Companies Act Current Affairs - 2019
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The Union Ministry of Corporate Affairs (MCA) has constituted High Level Committee on Corporate Social Responsibility – 2018 (HLC-2018) under Chairmanship of Injeti Srinivas, Secretary, MCA. It will review existing framework and guide and formulate roadmap for coherent policy on Corporate Social Responsibility (CSR).
Committee’s Terms of Reference
It will review existing CSR framework as per Act, Rules and Circulars issued from time to time and recommend guidelines for better enforcement of CSR provisions. It will analyze outcomes of CSR activities, programmes and projects and suggest measures for effective monitoring and evaluation of CSR by companies. It will also give suggestions on innovative solutions, use of technology, platform to connect stakeholders, and social audit. It will submit its report to Government within three months from date of holding its first meeting.
Corporate Social Responsibility (CSR)
CSR is referred as initiative undertaken by CST to assess and take responsibility for company’s effects on environment and impact on social welfare and to promote positive social and environmental change. Its basic philosophy is that income is earned only from the society and therefore it should be given back. Thus, CSR aims at promoting responsible and sustainable business through inclusive growth.
The provisions of section 135 of Companies Act, 2013 (Act) pertains to CSR. The existing provisions of in Companies Act, 2013 fully empower Board of Company to decide on their CSR Policy, approve projects and oversee implementation. Under this Act, any company with net worth of Rs 500 crore or more or turnover of Rs 1000 crore or more o net profit of Rs 5 crore or more has to spend at least 2% of last 3 years average net profits on CSR activities as specified in Schedule VII of Act.
Union Ministry of Corporate Affairs (MCA) has mandatory for unlisted public companies to issue new shares or transfer of all shares in dematerialised or demat (i.e. in electronic form) form beginning October 2, 2018. With this, major benefits of dematerialisation of securities will now be available to unlisted Public companies.
The Companies Act 2013, provides for government to mandate that as in case of listed public companies other classes of public companies should also issue securities only in dematerialised form. MCA’s latest step is seen as measure for further enhancing transparency, investor protection and governance in the corporate sector. It also comes at a time when the ministry is clamping down on shell companies that are suspected of being conduits for illicit fund flows
Major benefits of dematerialisation of securities
It will help in elimination of risks associated with physical certificates such as loss, theft, mutilation, fraud etc. It will help in improving corporate governance system by increasing transparency and preventing mal-practices such as benami shareholding, back dated issuance of shares, etc. It will also ease in transfer, pledge etc. of securities and provide exemption from payment of stamp duty on transfer.
According to Companies Act 2013, a public company is formed by seven persons or more, while for private company this number is two or more. If shares of such companies are not traded on stock exchange, they are called unlisted companies.