Presentation on 98 sections effective 12092013

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Companies Act, 2013
Detailed analysis of 98 sections
effective 12.09.2013
CS Mamta Binani
Past Chairperson (Year 2010), EIRC of ICSI
Room No.6, 4th Floor, Commerce House
2A, Ganesh Chandra Avenue, Kolkata 700013
Connect me @ : (033) 3028 8955-57; (033) 3002 5630-33; 98310 99551
[email protected]
Visit me @ : www.mamtabinani.com
Companies Act, 1956
Companies Act, 2013
• It was introduced on 1st
 Companies Bill passed by
April, 1956.
• It has 658 Sections and 15

Schedules.
• It extends to the whole of
India (Sikkim has its own
Companies Act).



the Lok-Sabha on 18th
December, 2012.
Rajya Sabha passed it on
8th August, 2013 by voice
vote
29th
August-President’s
Assent;
30th
AugustGazette Notification
The Bill has 470 Clauses
(309 pages), 29 Chapters, 7
Schedules and 29 Rules
It applies to the whole of
India.
FINALLY……WE SEE THE MUCH
AWAITED ACT FLUNGING INTO ACTION
• Ministry of Corporate Affairs issues
Notification for Commencement of 98
Sections (out of 470 sections) of the New
Act on 12th September, 2013
In PHASES
• It seems that it has been decided to enforce the
provisions of the new legislation in phases.
• The provisions of the new Act which
require statutory/regulatory consultation or
functioning of new bodies or prescription of
relevant rules/forms will be brought in force
after the preparatory action is completed.
Probably, sections which do not
require rules
• In the first instance it has
been decided to notify those
provisions of the Act which do not
require such preparations.
Verbatim
• The exact language of Notification is:
In exercise of the powers conferred by
sub-section (3) of section 1 of the
Companies Act 2013, the Central
Government hereby appoints the 12th day
of September, 2013 as the date on which
the following provisions of the said Act
shall come into force
Section 1 (3)
• This section shall come into force at once and the
remaining provisions of this Act shall come into
force on such date as the Central Government
may, by notification in the Official Gazette,
appoint and different dates may be appointed for
different provisions of this Act and any reference
in any provision to the commencement of this Act
shall be construed as a reference to the coming
into force of that provision
Circular dated 12.09.2013 by way
of a Notification
• http://www.mca.gov.in/Ministry/pdf/Com
mencementNotificationOfCA2013.pdf
• The notification has been signed by
Renuka Kumar, Joint Secretary to the
Government of India
Clarification on the notification
dated 12.09.2013
• The clarification has been made by way of a
General Circular no.15/2013 dated 13.09.2013
• The clarifications were:
• 1. Sub-section (68) of section 2: ROC may register
those Memorandum and Articles of Association
received till 11.09.2013 as per the definition
clause of the .private company, under the
Companies Act, 1956 without referring to the
definition of private company under the new Act
Clarification on the notification
dated 12.09.2013….contd
• 2. Section 102: All companies which have issued notices of
general meeting on or after 12.9.2o13, the statement to be
annexed to the notice shall comply with additional
requirements as prescribed in section 102 of the new Act
• 3. Section 133: Till the Standards of Accounting or any
addendum thereto are prescribed by Central Government in
consultation with and after examination of the
recommendation of the National Financial Reporting
Authority, the existing Accounting Standards notified under
the Companies Act, 1956 shall continue to apply
Clarification on the notification
dated 12.09.2013….contd
• 4. section 180: In respect of requirements of special resolution
under Section 180 of the said Act, as against ordinary resolution
required by the Companies Act 1956, if notice for any such
general meeting was issued prior to 12.9.2013, then such
resolution may be passed in accordance with the requirement of
the Companies Act 1956
Another circular on 18.09.2013
• Ministry of Corporate Affairs had issued a general circular
dated 18.09.2013.
• Background:
Ministry had issued a notification on 12.09.2013 bringing
into force 98 sections or part thereof of the Companies Act,
2013. Ministry received requests for clarification as to
whether the provisions of the Companies Act,
1956 corresponding to such 98 sections would continue to
apply or not and hence as a clarification, it issued this
circular
dated
18.09.2013.
Continued….
• This Circular clarified that with effect from
12.09.2013, the relevant provisions of
the Companies Act 1956, which
corresponds to the provisions of 98
sections of the Companies Act,
2013 brought into force on 12.09.2013,
cease to have effect from that date.
In this Power Point Presentation
• The objective is provide a chapter-wise
comparative summary of the 98 Sections
made effective in the Companies Act 2013
vis a vis the Companies Act, 1956
Chapter – I
Preliminary
• Sections ranging from 1 to 2
• Total 2 sections
• On 30th August 2013, Ministry of Law and Justice issued a
notification regarding the Companies Act, 2013 immediately
after it received assent of President of India. Only section 1 of
the Act of 2013 came into effect from that day. Section 1 as
usual deals with short title, extent, commencement and
application
• The 2nd section deals with the definition clauses
• Out of 95 definitions, 83 definitions (in which 26 are new
definitions) have been notified w.e.f. 12.09.2013
Definitions-Section 2
• The following definitions given against each clause, becomes
applicable:
1: abridged prospectus
3: alteration
4: appellate tribunal
5: articles
6: associate company
8: authorised capital (new)
9: banking company
10: board of directors or board
11: body corporate or corporation
12: book and paper and book or paper
Definition Continued……
14: branch office
15: called-up capital (new)
16: charge (new)
17: chartered accountant (new)
18: chief executive officer (new)
19: chief financial officer (new)
20: company
21: company limited by guarantee
22: company limited by shares
Definition Continued….
24: company secretary
25: company secretary in practice
26: contributory
27: control (new)
28: cost accountant (new)
29: Court (except sub clause iv which talks
about special courts)
30: debenture
32: depository
33: derivative
Definition Continued….
34: director
35: dividend
36: document
37: employees’ stock option
38: expert (new)
39: financial institution (new)
40: financial statement (new)
43: free reserves
44: global depository receipt (new)
45: government company
Definition Continued….
46: holding company
49: interested director
50: issued capital (new)
51: key managerial personnel (new)
52: listed company
53: manager
54: managing director
55: member
56: memorandum
57: networth
Definition Continued….
58: notification (new)
59: officer
60: officer who is in default
61: official liquidator
63: ordinary or special resolution (new)
64: paid up share capital (new)
65: postal ballot (new)
66: prescribed
67: previous company law (except sub clause ix relating to
Registration of Companies (Sikkim) Act, 1961
Definition Continued….
68: private company
69: promoter (new)
70: prospectus
71: public company
72: public financial institution
73: recognised stock exchange
74: register of companies (new)
75: registrar
76: related party
77: relative (my comment: the list of relatives as per sub
clause iii is yet to be prescribed)
Definition Continued….
78: remuneration
79: schedule
80: scheduled bank
81: securities
82: securities and exchange board
84: share
86: subscribed capital (new)
87: subsidiary company or subsidiary (except the proviso
and explanation (d)
Definition Continued….
