Section 2 (38) “Exper” of Companies Act, 2013:
Engineers, valuers, chartered accountants, company secretaries, cost accountants, and anybody else with the capacity to give a certificate in accordance with a current legislation are all considered “experts.”
If a person possesses in-depth knowledge in a certain subject or special abilities that are essential to a group’s success, I consider them to be an expert. A person becomes an expert when they have undergone experiences relating to a particular knowledge subject or role since the words “expert” and “experience” is closely associated. Over time, these experiences come about as a result of certificates, advanced degrees, intensive research, or simply by excelling in a certain profession.
Introduction
At the end of August 2013, India finally passed its new Companies Act 2013 (the “Companies Act”) after a protracted legislative process. The Indian Parliament’s Lower House, the Lok Sabha, and Upper House, the Rajya Sabha, both passed the Companies Bill on December 18, 2012, and August 8, 2013, respectively. On August 29, 2013, it got presidential assent, resulting in the creation of the Companies Act 2013.
The 2013 Companies Act is a significant piece of legislation with far-reaching effects on all businesses with Indian incorporation. The Act of 2013 aims to be more globally minded and more in line with standards around the world. It is anticipated that it will serve as a model for more contemporary legislation that encourages expansion and stricter control of India’s corporate sector. The 2013 Act was created with the goal of enhancing self-regulation, enhancing corporate governance standards, enhancing accountability on the side of businesses and auditors enhancing levels of transparency, and defending the interests of investors, particularly small investors.
Research Review
- The Companies Act of 2013 and the Companies Act of 1956: A Brief Review of Some Provisions was the subject of research by Dr. Ramindra Kumar Sahu in January 2016. He compared and contrasted the two acts’ various provisions and discovered that the 2013 act places more emphasis on e-governance, good corporate governance, corporate social responsibility, protection of minority shareholders, and other issues.
- One Person Companies Will Bring Revolutionary Change to the Indian Business Sector, According to Debendra Kumar Ojha and Dr. Kishore Kumar Das (Jan 2016) who reviewed the rules relating to One Person Companies or Single Member Companies under the Companies Act 2013
- In a study published in May 2014, Nishant Sharma and Ruchita Dang compared the historical context of the Companies Act and the Companies Act 1956 on a number of themes covered by various Act chapters.
Objectivity of Research
A historical shift in the business sector is the most recent change to the Companies Act. Numerous provisions and concepts are added, and many are redefined. One of the key elements that promotes growth and aids businesses in maintaining liquidity and long-term viability is share capital. This study primarily focuses on the legal framework for businesses in India as well as several aspects of share capital under the New Companies Act. As a result, it will be of great assistance to several researchers, businesses, people, and experts in their industries.
Company Regulations Prior To Independence
Company law is the area of law that focuses solely on issues connected to businesses, such as business incorporations, share capital distribution, membership in businesses, management and administration of businesses, and business winding up.
Indian company law is the area of Indian law that governs Indian corporations. So let’s look at the rules that applied to businesses before to independence.
- Joint Stock Companies Act 1850: English company law is where India’s corporate law got its start. The businesses acts that have periodically been passed in India have been modelled after the English companies acts with a few adjustments to account for Indian situations. In the year 1850, the first piece of legislation pertaining to “Registration of Joint Stock Companies” was passed. The English Corporations Act, 1844 (also known as the Joint Stock Companies Act, 1844), which recognised companies as separate legal entities but did not offer them the benefit of limited liability, served as the model for this legislation.
- Joint Stock Companies Act of 1857: This law took the place of the Joint Stock Companies Act of 1850. The benefit of limited liability was originally granted to company members in India by this act from 1857. However, this measure did not grant members of banking institutions and insurance companies the benefit of limited liability.
- The Joint Stock Companies Act of 1857 was replaced by the Joint Stock Companies Act of 1866. Members of banking businesses and insurance companies now have limited responsibility according to the Joint Stock Companies Act of 1860.
- The Joint Stock Companies Act of 1860 was repealed by the Companies Act of 1866, which took its place. The first comprehensive businesses law passed in India was the corporations Act of 1866. The English companies Act of 1862 served as the foundation for the companies act of 1866. The corporations Act of 1866 was created with the intention of codifying and amending the laws governing the formation, administration, and dissolution of trade companies and other groups.
- The Indian Companies Act of 1913 failed to take into account the unique characteristics of Indian trade and commerce as well as some unique institutions like “managing agencies.” As a result, the Act’s performance throughout implementation was deemed to be quite inadequate. As a result, this Act underwent numerous modifications over the years.
Regulations for businesses following independence
- Companies Act 1956: Following the end of World War II, it was deemed that the company legislation needed to be updated once more. The administration and organisation of joint stock corporations has undergone numerous changes. Therefore, on October 25, 1950, the Indian government made the appointment. Under the direction of Shri. H. C. Bhabha, a team of 12 representatives from various fields was formed to evaluate the Indian Companies Act 1913 in its entirety. In April 1952, the committee turned in its final report on all facets of business law. The 1956 Companies Act was passed based on the Bhabha Committee’s recommendations. The English Companies Act of 1948 served as the model for the 1956 Indian Companies Act, which included various adaptations for the local environment. On April 1st, 1956, the Companies Act of 1956 went into effect. There are 658 sections and 15 schedules in this Act.
