Tech Savvy Companies Act Brings Opportunities And Challenges
Changes proposed by MCA with respect to Companies Act - Schedule VI are aimed at eliminating the differences between Indian GAAP and the GAAP in other countries. Simplifying reporting requirements for balance sheet and P&L account are the main aims of the proposed changes. Experts participated in the session on Companies Act – Schedule VI organized by CII on Friday in Bangalore discussed advantages and challenges related to the proposed changes. At the same time, they also warned about the glitches and inconveniences in the process of transformation.
As MCA simplified procedures for obtaining central government approval under section 297 and made it easy to follow electronic mode for conducting shareholders meetings, sending notices to shareholders, and filing e-forms, all these bring more convenience to the companies, according to the experts at the session.
MCA is modifying online incorporation procedures to incorporate a company and intends to complete the formation processes in 24 hours with effect from Aug 11, 2011. Procedures for shifting of registered office from one state to other state are simplified and these issues will come under ROC, which are currently under the purview of CLB. Speakers analysed the new opportunities and challenges emerging out of these changes.
Some of the key challenges outlined by the speakers are: Impact on a company’s existing chart of accounts; Classification of liabilities and assets; Applicability of revised schedule VI to interim financial statements; Current and non current classifications of employee benefits and other provisions; and Disclosures for dues to MSMED or those under clause 32 of the listing agreement.
Mr Asheesh Singh, Partner- Assurance, Grant Thornton, said, “ New changes to Schedule VI are applicable to all companies for filing the financial statements to be presented from the year 2011-2012 and would require a recast of FY11 numbers for comparative purposes. The change is to make financial statements more user friendly with minimum disclosure requirements by removing obsolete requirements.”
Mr B Jayaraman, “ Vice President, Ingersoll Rand (I) Ltd, said, “ The changes make comparision with global peers more easy and help in case of mergers and acquisitions.”
Mr Murali Anathasivan, Partner, J Sagar Associates, said, “ green initiative of MCA allows board meetings in electronic mode without need of physical attendance. Videoconferences make it easy to conduct board meetings. For FY 2011-12, electronic mode for shareholders meeting is optional and thereafter it is mandatory for all listed companies.”
Mr S Ramanujam, Executive Vice President, Group Taxation, UB Group, said, “ Balance sheet is also a brand and it has a great value for many stakeholders. Costing and certain reportings should be on the basis of functional processes of the company.”
Mr Rahul Matthan, Founder Partner, Trilegal, stressed the need to remove the anamolies among states in the ROC stamp duty structure related to mergers and demergers of companies.
Mr Anupam Kumar, Director- Assurance, Grant Thornton, said, “ Indian companies need to be globally competitive and our regulatory environment related to corporate governance should facilitate that. The proposed changes encourage use of Internet and Information Technology and help smooth handling of several company affairs. At the same times there are also some glitches to be addressed. But these checking mechanisms should not become hurdles.”