88: sweat equity shares
89: total voting power
90: tribunal (new)
91: turnover (new)
92: unlimited company (new)
93: voting right (new)
94: whole time director (new)
95: words & expression borrowed from SCRA, SEBI and
Depositories Act…
Chapter – II
Incorporation
• Sections ranging from 3 to 22
• Total 20 sections
• Out of which 3 sections has been made applicable from
12.09.13
• The notified sections are 19,21,22
Subsidiary Co. not to hold shares
in its holding Company
New Act (section 19)
• Subsidiary company shall
not hold shares in its
holding
company
(exceptions provided in
19(1)(a),(b),(c) and
• No holding company
shall allot or transfer its
shares to any of its
subsidiary companies
Old Act (corresponding 42)
• Membership of holding
company
Authentication of documents,
proceedings and contracts
New Act (section 21)
• A
document
or
proceeding or contracts
may be signed by any
KMP or an officer duly
authorised by the Board
in this behalf
Old Act (corresponding 54)
• Authentication
of
documents
and
proceedings
• A
document
or
proceeding
requiring
authentication by the
company may be signed
by a director, manager,
secretary
or
other
authorised officer of the
company
Execution of bills of exchange etc.
New Act (section 22)
• A bill of exchange, hundi or
promissory note shall be
deemed to be proper if
signed by any person acting
under its authority, express
or implied
• New: Execution of other
deeds – POA
• Deeds signed by such an
POA holder shall bind the
company
Old Act (corresponding 47 & 48)
• Bills of Exchange
Promissory Notes
&
Chapter – III
Prospectus & Allotment of Sec
•
•
•
•
•
This chapter is divided into 2 parts
Part I – Public Offer and Part II – Private Placement
Sections ranging from 23 to 42, i.e. (23 to 41) and 42
Total 20 sections
Out of which 15 sections has been made applicable from 12.09.13,
all in Part I
• The notified sections are 23, 24, 25, 29, 30, 31, 32, 33, 34, 35, 36,
37, 38, 39 and 40
Public offer and pvt. placement
New Act (section 23)
Old Act (NEW provision)
• It provides the ways in which:
Public company or a
Private company
may issue securities.
• It is to be noted here that
23(1)(b) and 23(2) has yet not
been notified
• 23(1)(b): Private placement of
shares by public companies
• 23(2): Issue of shares by
private companies
• This is a new provision and
no corresponding section
could be found
Power of SEBI to regulate issue &
transfer of securities etc
New Act (section 24)
• It provides the provisions for the
administration of issue and transfer
of securities by SEBI, in relation to:
*Issue and transfer of securities;
and
*Non-payment of dividend
By *listed companies or
*those companies which intends
to get there securities listed
• Scope widened
O. Act(corresponding 55A)
• Powers of Securities and
Exchange Board of India
Doc containing offer of sec. for
sale to be deemed prospectus
New Act (section 25)
• Any document by which the
offer for sale of securities is
made to the public, it shall be
deemed to be a prospectus
and all sections for the same,
shall be applicable to it.
• It is to be noted that section
25(3) has not been notified.
• This sub section brings out
additional
information
required to be mentioned in
the prospectus
Old Act(corresponding 64)
• Document containing
offer of shares or
debentures for sale to be
deemed prospectus
Public Offer of Sec to be in Demat
New Act (section 29)
• Applicable
to
every
company making public
offer and such other class of
public companies as may be
prescribed
• Other companies may issue
securities in physical or
demat form
Old Act(corresponding 68B)
• Applicable to every listed
company making an
initial public offer of any
security for a sum of Rs
10 Crores or more
Advertisement of Prospectus
New Act (section 30)
• Ad of Prospectus published
in any manner shall specify
the contents of its MOA:
•
•
•
•
•
Objects
Liability of Members
Share Capital
Subscriber Details
Capital Structure
Old Act(corresponding 66)
• Where any prospectus is
published
as
a
newspaper ad, it can do
away with specification
of the contents of the
memorandum
or
signatories thereto or
the number of shares
subscribed by them
Shelf Prospectus (SP)
New Act (section 31)
• Any
class
of
companies
prescribed by SEBI may file SP
with ROC
• At the stage of 1st offer of
securities
• Period of Validity 1 year
• Date of Opening becomes
Commencing Date
• Prior to any subsequent offer
under the same SP, Co. to file
with
ROC
Information
Memorandum on new charges
created or of any change in
financial position
• Option to Refund Money
Old Act(corresponding 60A)
• Only Public Financial
Institutions,
Public
Sector or Scheduled
Banks
whose
main
object
is
financing
allowed to issue SP
Red Herring Prospectus (RHP)
New Act (section 32)
• IM now RHP
• Co. proposing to make an offer of
securities
• RHP may be issued prior to issue
of Prospectus
• RHP to be filed with ROC at least
3 days prior to opening of
subscription list and the offer
• Upon closing of the offer, the
details of information to be filed
with ROC and SEBI
Old Act(corresponding 60B)
• Information
Memorandum (IM)
Issue of Application Forms for Securities
New Act (section 33)
• Every form of Application Issued
for purchase of any Securities
shall be accompanied by an
abridged Prospectus
• Talks about abridged prospectus
• It is to be noted that section 33(3)
has not been notified.
• This sub section brings out the
penalty provisions in case of
default
Old Act(Corresponding 56)
• Matters to be stated and
reports to be set out in
Prospectus
• New Section Corresponds
to Sec 56(3)
• Form was required to be
accompanied
by
a
Memorandum containing
such salient features of a
prospectus
as
was
prescribed
Criminal Liability for Mis-statements in
Prospectus
Old Act(Corresponding 63)
New Act (section 34)
• Any statement which is Untrue or
Misleading in form or context or
Inclusion or omission likely to mislead
• Section 447 (Punishment for
Fraud) invoked
• Persons who have authorized the
issue of such prospectus shall
also be criminally liable
• Escape mechanism if the person
can prove that such statement or
omission was
• Immaterial
• Had reasonable
believe etc
grounds
to
• Earlier penal provision was
for untrue statements only
Civil Liability for Mis-statements in
Prospectus
New Act (section 35)
• Civil Liability in case of prospectus
issued for all type of securities.
• Where prospectus issued with an
intention to defraud every person
liable under this section shall be
personally liable without any
limitation for the losses incurred
by any person who has
subscribed
• It is to be noted that section
35(1)(e) which deals with
inclusion of experts in the gamut
has not been notified.
Old Act(Corresponding 62)
• The option to withdraw
on becoming aware of
any untrue statement
after issue of prospectus
and before allotment has
been dispensed with-Sec
62(3)(b)
Punishment for Fraudulently inducing
persons to Invest money
New Act (section 36)
• Persons who fraudulently induces
persons to invest money shall be
liable for action under Sec 447
(Punishment for Fraud)
• This includes any agreement with
a view to obtaining credit
facilities from bank or financial
institutions.
• A non compoundable offence
Old Act(Corresponding 68)
• Bank
and
Financial
Institutions were not
covered
• It was a compoundable
offence
Action by Affected Persons (Sec 37)
•
•
•
•
•
•
•
New Section
A suit may be filed or
Any other action may be taken
U/s 34, 35 or 36
By any person, group of persons or any association of persons
Affected by any misleading statements, inclusion, omission
of any matter in the prospectus
Punishment for Personation for
Acquisition etc of Securities
New Act (section 38)
• Punishment u/s 447 (Fraud) for
persons who apply in fictitious
names, multiple applications
• Court may order disgorgement of
gains, if any and seizure and
disposal of the securities
• The amount so received by the
court to be credited to the IAP
fund.