- 2013 Companies Act Old Companies Act, 1956 is being replaced by the new Companies Act (hence referred to as CA2013) (hereinafter referred as CA1956). All public and unlisted firms in the nation are governed by the complete requirements of the CA2013. The CA2013 is only partially implemented as of September 12, 2013. It has 7 schedules95 definitions and 29 Chapters with 470 sections each. However, the new law also makes numerous references to rules that serve as subordinate legislation and are an essential component of the new law governing corporations in India. The MCA has also finalised the regulations under each chapter in accordance with the authority granted by the CA 2013, and the majority of those rules have been notified.
Key Points of the Expert under Companies Act
- Strengthening Women’s Contributions in the Boardroom: The CA2013 requires the appointment of at least one woman director to the board of the specified class of companies in order to increase the talent pool and give large corporations access to individuals with a variety of backgrounds and perspectives.
- Corporate Social Responsibility: The Company Act of 2013 requires a specific type of Companies to invest a specific sum of money each year in projects/activities that reflect CSR. Although there may be challenges in the early years of implementation, this approach would help the underprivileged and backward sectors of society and the corporate entity would actually benefit in terms of their reputation and image in the society.
- National Company Law Tribunal: The CA2013 replaced the Company Law Board and Board for Industrial and Financial Reconstruction with the National Company Law Tribunal and the National Company Law Appellate Tribunal. They would deliver specialised justice while relieving the Courts of their burden.
- An increase in the maximum number of shareholders in a private corporation was made by the CA 2013, which raised the limit from 50 to 200.
- The maximum number of partners in any combination or partnership may not exceed the number that may be prescribed, but in no case more than one hundred. a group or partnership composed of experts in their fields, such as attorneys, chartered accountants, corporate secretaries, etc. that is governed by their respective particular laws will be exempt from this requirement.
- One Person Company: The CA2013 introduces a new type of private company, i.e., one Person Company, which may only have one shareholder and one director. The CA1956 stipulates that a private corporation must have a minimum of two shareholders and two directors.
- Electronic Mode: The CA2013 recommended e-government for a number of business operations, including document maintenance and inspection in electronic form, the possibility of keeping books of accounts in electronic form, the posting of financial statements on a corporate website, etc.
- Independent Directors: The CA2013 mandates that at least one-third of the Board members for all listed businesses must be independent. Any other class or classes of public enterprises that the central government may specify must likewise select independent directors.
- Rotation of Auditors: In the case of publicly traded corporations, the CA2013 provides for the rotation of auditors and audit firms.
- Auditors providing non-audit services: In order to maintain the independence and accountability of auditors, the CA2013 forbids auditors from providing non-audit services to the company where they are auditors.
- Financial Year: Each company’s fiscal year will run from January 1 to March 31 of each year.
2013’s Objective of Companies Act
- Transparency through a more robust reporting system
- Greater Accountability for Auditors
- Fostering freedom and ease in the establishment and upkeep of businesses.
- Adopt modern business and financial practises as well as IT
- Growth driven by the CSR goal; expanded director and management responsibilities.
- To better protect investors.
Major Findings:
- While there was no such provision in the previous CA, the new CA specifies the usage of share premium. The security premium is now restricted to specific uses as a result. As a result, the corporation has less option in how to use security premium.
- Previously, a firm may issue shares at a discount subject to a few conditions, but under the new CA, all shares can only be issued at a discount if they are sweat equity shares. As a result, under the new CA, a company cannot gain from issuing shares at a discount, and at the same time, it is exceedingly challenging for the company to draw in investors during a downturn.
- A corporation engaged in the development and management of infrastructure projects as described in Schedule VI of the Companies Act of 2013 may issue preference shares, whereas the old CA 1956 did not specify a specific percentage or other restrictions. Since less reserve for redemption is required under the new Companies Act, more money is accessible for use by businesses for other purposes that were previously prohibited by the redemption reserve.
- A company will benefit from the New Companies Act 2013’s expanded private placement regulations, which will make it simpler and faster for them to get financing.
- If a firm decides to buy back shares, it will aid in cash management and allow it to benefit from growing share prices during boom times by making the same purchases investors made in the past during periods of low demand. The Cash Flow Statement is also impacted by it.
- According to CA 2013, a company may only declare and pay dividends from free reserves; nonetheless, CA 1956 does not contain this requirement. Therefore, that will affect how readily available financing is for businesses. Due to the fact that dividends are only paid from free reserves, the corporation is now able to redirect the reserves that were previously used for dividend payment purposes to other uses.
Conclusion
The new Indian Companies Act, 2013, puts India on line with corporate laws in other parts of the world, which is a significant and welcome step toward modernising Indian company law. The Act is a progressive and forward-looking law that aims to improve corporate governance standards, promote disclosures and transparency, encourage ethical business practises, hold executives and auditors more accountable, and impose stringent enforcement procedures. It significantly lessens administrative cost in various areas while also safeguarding shareholders’ interests.
References
https://info.stvincent.edu/faculty-blog/the-role-of-experts
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