Important Amendments and Developments under Companies Act 2013
SEBI’s Latest Notification about dissemination of Financial Results by Listed Companies
On May 9, 2018, SEBI issued a Notification and amended of the SEBI LODR Regulation, 2015 in respect of financial results of listed companies. The following amendment will take place w.e.f. April 1, 2019
(a) Listed entity shall also submit quarterly/year-to-date consolidated financial results,
(b) Listed entity shall also submit the audited or limited review financial results in respect of the last quarter along-with the results for the entire financial year, with a note stating that the figures of last quarter are the balancing figures between audited figures in respect of the full financial year and the published year-to-date figures up to the third quarter of the current financial year,
(c) Listed entity shall also submit as part of its standalone and consolidated financial results for the half year, by way of a note, statement of cash flows for the half-year,
(d) Listed entity shall ensure that, for the purposes of quarterly consolidated financial results, at least 80% of each of the consolidated revenue, assets and profits, respectively, shall have been subject to audit or in case of unaudited results, subjected to limited review.
(e) Listed entity shall disclose, in the results for the last quarter in the financial year, by way of a note, the aggregate effect of material adjustments made in the results of that quarter which pertain to earlier periods;
(f) Statutory auditor of a listed entity shall undertake a limited review of audit of all the entities/ companies whose accounts are to be consolidated with listed entity as per AS 21.
Filing of e-Form CRL-1 if your company is having more than 2 layers of Subsidiaries.
As ROC has started to issue ‘Show Cause Notice” in respect of non-filing of e-form CRL -1 disclosure in respect of more than 2 layer of subsidiary.
Disclosure of CSR Spending in Director’s Report
As ROC has started issue ‘Show Cause Notice” in respect of failure to provide information in the directors report as regards to CSR spending.
It is advised that company has to mention in the directors report “ the reasons for not spending the CSR amount in case if they don’t spend CSR amount during the current year . This will save the company from receiving show cause notice from Registrar of Companies.
The following may be the reasons that may be stated in the Director’s Report for not spending CSR amount.
- Liquidity crunch–Company is required to spend on modernization of the existing machinery and borrowed amount is not sufficient to meet up the requirement for the fund and hence CSR has not been made. The shortfall will be recouped in the next year.
Not able to find out suitable CSR activity
- Time to ascertain proper CSR activities was very short and hence the Company could not spend required amount on CSR. The shortfall will be made good in the next year.
Fire or Natural Calamity
- Fire or natural calamity that took place in the factory and hence, liquidity crunch.
Inadequacy of Profits
- Company Incurred loss in any financial year immediately preceding three financial years.
Carry forwarding Unspent CSR Amount
It is not clarified by the MCA whether unspent CSR amount can be carried forward and spent in the succeeding year or not.
Disclosure about Employee’s Remuneration
- Names of top 10 employees in terms of remuneration drawn; and
- Name of every employee who was in receipt of remuneration not less than Rs. 1.02 Crore per annum or if employed for a part of financial year with a remuneration not less than Rs. 8.50 Lakhs p.m.
- Name of every employee who was in receipt of remuneration in excess of MD/WTD/Manager and holds shares along with his dependents, not less than 2% of the equity shares of the Company.
- The statement also to include the designation, remuneration, nature of employment, qualifications, age, last employment, percentage of shares, etc.
However, if board decides by a board resolution , for those employees who are drawing more than Rs 5 lacs per month who are working in abroad, their salary details need not be published.
This is being perused by many top IT companies who have their major chunk of employees working in abroad.
No Need to Attach the Abstract of MGT-7 in the Directors Report
With Companies amendment act 2017, section 92 being notified, there is no necessity to attach the abstract of annual return with Directors report. However , if your company has website , you have to upload the annual return there and you have to give the link of the Annual Return in the Directors Report.
The Amendment says only for those companies which do have websites . If the company do not have any website , no need to comply the above provision.