Old Act(Corresponding 68A)
• Disgorgement provisions
was not there earlier
• Multiple applications in
different name or in
different combination
was not included earlier
Allotment of Securities by Companies
•
•
•
•
New Act (section 39)
Where no minimum amount has
been subscribed and money
received the amount needs to be
refunded to all applicants within
30 days from date of issue of
prospectus
Co. having a share capital on
allotment of securities (earlier
only shares) file a return of
allotment with ROC
Rs 1000/- penalty for each day of
continuing default
It is to be noted that section 39(4)
relating to Return of Allotment
has not been notified.
Old Act(Corresponding 69 & 75)
• Prohibition of Allotment
unless
Minimum
Subscription Recd (Sec
69)
• Return as to Allotments
(Sec 75)
• Only pertaining to Shares
Securities to be dealt with in SE
•
•
•
•
•
New Act (section 40)
Prospectus to mention name of
SE where the securities will be
dealt with
Application money recd from the
public to be kept in separate bank
account.
Co. may pay commission to any
person in connection with
subscription of securities
It is to be noted that section 40(6)
relating to commission payment
has not been notified.
Scope widened from shares and
debentures to securities
Old Act(Corresponding 73 & 76)
• Allotment of shares and
debentures to be dealt
in on SE (Sec 73)
• Power to pay certain
commission
and
prohibition of payment
of all other commission,
discount etc (Sec 76)
Chapter – IV
Share Capital & Debentures
•
•
•
•
Sections ranging from 43 to 72
Total 30 sections
Out of which 12 sections has been made applicable from 12.09.13
The notified sections are 44, 45, 49, 50, 51, 57, 58, 59, 60, 65, 69 &
70
Nature of Shares or Debentures
New Act (section 44)
• Shares or Debentures or other
interest of any member in the
company shall be moveable
property transferable in the
manner provided in AOA
• No Change
Old Act(Corresponding 82)
• Provisions retained
Numbering of Shares
•
•
•
•
New Act (section 45)
Company having a share capital
Shares of such a company to be
distinguished by its distinctive
number
Save and except Shares held by a
person as beneficial owner in a
depository account
No Major change
Old Act(Corresponding 83)
• Numbering of Shares
(provisions retained)
Calls on Shares of Same Class to be
made on uniform basis
New Act (section 49)
• No change
• When calls are made for further
capital on shares of a particular
class, the calls shall be made
uniformly.
Old Act(Corresponding 91)
• Provisions retained
Company to accept unpaid share capital
although not called up
New Act (section 50)
• No change
• Allows a Company if authorized
by its AOA to accept amounts
from members which are unpaid
on the shares even though no call
has been made.
• The acceptance of such amount
shall not confer any voting rights
against the amount paid till the
call has been made.
Old Act(Corresponding 92)
• Provisions retained
Payment of Dividend in proportion to
amount paid up
New Act (section 51)
• No Change
• Company if authorized by AOA
may pay dividend in proportion to
the amount paid up on each
share
Old Act(Corresponding 93)
• Provisions retained
Punishment for Personation of
Shareholder
New Act (section 57)
• It provides penalty for a person
who deceitfully personates the
owner of any share or interest
Old Act(Corresponding 116)
• Provisions retained
Refusal of Registration & Appeal against
Refusal
New Act (section 58)
• 58(1)-Refusal by Private Ltd Co.-to
send intimation within 30 days
from the date on which
instrument
of
transfer/transmission is delivered
to the Co.
• Notice to be sent to transferor
and transferee giving reasons for
refusal
• 58(2)-Securities in a public
company is freely transferable.
However, the act recognizes
contract or arrangement
in
respect of transfer of securities
Old Act(Corresponding 111, 111A)
• Contract or arrangement
in respect of securities
was not there earlier
Refusal of Registration & Appeal against
Refusal….contd
New Act (section 58)
• 58(3)-Transferee may appeal to
tribunal against refusal. Either
within 30 days from the date of
refusal notice or in case no notice
recd, 60 days from the lodgment
date
• 58(4)-In case of public co.transferee may appeal within a
period of 60 days from such
refusal or 90 days from the
lodgment date
Old Act(Corresponding 111, 111A)
• Timelines changed as
compared to earlier
provisions
Rectification of Registration of Members
New Act (section 59)
• Scope widened to Securities
• If a person’s name is omitted from
the Register of Members without
sufficient cause the aggrieved can
appeal to the Tribunal for
reinstatement of his name.
• Foreign members or debenture
holders to prefer an appeal with a
competent court to be set up outside
India for restoration of their names.
Old Act(Corresponding 111,
111A)
• Earlier only applicable to
shares and debentures
• Foreign Members or
debenture
holders’
appeal provision was not
there earlier
Publication of Authorized, Subscribed &
Paid Up Capital
New Act (section 60)
• If a Co. publishes a notice,
advertisement or other official
publications or business letter which
states the amount of Authorized
Share Capital, the Company should
state in the said document the details
of the subscribed and paid up capital.
• Penalty for non-compliance laid
down
Old Act(Corresponding 148)
• Provisions Retained
Unlimited Company to Provide for Reserve Share
Capital on Conversion into Limited Company
New Act (section 65)
• Unlimited Company may be allowed
to increase its Nominal Capital
provided that the same shall not be
called up except at the time of
winding up.
Old Act(Corresponding 98)
• Provisions Retained-No
Change
Transfer of Certain Sums to CRR
Account
New Act (section 69)
• Where there is a buy back out of Free
Reserves or Share premium Account
the amount equal to nominal value of
shares bought back should be
transferred
to
CRR(Capital
Redemption Reserve)
• The said Reserve can be used for a
bonus issue.
Old Act(Corresponding 77AA)
• Provisions Retained
• Usage for Bonus Issue
earlier not specified
Prohibition for Buyback in Certain
Circumstances
New Act (section 70)
• A Co. cannot buy back its own shares
directly or indirectly through any
Subsidiary or Investment Company.
• In case a co. defaults as prescribed,
prohibition of buy back has an
exception: if default is remedied and
a period of 3 years has lapsed after
such default ceased to subsist.
• It is to be noted that section 70(2)
relating to prohibition of buy back of
its own shares or securities under
certain situations has not been
notified
Old Act(Corresponding 77B)
• Provisions Retained
Chapter – V
Acceptance of Deposits by Co.’s
• Sections ranging from 73-76
• Total 4 sections
• Out of which ‘NO’ sections has been notified as yet
Chapter – VI
Registration of Charges
• Sections ranging from 77-87
• Total 11 sections
• Out of which only 1 section has been made applicable from
12.09.2013
• The notified section is 86
Punishment for Contravention
New Act (section 86)
• If the Company fails to comply with
the provisions relating to Chapter VI,
penalty will be imprisonment which
may extend to six months or fine of
minimum Rs.25,000 and maximum of
Rs. 1 lac or with both.
