Companies Act 2013: Highlight of some important provisions (PART I)

  1. Corporate Social Responsibility:


Thanks to Section 135 of the Companies Act, 2013, now the Indian Companies will have to contribute a part of the net profit towards economic development betterment of quality of life of all stakeholders. The clause states that compliance of CSR is mandatory if the company meets one of the following criteria:

  1. Net worth of 500 crore or more, or
  2. Turnover of Rs.1,000 crore or more, or
  • Net profit of Rs.5 crore or more during any financial year.


If any company falls in any of the above criteria it should ensure that at least 2% of the average net profits made during the 3 financial years immediately preceding in pursuance of the policy.


  1. Cost Audit:


Section 148 changes the applicability of cost audit to companies. Instead of company pertaining to any class of companies engaged  in production, processing, manufacturing or mining activities, the Central Government can only direct cost audit to be conducted in such class of companies engaged in production of such goods or providing such services, which have the prescribed net-worth or turnover and who has been directed to include the particulars relating to the utilization of material or labour or to other items  of cost as may be prescribed in their books of account. Now as per the New Act, no approval is required of Central Government for appointment of cost auditors to conduct cost audit.


  1. Woman Director:


As per Section 149 prescribed class of companies must have at least one woman director on the Board. This is a progressive step that continues to move to increased discipline in governance and an innovation orientation.


  1. One Person Company:


Minimum share capital required for a One Person Company would be 1 lakh. Like private companies need to have suffix Pvt Ltd, one person company would require to have suffix One Person Company. However the main deterrent for one Person Company would be the 30% tax slab as applicable to other companies.

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