Companies Act 1956 vs Companies Act 2013

8/13/2019 Companies Act 1956 vs Companies Act 2013

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COMPANIES ACT 1956

VS

COMPANIES ACT 2013


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Contents

THE COMPANIES ACT, 2013............................................................................................................................................... 3

An overview of Companies Act 2013 .............................................................................................................................. 3

Comparative st!" on some of t#e provisions of Companies Act 1$%& an! Companies Act 2013 ......................... 4

I. Significant changes in Definitins an! ne" inc#$sins .................................................................... 4

II. Inc%&%atin ............................................................................................................................................. 8

III. Di%ect%s ................................................................................................................................................... 10

IV. Sha%e ca&ita#............................................................................................................................................. 12

V. Acce&tance f !e&sits '( C)&anies ................................................................................................ 14

VI. In*est)ents .............................................................................................................................................. 14

VII. +,s f Acc$nts an! -inancia# ea% ................................................................................................ 15

VIII. /e&%ts ...................................................................................................................................................... 16

I. P%s&ect$s /aising f f$n!s A##t)ent ......................................................................................... 16

. ti#ising Sec$%ities P%e)i$) Acc$nt ................................................................................................ 17

I. Ann$a# %et$%ns an! %e#ate! iss$es ....................................................................................................... 17

II. Ntices Meetings 4$%$)s Vting /es#$tins Min$tes......................................................... 19

III. Inte%na# A$!it .......................................................................................................................................... 21

IV. Cst A$!it ................................................................................................................................................ 21

V. Stat$t%( c)iance .............................................................................................................................. 21

VI. T%ansfe% t %ese%*es ................................................................................................................................ 21

VII. Di*i!en!s ................................................................................................................................................. 22

VIII. A$!it%s .................................................................................................................................................... 22

I. N)inatin /e)$ne%atin c))ittee ........................................................................................... 25

. P%hi'itins /est%ictins ................................................................................................................... 25

I. C)&an( Sec%eta%( ................................................................................................................................. 25

II. In*estigatins .......................................................................................................................................... 26

III. C%&%ate /est%$ct$%ing........................................................................................................................ 26

IV. C#ass actin S$its .................................................................................................................................... 27

V. Va#$atins ................................................................................................................................................ 27

VI. in!ing $& .............................................................................................................................................. 27

VII. Othe% #ega# &%*isins............................................................................................................................ 28

VIII. Natina# -inancia# %e&%ting A$th%it( .............................................................................................. 28

I. Sche!$#es C)&anies Act 2013 ......................................................................................................... 30

'eferences( ........................................................................................................................................................................ 31


3/31

)Passe! in *o

-e a++ .now t#at t#e %/ "ear o+! C

Act, 2013 T#is write p #as *een

t#e new Companies Act, 2013 an! t

A

2013

4Enacte! as Companies

45i++ passe! in 'a"a Sa*

20124Companies 5i++ passe! i

20114Intro!ce! in 6o. Sa*#

2010

45i++ referre! to stan!in2010

200$4200, 5i++ mo!ifie! an! r

200,

4Companies *i++ 200, inrep+ace %2 "ear o+! Com

45t it +apse! !e to !iss

29 C7APTE/S

T7E COMPANIES ACT 2013

t# #oses of Par+iament on t#Ast 20137

mpanies act, 1$%& #as now ot rep+ace! wit# t#e n

a!e wit# an effort to compare some of t#e maor c+

#e Companies Act 1$%&

Histor" of Companies 5i++ 2012

overview of Companies Act 2013

ct 2013, wit# Presi!ent assent on 2$t# Ast 2013

a on t# Ast 2013

6o. Sa*#a on 1t# 8ecem*er 2012

on 19 t# 8ecem*er 2011

committee for review , report ta*+e! in 6o. Sa*#

intro!ce! on 3r! Ast 200$

tro!ce! in 6o. sa*#a on 23r! Octo*er 200 foranies Act , 1$%&

o+tion of par+iament

COMPANIES ACT 2013

VII SC7ED8

:0 C8ASES

ew Companies

se isses in

a on 31st Ast

t#e first time, to

S


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C)&a%ati*e st$!( n s)e f the &%*isins f C)&anies Act 1956 an! C)&anies Act 2013