• Penal provisions have been made
stringent
Old Act(Corresponding 142)
• Provisions Retained
Chapter – VII
Management & Administration
•
•
•
•
Sections ranging from 88 to 122
Total 35 sections
Out of which 13 sections has been notified from 12.09.13
The notified sections are 91, 100, 102, 103, 104, 105, 106, 107,
111, 112, 113, 114 and 116
Power to Close Register of Members or Debenture
Holders or other Security Holders
New Act (section 91)
• Manner for closure will be as
specified by SEBI
• Applicable only to Listed or those
intending to get their securities
listed
Old Act(Corresponding 154)
• Power to close Register
of
Members
or
Debenture Holders
• Not applicable to other
Security Holders
• As per plain reading was
applicable
to
all
companies
Calling of Extra-ordinary General Meeting
New Act (section 100)
• It is to be noted that section
100(6) relating to reimbursement
of
expenses
incurred
by
requisitionists from the fee or
other remuneration under Sec
197 payable to directors who
were in default in calling the
meeting, has not been notified
Old Act(Corresponding 169)
• The explanation which was
given in the erstwhile
169(7)(b) has now been
removed
• This
means
that
adjournment to a date
after the expiry of three
months no more holds
good
• Other provisions broadly
retained
Statement to be Annexed to Notice
•
1.
2.
3.
4.
New Act (section 102)
To specify the nature of concern
or interest, financial or otherwise,
if any in respect of each of the
following persons:
Every Director and the Manager,
if any
Every other KMP and
Relatives
of
the
persons
mentioned above and
Also as per 102(1)(b) to give any
other information and facts that
may
enable
members
to
understand the meaning , scope
and implications.
Old Act(Corresponding 173)
• Disclosure for KMP was
not required
• Not applicable from
11.09.2013
Statement to be Annexed to Notice….contd
New Act (section 102)
• 102(2)(b)-Disclosure of %age of
shareholding in any other co.
under consideration to be made if
the %age of shares held in that
co. is not less than 2%
• 102(4)-In case of any benefit or
profit by the concerned Promoter,
Directors, KMP etc which accrues
due
to
insufficient/nondisclosure, the said person will be
liable to compensate the
company as specified
Old Act(Corresponding 173)
• Earlier for such disclosure
%age was 20
Quorum for Meetings
•
•
•
•
•
•
New Act (section 103)
Requirement of Quorum
in
public co. changed
1000 <= 5 members
< 1000 or >= 5000-15 members
<5000- 30 Members
103(1)(b)- for private limited
company 2 members personally
present
103(2)-Where GM adjourned for
lack of quorum, the co. to give
not less than 3 days notice to
members individually or by an
advertisement in newspaper
Old Act(Corresponding 174)
• 5 members personally
present in case of public
co
• 2 members personally
present for private co.
Chairman of Meetings
New Act (section 104)
• The members personally present
shall
elect
one
amongst
themselves to be the Chairman of
meeting on a show of hands
unless the AOA otherwise
provides
• On a poll being demanded for
this, to be taken forthwith and
such other elected person to be
the Chairman for the rest of the
meeting
Old Act(Corresponding 175)
• Provisions retained
Proxies
•
•
•
•
New Act (section 105)
Central Government given the
power to prescribe class of
companies whose members shall
not be entitled to appoint
another member as proxy
One person cannot represent as
proxy for more than 50 members
Proxy will no more be able to
vote by show of hands
It is to be noted that the 3rd and
4th proviso to Sec 105(1) which
relates to first 2 points mentioned
herein above has not been
notified. Also 105(7) not notified
Old Act(Corresponding 176)
• The provision of 48 hours
has been retained as it is
Restriction on voting rights
•
•
•
•
New Act (section 106)
All the 3 sections merged into 1
Broadly the provisions have been
retained
This section basically mentions
that a person can only be
prohibited from exercising the
voting rights if the call money or
other sums payable by him has
not been paid or in cases where
the company has exercised any
right to lien
Previously,
private
limited
companies could prescribe other
restrictions, which now no more
allowed
Old Act(Corresponding 181,182 &
183)
• Section 181: Restriction on
exercise of voting right of
members who have not
paid calls etc.
• Section 182: Restrictions on
exercise of voting right in
other cases to be void
• Section 183: Right of
member to use his votes
differently
Voting by show of hands
•
•
•
•
New Act (section 107)
2 sections merged into 1
The provisions have been
retained
Section 107(1): At any general
meeting, a resolution put to vote
of the meeting shall, unless a poll
is demanded under section 109
or the vote is carried out
electronically, be decided on a
show of hands.
The underlined words above, has
been added in the new law
Old Act(Corresponding 177 & 178)
• Section 177: Voting to be
by show of hands in first
instance
• Section 178: Chairman’s
declaration of result of
voting by show of hands
to be conclusive
Circulation of member’s resolution
•
•
•
•
New Act (section 111)
This section mentions that the
eligibility criteria for members of
companies with or without share
capital will be as mentioned in
section 100
Eligibility reduced to 1/10
(company having share capital)
And it lays down the process as to
how
and
where
the
requisitionists need to deposit
the notice etc.
And the penalty provisions
Old Act(Corresponding 188)
• Section 188: Mentioned
eligibility as 1/20th of
voting power
• The
provision
of
restriction of circulating
statement of not more
than 1000 words by the
members
has
been
dispensed with in the
new law
Representation of President & Governors in
meetings
New Act (section 112)
Old Act(Corresponding 187A)
• Provides that the President of India • Complete
or the Governor of a State, if he is a
retained
member of company
• May appoint any person to act his
representative at any meeting of a
company
• That member will be deemed to be
the member of the company and
shall exercise the same rights and
powers as the President or the
Governor could have exercised
• Including the right to vote by proxy
provisions
Representation of Corporations at meetings
of companies and of creditors
•
•
•
•
•
New Act (section 113)
Provides that if a body corporate is a
member of company, it can authorise
any person to act as its representative
at any meeting of a company
Such authorisation to be given by way
of board meeting resolution
The authorised person to exercise the
same rights and powers, including the
right to vote by proxy and by postal
ballot
The underlined words have been
added in the section
Sec 113(1)(b) not notified
Old Act(Corresponding 187)
• Complete provisions
retained
Ordinary & Special Resolutions
New Act (section 114)
Old Act(Corresponding 189)
• Provides that a resolution shall be • Complete
an ordinary resolution if the votes
retained
cast in favour exceeds the votes cast
against the resolution, including the
casting vote, if any
• A resolution shall be a special
resolution when it is specified to be
considered that way in the notice
and the votes cast in favour is 3
times the votes cast against
• The word ‘electronically’ has been
introduced in section 114(1) and (2)
provisions
Resolutions passed at adjourned meeting
New Act (section 116)
Old Act(Corresponding 191)
• A resolution passed at an adjourned • Complete
meeting of:
retained
a. Company or
b. The holders of any class of shares
c. BOD
Shall for all purposes be treated as
passed on the date on which it is
passed and is not supposed to be
deemed to be passed at any earlier
date
provisions
Chapter – VIII
Declaration & Payment of Div
•
•
•
•
Sections ranging from 123 to 127
Total 5 sections
Out of which 1 section has been made applicable from 12.09.13
The notified section is 127
Punishment for failure to distribute
dividends
New Act (section 127)
• Dividend to be paid within 30 days
from declaration date
• This section prescribes penalty
provisions for the directors, who
knowingly is party to the default
• The punishment is imprisonment
which may extend to 2 years and
with fine not less than Rs.1000 for
every day of continuing default
• 5 points have been mentioned when
