Companies Act, 2013 – A New Era of Compliance Governance

[Debtosh Dey]

Companies Act, 2013 makes following important changes :

Directors’ duties of care are more specific covering all stakeholders and applicable laws  besides restrictions on personal/ related-party transactions. Board’s report includes more disclosures including CSR initiatives where applicable. KMP (CEO/ MD or Whole-Time Director, CS, CFO, etc) and Independent Directors are mandated for prescribed/ listed companies. Defaulting directors/ KMP attract various liabilities depending on the circumstances.

Auditor’s willful contravention of certain provisions relating to audit report and non-audit services attracts imprisonment and fine. Auditor rotation is another important provision. 

CS’s role, in compliance reporting to the Board, virtually covers any applicable law besides Company law (i.e. from Contract, Securities & Tax Laws to any law relating to Property/ Labour/ Mining/ Industry/ Environment/ Carriage/ Foreign Trade/ FEMA, etc may be relevant). Further, the Act provides for secretarial audits and Annual Return certification in listed and some other companies by CS in practice.   

Moreover, additional Committees of Board (beside Audit Committee), Internal Audit and Vigilance Mechanism in certain companies, Registered Valuers, fraud investigation by SIFO (with powers of search, seizure & arrest) and regulation of accounting & auditing standards by NFRA suggest multi-functional checks.

Discussions to this article

[Gaurav Agarwal]

Dear Sir,

It is true that a lots of responsibilities is now given in our solders but because of this step of the MCA the reporting standard will improve. These laws will not affect all those CA whose practice are good but will effect to all those who use to sign the reports for some money.

 

Compulsorily change of auditors & firm in every 5 & 10 yrs is also one the very good step by the government in my thought. this will also stop the CA from unlawful attestation of Financials.

Thanks & Regards

CA Gaurav Agarwal

9015449229

 

[Debtosh Dey]

Observations of Mr Gaurav Agarwal are true enough ! Let good things drive out bad things - this should be the spirit of effective governance. For this, our legal system should be fool-proof, indiscriminate and certain with minimum interfaces between corporate and Govt authorities.