case may be, as existing on the date of last audited Financial Statements shall be taken into account for the purposes of this rule.

 

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13 Applicability of Corporate Social Responsibility Committee (CSR):

As per Provisions of sub section ‘1’ of Section 135 of Companies Act, 2013:

As per Provisions of Section 135 of Companies Act, 2013 read with Rule 3 Chapter XI, Companies (Appointment and Qualification of Directors) Rules, 2014:

 

The following class of companies shall be required to constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director:-

a.      Every company having net worth of rupees 500 Crore (five hundred crore) or more;

b.      Every company having turnover of rupees 100 crore (one thousand crore) or more;

c.       Every company having net profit of rupees 5 crore (five crore) or more;

AMOUNT OF CONTRIBUTION: The Board of every company mentioned above shall ensure that the company spends, in every financial year, at least two per cent. of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy:

 

 

 

14 Applicability of Rotation of Auditor:

As per Provisions of sub section ‘2’ of Section 139 of Companies Act, 2013:

As per Provisions of Section 139 of Companies Act, 2013 read with Rule 5 Chapter X, Companies (Audit and Auditors) Rules, 2014: Below mentioned Companies shall not appoint or re-appoint:

 

Ø  An individual as auditor for more than one term of five consecutive years; and

Ø  An audit firm as auditor for more than two terms of five consecutive years.

 

Limits of Companies as given below:

a)     All Listed Companies

b)     Every Public Company having a Paid-Up Share Capital of Rs. 10 Crore (Ten crore rupees) or more.

c)      Every Private Limited Company having Paid-Up Share Capital of Rs. 20 Crore (Twenty crore rupees) or more.

d)     All Companies having public borrowings from Financial Institutions, banks orpublic deposits of Rs. 50 Crore (Rupees Fifty Crore Only) or more.

 

 

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(Author – Diwakar Agrawal, Corporate Consultant, from Delhi

Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Though utmost efforts has made to provide authentic information, it is suggested that to have better understanding kindly crosscheck the relevant sections, rules under the Companies Act, 2013. The observations of the author are personal view and the authors do not take responsibility of the same.

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