no offence will be deemed to have
been committed
Old Act(Corresponding 207)
• The heading read as ‘Penalty
for failure to distribute
dividends within 30 days
• Provisions has been retained
• In the heading of the
section,
the
word
‘punishment’ has replaced
by the word ‘penalty’
• It is to be noted that in the
new law, imprisonment has
been reduced from 3 to 2
years
Chapter – IX
Accounts of Companies
•
•
•
•
Sections ranging from 128 to 138
Total 11 sections
Out of which 1 section has been made applicable from 12.09.13
The notified section is 133
Central Government to prescribe accounting
standards
New Act (section 133)
Old Act(Corresponding 211(3C))
• The CG* may prescribe the • There was a mention of
standards of accounting or any
the National Advisory
addendum thereto
Committee on Accounting
• As recommended by the Institute of
Standards
Chartered Accountants of India
• The CG would consult with NFRA*
and examine the recommendations
made by ICAI
• CG means Central Government
• NFRA means National Financial
Reporting Authority
Chapter – X
Audit & Auditors
• Sections ranging from 139 to 148
• Total 10 sections
• Out of which ‘NO’ section has been made applicable from 12.09.13
Chapter – XI
Appointment & Qualificatn of Dirs
•
•
•
•
Sections ranging from 149 to 172
Total 24 sections
Out of which 3 sections has been made applicable from 12.09.13
The notified sections are 161, 162 and 163
Appointment of additional director, alternate
director & nominee director
New Act (section 161)
Old Act(Corresponding 260,262,313)
• All the 3 sections merged into 1
• Section 161(1) deals with addl dir • Section 260: Additional
(AD): BOD can appoint AD’s. Person
Directors
who fails to get appointed in a general
meeting will not be eligible to be • Section 262: Filling of
casual vacancies among
appointed as AD
directors
• Section 161(2) deals with alternate
dir: BOD may appoint any person to • Section
313:
act as alternate director for any
Appointment and term of
director during his absence for a
office
of
alternate
period not less than 3 months from
India
directors
• This person should not be holding any
alternate directorship for any other
director in the company
Appointment of additional director, alternate director &
nominee director…..contd
New Act (section 161)
Old Act(Corresponding 260,262,313)
• To get appointed as alternate director
to any independent director, the • Section 260: Additional
incumbent also have to satisfy the
Directors
conditions laid down for independent
• Section 262: Filling of
directors
casual vacancies among
• The period upto which alternate
director remains in office has been
directors
specified
• Section
313:
• Section 161(3) deals with nominee
Appointment and term of
dir: BOD may appoint any person as a
office
of
alternate
director nominated by any:
directors
a. institution
b. any agreement
c. CG or the State Government
Appointment of additional director, alternate
director & nominee director…..contd
New Act (section 161)
Old Act(Corresponding 260,262,313)
• Section 161(4) deals with filling up of • Section 260: Additional
casual vacancies: In case of public
Directors
companies whose office of directors
are vacated before expiry of his term, • Section 262: Filling of
the resulting vacancy can be filled by
casual vacancies among
the BOD
directors
• Section
313:
• It is to be noted that provisions of
Appointment and term
section 161(2) relating to alternate
of office of alternate
directors has not been notified yet
directors
Appointment of directors to be voted
individually
•
•
•
•
New Act (section 162)
Old Act(Corresponding 263)
A single resolution cannot be passed
for appointment of more than 1 • Broadly, the provisions
has been retained
director
Unless an approval for en-bloc
appointment has been resolved at a
meeting without a single vote cast
against it
In the new law, this section has been
made applicable to private limited
companies also
In 1956 Act, it was applicable to public
company and a private company
which is a subsidiary of a public
company
Option to adopt principle of proportional
representation for appointment of directors
New Act (section 163)
Old Act(Corresponding 265)
• Provides that the AOA of a company
may provide for appointment of not • Broadly, the provisions has
been retained
less than 2/3rd of the total number of
the directors in accordance with the
principle
of
proportional
representation
• In the new law, this section has been
made applicable to private limited
companies also
• In 1956 Act, it was applicable to public
company and a private company
which is a subsidiary of a public
company
Chapter – XII
Meeting of Board & its Powers
•
•
•
•
Sections ranging from 173 to 195
Total 23 sections
Out of which 9 sections has been made applicable from 12.09.13
The notified sections are 176, 180, 181, 182, 183, 185, 192, 194 and
195
Defects in appointment of directors not to
invalidate actions taken
New Act (section 176)
Old Act(Corresponding 290)
• Any act done by a person as a director • Provisions have been
shall not be invalid if it is subsequently
retained
noticed that his appointment was
invalid
• The word ‘discovered’ in
• By reason of any:
the old act has been
a. Defect or
replaced with ‘noticed’ in
b. Disqualification
the new act
c.Termination by virtue of any
provision in the Act or in AOA
• The further acts of directors will be
considered as invalid after his
appointment have been so noticed by
the company
Restrictions on powers of Board
New Act (section 180)
• Certain powers which can be exercised
by the BOD with the approval of general
meeting, are now applicable to private
limited companies also
• The word, ‘undertaking’ and the
expression, ‘substantially the whole of
the undertaking’ has been defined
• Some powers now can be exercised by
the BOD after passing special resolution
vis-à-vis ordinary resolution in the old
law
• Contribution to charitable funds as
mentioned in old section 293(1)(e) has
been removed and shifted to a new
section
Old Act(Corresponding 293)
• Quite a number of changes
has been made
Company to contribute to bonafide and
charitable funds etc.
New Act (section 181)
Old Act(Corresponding 293(1)(e))
• The BOD may contribute to • Few changes
bonafide charitable and other
funds
• Provided that, prior permission by
way of resolution at a general
meeting is obtained
• This permission only required if
the amount, the aggregate of
which, in any financial year,
exceeds 5% of its average net
profits for the 3 immediately
preceding financial years
Prohibitions & restrictions regarding
political
contributions Old Act(Corresponding 293A)
New Act (section 182)
• Manner and limits pertaining to
political contributions has been laid in
the section
• What will be considered as a political
contribution has been mentioned
• The way the said contribution needs to
be disclosed in the profit & loss account
of the company has been mentioned
too
• Punishment for contravention has been
increased
• ‘Political party’ means a political party
registered
u/s
29A
of
the
Representation of the People’s Act,
1951
• Few changes
• 293A(1)(b)(ii) & 293A(2)(b)
had
a
mention
of
contribution to any person
for any political purpose.
That is no more allowed in
the new law
• Proviso to 293A(2) laid the
limit of 5% which has been
increased to 7.5% in the
new law
Power of Board and other persons to make
contributions to National Defence Fund etc.
New Act (section 183)
Old Act(Corresponding 293B
• Company can contribute such • Provisions retained
amount as it thinks fit to the
National Defence Fund
• Or to any other Fund approved by
the CG for the purpose of national
defence
• The company to disclose in its
profit and loss account, the total
amount of contribution during the
financial year to which it relates
Loan to Directors etc.
New Act (section 185)
• 2 sections combined into 1
• 185(1): Provisos - Circumstances
and manner in which a company
shall advance any loan to any of its
directors
• Or to any other person, in whom
the director is interested
• The expression ‘to any other person
in whom director is interested’ has
been defined
• The section not only mentions loan
but also guarantee or any security in
connection with loan
Old Act(Corresponding 295, 296)
• 295: Loans to directors
etc.
