OF PUBLIC ENTERPRISES
NOTE OF DISCUSSIONS ON COMPANIES
ACT 2000, HELD ON 3rd SEPTEMBER 2002
Company Secretaries of Assam Industrial Development Corporation Ltd,
Assam Tea Corporation Ltd. & Assam Petrochemicals Ltd and Sri C.
K. Dowerah, Company Secretary in practice attended the meeting taken
by Sri P. K. Chowdhary, Commissioner & Secretary, Department of
Public Enterprise on 3rd September 2002. Sri A. K. Das,
Adviser (P), Department of Public Enterprise also attended the
The Companies Act 1956 has undergone amendments vide
Companies (Amendment) Bill 2000, after it was passed by the Lok-Sabha
on 27.11.2000 & by the Rajya-Sabha on 30.11.2000 and assented by
the President of India on 13.12.2000. Some of the salient points of
amendments were discussed.
in definition of Company (Section 3)
The Amendment Act has
amended the existing definition making private Companies to fulfill
the following additional requirements.
private Company shall have a minimum paid-up capital of Rs. 1 Lakh
or such higher paid-up capital as may be prescribed (existing
companies with less than Rs. 1 Lakh as paid-up capital will have to
raise it within 2 years from commencement of the Amendment Act)
private Company shall by its Article of Association prohibit any
invitation or acceptance of deposits from persons other than its
members, directors or their relatives.
Amendment Act has amended the existing definition of public company
Companies should have a minimum paid-up capital of Rs. 5 Lakh or
such higher paid-up capital as may be prescribed
private company, which is a subsidiary of a public company, is a
Companies in which the paid-up capital are below the prescribed
limits will have to raise the same accordingly.
of Directors - disqualification/ maximum number of companies in
which one can be appointed as Director at a time. (Section 274/252)
Amendment Act adds that a person shall not be capable of being
appointed as Director of a Company for a period of 5 years
such a person is already a Director of a Public company that has not
filed the annual accounts and returns for 3 continuous financial
years commencing on or after 1.4.1999.
such a person is already a Director of a public company which has
failed to repay its deposit or interest thereon on due date or
redeem its debenture on due date or pay dividend and such failure
continues for 1 year or more.
number of Companies in which a person can be appointed as Director is
reduced from 20 to 15.
Department of Company Affairs, Ministry of Finance & Company
Affairs of Govt. of India has responded to the request of the State
Govt. vide letter no. 2/5/2001-CLV dated 16.8.2002 that the proposal
of exempting Govt. companies from the provision of section 274(1)(g)
of Companies Act 1956 was under process. However, as per
clarification issued by Ministry of Law, Justice & Company
Affairs, Department of Company Affairs vide 2/5/2001-CLV General
circular no 8/2002 dated 22.3.2002, the Govt. decided to exempt Govt.
companies from the applicability of provisions of section
274(1)(g) of the Companies Act 1956
of "Directors' Responsibility Statement" (Section 217)
Directors' Responsibility statement will have to be annexed to every
balance sheet laid in the AGM certifying that
accounting standards were followed, with explanation in cases of
Directors had selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable &
prudent so as to give a true and fair view of the state of affairs
of the company at the end of the financial year and of the profit &
loss of the company for that period
was decided that the Company Secretaries present in the meeting would
make the 23 accounting standards available to the Commissioner &
Secretary, Department of Public Enterprises for information &
this connection, the problems leading to huge arrear in finalization
of accounts of most of the Govt. companies viz. non-availability of
internally audited accounts in some cases, delay in statutory audit
etc. were discussed. It was suggested that in order to make all
concerned aware of the immediate need of clearing arrears in
accounts, working-out possibilities of simplification of procedure
for shortening the process time and also to impart knowledge of the
relevant provisions of the Companies (Amendment) Act 2000, a seminar
could be arranged. It was therefore decided that Commissioner &
Secretary, Department of Public Enterprises may have a discussion
with Sri Debashish Mitra (Chairman, Institute of Chartered
Accountants of India (EIRC) C/O Guwahati branch, Ambari , Guwahati
781 001) in this regard.
of "Audit Committee"- Chairperson of Audit Committee to
attend AGM (Section 292-A)
would be mandatory for every public company having paid-up capital of
not less than Rs. 5 Crore, to constitute "Audit Committee"
consisting of Directors, which should discuss auditors periodically,
review financial statements before submission to the Board of
Directors and also to ensure compliance of internal control systems.
The elected Chairman of the Committee shall attend the AGM to provide
could be examined as to whether constitution of Audit Committee could
be done in cases of all the Govt. companies, including private Govt.
companies, though not mandatory, to ensure the Board of Directors of
appropriate internal control systems.
of Company Secretaries - Secretarial Certificates (Section 383-A)
Company having paid-up capital of Rs. 10 Lakh or more, but less than
Rs. 50 Lakh (Raised to Rs. 2 Crore w.e.f 11.6.2002), which is not
required to employ a whole-time qualified Company Secretary, shall
file with the ROC, a certificate from practicing Company Secretary as
to whether provisions of the amended Act have been complied and such
certificate shall be attached with Directors' report to the
Govt. companies will have to ensure compliance of the provisions as
regards appointment of Company Secretaries / Secretarial
certificates. It was decided to write to the Secretary, Institute of
Company Secretaries of India (ICSI House, 22 Indraprastha Area, Lodi
Road, New-Delhi 110 003) requesting the names & addresses of
locally available practicing Company Secretaries for the purpose of
Secretarial Certificates. Till this is available, the Companies could
avail the services of locally available practicing Company
Secretaries known to the Companies / State Govt.
method (Section 350)
amended section 350 provides that the depreciation on assets shall be
same as shown in books of accounts, to facilitate liberalized
adequate compensation to best managerial personnel
provides a tool for better management of a company.
& remuneration of auditors of Govt. companies (Section 619/224)
place of appointment or re-appointment of auditors of Govt. companies
by the Central Govt. on the advice of C & AG, the amendment Act
provides that such appointment shall be done by the C & AG fro
13.12 2000. Where the C & AG appoints an auditor for a Govt.
company under section 619, his remuneration shall be fixed by the
Company in General Meeting or in such manner as the company in
General meeting may determine.
will overcome some delays in appointment of statutory auditors and
disputes on audit fees. The C & AG may be requested to appoint
Statutory Auditors locally available and preferably the same auditor
for a period of at least 3 continuous years at a time, if not for the
entire period of pendency.
( P. K. Chowdhary )
Commissioner & Secretary
Department of Public Enterprises
No. PE (D) 4/2001/ 67-A Dated Dispur the October 2002
to : 1. Sri C. K. Dowerah, Company Secretary in practice
Road, (Near Laksmi Service Center)
: GUWAHATI 781 003
Industrial Development Corporation Ltd
Road, GUWAHATI 781 024
Tea Corporation Ltd
Road, GUWAHATI 781 005
GUWAHATI 781 001
By order etc.
Commissioner & Secretary
Department of Public Enterprises