• 296:
Application
of
section 295 to book debts
in certain cases
• Most important change:
The new act makes
section 185 applicable to
private limited companies
also
Restriction on non-cash transactions involving
directors
New Act (section 192)
Old Act(Corresponding NIL)
• This section regulates the • New Provision
arrangements where the:
a. Director of the company or
b. Director of its holding
company
c. Director of its subsidiary
company
d. Director of its associate
company
acquires
assets
for
consideration other than cash,
from the company
Prohibition on forward dealings in securities
of company by director or KMP
New Act (section 194)
• It seeks to prohibit whole
time director or any of its
KMP
• From buying certain kinds of
future contracts
• In relation to the securities of
the company
Old Act(Corresponding NIL)
• New Provision
Prohibition on insider trading of securities
New Act (section 195)
Old Act(Corresponding NIL)
• It seeks to prohibit directors • New Provision
or any of its KMP
• To deal in securities of a
company, or counsel, procure
or communicate
• Directly or indirectly
• About any non-public price
sensitive information to any
person
Chapter – XIII
Appointment & Remuneration
of Managerial Personnel
•
•
•
•
Sections ranging from 196 to 205
Total 10 sections
Out of which 1 section has been made applicable from 12.09.13
The notified section is 202
Compensation for loss of office of managing or
whole-time director or manager
New Act (section 202)
• Manner and circumstances in which
any managing director or whole-time
director or manager, shall be entitled
to receive payment by way of
compensation:
- for loss of office or
- as consideration for retirement from
office or
- in connection with such loss or
retirement
• 202(2) lays down the cases when the
payment by way of compensation will
not be allowed
• 202(3) specifies the quantification of
such compensation
Old Act(Corresponding 318)
• Provisions retained
Chapter – XIV
Inspection, Inquiry &
Investigation
• Sections ranging from 206 to 229
• Total 24 sections
• Out of which ‘NO’ section has been made applicable
from 12.09.13
Chapter – XV
Compromise, Arrangement &
Amalgamation
• Sections ranging from 230 to 240
• Total 11 sections
• Out of which ‘NO’ section has been made applicable
from 12.09.13
Chapter – XVI
Prevention of Oppression &
Mismanagement
• Sections ranging from 241 to 246
• Total 6 sections
• Out of which ‘NO’ section has been made applicable
from 12.09.13
Chapter – XVII
Registered Valuer
• Section 247
• Total 1 section
• This section has NOT been made applicable from
12.09.13
Chapter – XVIII
Removal of name of companies
from the Register of Companies
• Sections ranging from 248 to 252
• Total 5 sections
• Out of which ‘NO’ sections has been made applicable
from 12.09.13
Chapter – XIX
Revival & Rehabilitation of sick
companies
• Sections ranging from 253 to 269
• Total 17 sections
• Out of which ‘NO’ sections has been made applicable
from 12.09.13
Chapter – XX
Winding Up
•
•
•
•
•
•
•
Sections ranging from 270 to 365
Total 96 sections
Out of which ‘NO’ sections has been made applicable from 12.09.13
This chapter has been divided into 3 parts
Part I – Winding up by the Tribunal
Part II – Voluntary winding up
Part III – Provisions applicable to every winding up
Chapter – XXI
Companies authorised to register
under this Act
• Sections ranging from 366 to 378
• Total 13 sections
• Out of which ‘NO’ sections has been made applicable
from 12.09.13
• This chapter has been divided into 2 parts
• Part I – Companies authorised to register under this Act
• Part II – Winding up of unregistered companies
Chapter – XXII
Companies incorporated
outside
India
• Sections ranging from 379 to 393
• Total 15 sections
• Out of which 4 sections has been made applicable from 12.09.13
• The notified sections are 379, 382, 383 and 386
Application of Act to foreign companies
New Act (section 379)
Old Act(Corresponding 591)
• If not less than 50% of the paid-up • Provisions retained
capital of a foreign company
• Interestingly, the words
• Is held by citizen(s) of India, companies
used in section 591(2),
or bodies corporate registered in India
‘having an established
• Then such a foreign company will have
place of business in India’
to comply with Chapter XXII
has been discontinued in
• And comply with other provisions as if
the new law
it was a company incorporated in India
Display with name etc. of foreign company
New Act (section 382)
• Every foreign company:
• 383(a): conspicuously exhibit, name,
country in which incorporated in
english and also in local use
language, outside of its every office
• 383(b): same in all business letters,
bill heads etc.
• 383(c)(i): If its liability is limited,
cause notice of the same to be
stated in every prospectus issued
and official publications in legible
english characters
• 383(c)(ii): And also of its limited
liability outside its every office
Old Act(Corresponding 595)
• Broad provisions retained
• 595(1)(a) mentioned that
every foreign company shall
in every prospectus inviting
subscriptions in India for its
shares or debentures, state
the country in which the
company
is
incorporated…this doesnot
find place in the new law
Service on foreign company
New Act (section 383)
• Any process, notice or other
document
• Required to be served on a foreign
company
• Shall be deemed to be sufficiently
served
• If addressed to any person whose
name and address have been
delivered to the ROC u/s 380
• And left at, or sent by post
• To that address
• Or sent by electronic mode
Old Act(Corresponding 596)
• The matter in provisos,
‘a’ and ‘b’ to section 596
has not been retained
• The word ‘by electronic
mode’ has been added
to section 383 in the new
law
Interpretation
New Act (section 386)
Old Act(Corresponding 602)
• For the purposes of Chapter XXII:
• The interpretation of the
- ‘certified’ means certified in the
words ‘Prospectus’ and
prescribed manner to be a true copy or
‘Secretary’ has been
a correct translation
dropped in the new law
- ‘director’ includes any person in
accordance to whose directions or
instructions the BOD is accustomed to
act
- ‘place of business’ includes a share
transfer or registration office
• It is to be noted that sub-clause (a), i.e.
the meaning of ‘certified’ has yet not
been notified
Chapter – XXIII
Government Companies
•
•
•
•
Sections ranging from 394 to 395
Total 2 sections
Out of which 1 section has been made applicable from 12.09.13
The notified section is 394
Annual reports on Government
Companies
New Act (section 394)
Old Act(Corresponding 619A)
• 394(1): Where the CG is a member of a • Provisions retained
government company
• The language in the new
• The CG shall cause to prepare the
law has been made
annual report on the working and
simpler
affairs of the company
• Along with the auditor’s report and
comments of the Comptroller and
Auditor General of India
• And the same be laid before both the
Houses of Parliament
• If State Government is a member, same
provisions, just that the reports etc. be
placed before both the Houses of the
State Legislature
Chapter – XXIV
Registration offices & fees
• Sections ranging from 396 to 404
• Total 9 sections
• Out of which ‘NO’ section has been made applicable from 12.09.13
Chapter – XXV
Companies to furnish information
or statistics
• Section 405
• Total 1 section
• This section has been made applicable from 12.09.13
Power of CG to direct co. to furnish information or
statistics
New Act (section 405)
Old Act(Corresponding 615)
• 405(1): CG may require companies to • Broad
provisions
furnish such information within such
retained
time as specified in its order
• 405(2): Every such order shall be • The provisions in section
published in the Official Gazette and
615(5) relating to the
may be addressed to companies in such
power to order inquiry
manner as the CG may think fit
where
the
said
• 405(3): The CG for the purpose of
information
is
not
satisfying itself, may seek for
production of such records etc.
provided has been done
• 405(4): Penal provisions
away with
• 405(5): Applicable to foreign companies
in relation to business carried on in
India
Chapter – XXVI
Nidhi
• Section 406
• Total 1 section
• This section has NOT been made applicable from 12.09.13
Chapter – XXVII
National Company Law Tribunal
and Appellate Tribunal
•
•
•
•
Sections ranging from 407 to 434
Total 28 sections
Out of which 8 sections has been made applicable from 12.09.13
The notified sections are 407, 408, 409, 410, 411, 412, 413 and 414
Definitions
New Act (section 407)
• It seeks to provide the
definitions of:
a. Chairperson
b. Judicial Member
c. Member
d. President
e. Technical Member
Old Act(Corresponding 10FD &
10FR)
• In the new law, the
definitions
of
Chairperson, Member
and President has been
introduced
Constitution of NCLT
New Act (section 408)
• The CG shall, by notification,
constitute, w.e.f. such date, as
may be specified therein a
Tribunal known as NCLT
• NCLT to consist of a President
and such number of Judicial and
Technical members, as the CG
may deem necessary
Old Act(Corresponding 10FB &
10FC)
• In the new law, the
upper limit of 62 has
been done away with
Qualification of President & Members of
Tribunal
Old Act(Corresponding 10FD)
New Act (section 409)
• The eligibility criterias has been • In the new law, the
eligibility
criteria
for
laid out for:
appointment of President,
a. President
Judicial member, Technical
b. Judicial Member
member have changed
c. Technical Member
Constitution of Appellate Tribunal
New Act (section 410)
Old Act(Corresponding 10FR)
• The CG shall, by notification, • In the new law, the limit of
constitute, w.e.f. such date as members which was 2 has
may be specified therein, an been increased to 11
Appellate Tribunal to be known
as the National Company Law
Appellate Tribunal
• Consisting of:
a. a chairperson and
b. such number of Judicial and
Technical
members,
not
exceeding 11
Qualification of Chairperson and
members of Appellate Tribunal
New Act (section 411)
• Qualifications of:
a. Chairperson
b. Judicial Member
c. Technical Member
has been laid out.
Old Act(Corresponding 10FR)
• In the new law, the
qualifications for the
Chairperson,
Judicial
member
and
the
Technical member for
NCALT
has
been
modified
Selection of members of Tribunal & Appellate
Tribunal
New Act (section 412)
• 412(1): President of the Tribunal and
the Chairperson & Judicial Members
of the Appellate Tribunal shall be
appointed after consultation with the
Chief Justice of India
• 412(2): The Members of the Tribunal
and the Technical Members of the
Appellate Tribunal to be appointed on
the recommendation of the Selection
Committee
• 412(3): The secretary of MCA shall be
the convener of the Selection
Committee
Old Act(Corresponding 10FX)
• In the new law, the
selection process has been
made stringent.
• Also the composition of the
selection committee has
been changed
• In the old law, the time
period within which the
casual vacancy needs to be
filled in was specified
• Which is not no in the new
law
Term of office of President, Chairperson and other
Members
New Act (section 413)
• 413(1): President and every other Member
of the Tribunal shall hold office for 5 years +
5 years (on reappointment)
• 413(2): Age limit for the Members of the
Tribunal:
President: 67 years
Any other Member: 65 years
Lower benchmark age for selection: 50
• 413(3): Chairperson or a Member of NCALT
shall hold office for 5 years + 5 years (on
reappointment)
• 413(4): Age limit for the Members of the
Appellate Tribunal:
Chairperson: 70 years
Any other Member: 67 years
Lower benchmark age for selection: 50
Old Act(Corresponding 10FT &
10FE)
• Quite a number of changes
Salary, allowances & other terms
and conditions of service
of
Old Act(Corresponding 10FG &
New Act (section 414)
10FW)
Members
• No change
• The:
salary
allowances and
other terms and conditions of
• Service of the Members of the Tribunal
and the Appellate Tribunal shall be
• Such sum as may be prescribed
• And that such sum or the terms etc.
shall be varied to their disadvantage
after their appointment
Chapter – XXVIII
Special Courts
•
•
•
•
Sections ranging from 435 to 446
Total 12 sections
Out of which 5 sections has been made applicable from 12.09.13
The notified sections are 439, 443, 444, 445 and 446
Offences to be non-cognizable
New Act (section 439)
Old Act(Corresponding 621)
• 439(1): Every offence except the ones
mentioned in 212(6) shall be deemed to
be non-cognizable offence
• Section 212 deals with investigation into
affairs of company by Serious Fraud
Investigation Office. 212 is a new
provision
• 439(2): Court shall take cognizance of
any offence under this Act only when the
complaint in writing has been made by
the ROC, a shareholder or by a person
authorised by the CG
• 439(3): Offence relating to issue and
transfer of securities and of non-payment
of dividend, on the complaint by SEBI
• Quite a number of changes
Power of CG to appoint company
prosecutors
Old Act(Corresponding 624A)
New Act (section 443)
•
•
•
•
•
•
•
•
The CG may appoint
• The change is: where the CG
appoints any Company
One or more persons
Prosecutors, they shall have
As Company Prosecutors
the same powers and
For the conduct of prosecutions arising
privileges conferred on
out of this Act
Public Prosecutors by the
And the persons so appointed
Criminal Procedure Code
Shall have the powers and privileges
under section 24 of the
conferred by the Criminal Procedure
Code instead of section 492
Code
of the code, as provided in
On Public Prosecutors
the old law
Appointed under section 24 of the
Code
Appeal against acquittal
•
•
•
•
•
Old Act(Corresponding 624B)
New Act (section 444)
The CG may
• No change
In any case arising under this Act
Direct any Company Prosecutor or
authorise any other person
To present an appeal from an Order of
Acquittal
Passed by any Court other than a High
Court
Compensation for accusation
without reasonable cause
New Act (section 445)
• The provisions of section 250 of the
Code of Criminal Procedure
• Shall apply mutatis-mutandis
• To compensation for accusation
without reasonable cause
• Before the Special Court or the
Court of Session
Old Act(Corresponding 625)
• Section 625 is quite long
• The old law specifically
makes section 250 of
the Criminal Procedure
Code, non applicable
Application of Fines
New Act (section 446)
Old Act(Corresponding 626)
• The Court imposing any fine under this
• Provisions retained
Act
• May direct that the whole or any part • Just that there was a
thereof
power which was also
• Shall be applied towards payment of
given to the Tribunal
cost of proceedings or
along with the Court, in
• Towards payment of reward to person
the old law, which has
• On whose information the proceedings
been removed
were instituted
• The new law
mentions, Court
only
Chapter – XXIX
Miscellaneous
• Sections ranging from 447 to 470
• Total 24 sections
• Out of which 12 sections has been made applicable from
12.09.13
• The notified sections are 456, 457, 458, 459, 460, 461, 462,
463, 467, 468, 469 and 470
Protection of Action Taken on Good Faith
New Act (section 456)
Old Act(Corresponding 635A)
• No suit, prosecution or other legal • Provisions retained
proceedings
• shall lie against the Government or any
other person authorised by the
government
• For acts done or intended to be done in
good faith
Non Disclosure of Information in Certain Cases
New Act (section 457)
Old Act(Corresponding 635AA)
• The registrar, any officer of the • Provisions retained
government or any other person
• Shall not be compelled to disclose to
any court etc
• The source from where he got any
information which led the CG to order
an investigation u/s 210 or
• Has been material in connection with
such investigation
Delegation by CG of its powers & functions
New Act (section 458)
Old Act(Corresponding 637)
• 458(1)-CG may delegate any of its • Quite a number of changes
powers and functions under this act • CG can delegate its power
other than the power to make rules
and functions under all
• By way of notification
provisions of the Act in the
• The delegation could be made to such
new law
authority or officer as prescribed
the old law no
• The powers to enforce the provisions in • In
Sec 194 and 195 relating to forward
delegation was allowed in
dealing and insider trading to be
some specified sections
delegated to SEBI only
• 458(2)-Copy of every notification as
soon as it is issued be laid before each
house of parliament
Powers of CG or Tribunal to accord approval etc
New Act (section 459)
Old Act(Corresponding 637A)
• While according approval, sanction, • Provisions Retained
consent, confirmation or recognition to
any matter the CG or the Tribunal give
any direction or grant any essentials in
relation to any matter
• Every application made to the CG or the
Tribunal shall be accompanied by such
fees as may be prescribed
Condonation in delay in certain cases
New Act (section 460)
Old Act(Corresponding 637B)
• 460(a): If any application required to be • Provisions Retained
made to the CG under this Act
• Has not been made within the specified
time
• CG may condone the delay
• By citing the reasons to be recorded in
writing
• 460(b): Where any document required
to be filed with the ROC under this Act
• Has not been filed within the specified
time
• CG may condone the delay
• By citing the reasons to be recorded in
writing
Annual Report by Central Government
New Act (section 461)
Old Act(Corresponding 638)
• Provisions Retained
• The CG
• Shall cause a general annual report
• On the working and administration of
this Act
• To be prepared and laid before each
House of Parliament
• Within 1 year
• Of the close of the year to which the
report relates
Power to exempt companies from
provisions of this Act
New Act (section 462)
Old Act(Corresponding 620)
• In the old law, the power
• The CG may in the public interest
to exempt could have
• By way of notification
been
exercised
in
• Direct that any of the provisions of this
Act shall not apply to such class or
relation to Government
classes of companies or
Companies only
• Shall apply with such exceptions,
modifications etc. as may be specified
in the notification
• A copy of the notification to be aid in
both the Houses of the Parliament
Power of Court to grant relief in certain
cases
New Act (section 463)
Old Act(Corresponding 633)
• The Court has the power to grant • Provisions retained
relief to any officer of a Company
in respect of the negligence,
default,
breach
of
duty,
misfeasance or breach of trust
• Provided that he has acted
honestly and reasonably and
having regard to all the
circumstances of the case
Power of CG to amend schedules
New Act (section 467)
Old Act(Corresponding 641)
• CG may by notification alter any of the • Provisions retained
regulations, rules, tables, forms and
other provisions contained in any of the
schedules to this Act
• Any such alteration shall come into
force on the date of notification, unless
the notification otherwise directs
• Notification to be laid immediately
before each House of Parliament
• The manner of laying the same has
been laid in the Act
Power of CG to make rules relating to
winding
up
Old Act(Corresponding 643)
New Act (section 468)
• CG may make rules relating to • Provisions retained
matters of winding up of
companies
• The rules made by the Supreme
Court shall continue to be in
force till the CG make rules
Power of CG to make rules
New Act (section 469)
Old Act(Corresponding 642)
• The CG may make rules for carrying out • Few changes
the provisions of this Act
• By way of notification
• Any rule may provide that a
contravention to the rules shall be
punishable with fine which may extend
to Rs.5000 and Rs.500 per day for
continuing default
• Every rule to be laid before both the
Houses of Parliament
• Manner of laying in both the Houses
has been mentioned in the Act
Power of remove difficulties
New Act (section 470)
Old Act(Corresponding NIL)
• If any difficulty arises in giving effect to • NEW provision
the provisions of this Act
• The CG may, by order in the Official
Gazette
• Make such provisions for removing the
difficulty
• But no such order can be made after
the expiry of 5 years from the date of
commencement of section 1 of this Act
• Every such Order will have to be laid
before both the Houses of Parliament
THERE ARE TOTAL 29
RULES
Out of which:
1. 16 Rules have been placed for public comments on 09.09.2013.
Last date for receiving comments is 08.10.2013
2. 9 Rules have been placed for public comments on 20.09.2013.
Last date for receiving comments is 19.10.2013
3. Some Rules have been placed on 22.10.2013
First set of draft rules
• The draft Rules for 16 chapters are for:
1. Chapter I - Preliminary
2. Chapter II - Incorporation of Company and Matters Incidental
Thereto
3. Chapter VI - Registration of Charges
4. Chapter VIII - Declaration and Payment of Dividend
First set of draft rules….contd
5. Chapter IX - Accounts of Companies
6. Chapter X - Audit and Auditors
7. Chapter XI - Appointment and Qualification of Directors
8. Chapter XII - Meeting of Board and its Powers
9. Chapter XVI - Prevention of Oppression & Mismanagement
10. Chapter XVIII - Removal of Name of Companies from the Register of
Companies
11. Chapter XIX - Revival and Rehabilitation of Sick Companies
First set of draft rules….contd
12. Chapter XXII - Companies Incorporated Outside India
13. Chapter XXIV - Registration Offices and Fees
14. Chapter XXVI - Nidhi
15. Chapter XXVII - National Company Law Tribunal and Appellate
Tribunal
16. Chapter XXIX - Miscellaneous
Second set of draft rules
• The draft Rules for 9 chapters are for:
1. Chapter III - Prospectus and Allotment of Securities
2. Chapter IV - Shares Capital and Debentures
3. Chapter VII - Management and Administration
4. Chapter XIII - Appointment and Remuneration of
Managerial Personnel
Second set of draft rules…contd
5. Chapter XV - Compromises, Merger and Amalgamations
6. Chapter XVII - Registered Valuers
7. Chapter XXI - Companies authorized to register under this
Act
8. Chapter XXVII - National Company Law Tribunal and
Appellate Tribunal
9. Chapter XXVIII - Special Courts (Mediation and Conciliation
Panel)
Third set of draft rules
• The draft Rules are for:
1. Chapter V - Deposits
2. Chapter XIV – Inspection, Inquiry and Investigation
3. Chapter IX - Provisions with respect to NFRA
NEW FORMS
• Many new forms have been included in the Rules
• Now the information required in the forms is more
detailed, in order to ensure clarity and further
transparency
• A note has been inserted at the bottom of the forms
for making the officers of the companies aware of
the punishment for false statement and certification
Disclaimer
• The contents of this presentation is based on my
understanding and interpretation of the relevant law. The
contents are summarized. Please study the provisions in detail
before taking any decision on the basis of the information
provided in this presentation.
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