Caption Companies Act 1$%& Companies Act ,2013 NewC+ases

I. Significant changes in Definitins an! ne" inc#$sinsA7 Associate compan" In re+ation to anot#er compan", means a

compan" in w#ic# t#at ot#er compan"#as a significant inf#$ence, *t w#ic# isnot a s*si!iar" compan" of t#e

compan" #avin sc# inf+ence an!inc+!es a oint ventre compan"

E:p+anation;or

*7 t#at ot#er=i7 w#ere t#e first=

mentione! compan" is ane:istin compan" inrespect of w#ic# t#e#o+!ers of preferences#ares isse! *efore t#ecommencement of t#isAct #ave t#e same votinri#ts in a++ respects ast#e #o+!ers of e?it"s#ares, e:ercises orcontro+s more t#an #a+f oft#e tota+ votin power ofsc# compan">

ii7w#ere t#e first=mentione! compan" isan" ot#er compan",#o+!s more t#an #a+f innomina+ va+e of itse?it" s#are capita+> or@

c7 T#e first= mentione!compan" is a s*si!iar"of an" compan" w#ic# ist#at ot#ers s*si!iar"

Bcontro+, s#a++ inc+!e t#e ri#t toappoint maorit" of t#e !irectors or tocontro+ t#e manaement or po+ic"!ecisions e:ercisa*+e *" a person orpersons actin in!ivi!a++" or in

concert, !irect+" or in!irect+", inc+!in*" virte of t#eir s#are#o+!in ormanaement ri#ts or s#are#o+!ersareements or votin areements or inan" ot#er manner

2 )2/7

C7 8irector inc+!es an" personoccp"in t#e position of!irector, *" w#atever nameca++e!

Means a !irector appointe! to t#e 5oar!of a compan"

2)397


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87

provi!e! t#at t#e financia+statementwit# respect to One PersonCompan",sma++ compan" an! !ormantcompan" ma" not inc+!e t#e cas# f+owstatement

Isse( Cas#


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an!

sc# ot#er officer as ma" *eprescri*e!

H Net -ort# Means t#e sm tota+ of t#epai!=p capita+ an!freereserves after !e!ctint#e provisions or e:penses asma" *e prescri*e!

E:p+anation =

c7 t#e one is re+ate! tot#e ot#er in t#e mannerin!icate! in Sc#e!+e IA

wit# reference to an" person, means

an"one w#o is a re+ate! to anot#er, if; t#e" are mem*ers of a Hin!

Ln!ivi!e! or one person is re+ate! to t#e

ot#er in sc# manner as ma" *eprescri*e!

2)//7

6 'e+ate! part"transactions

Section 2$/ covere! on+" sa+ean! prc#ase of oo!s,ren!erin of services,n!erwritin t#e s*s=cription of an" s#ares or!e*entres-#ere pai! p s#are capita+of t#e compan" e:cee!s 's 1crore, prior approva+ of t#eCentra+ Govt re?ire! Notapp+ica*+e to contracts*etween two p*+iccompanies

A+so covers

+easin of propert" appointment of aent for t#e

sa+e or prc#ase, re+ate! part"Js appointment to

an" office or p+ace of profit int#e compan", its s*si!iar" orassociate compan"

Prior CG approva+ !one awa" it an!on+" Mem*ers approva+ re?ire! *"wa" of a specia+ reso+tion

App+ica*+e to contracts *etween two

1


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p*+ic companies as we++

M Sma++ Compan" No provision e:ists means a compan", ot#er t#an a p*+iccompan",=

&ai! $& sha%e ca&ita# of w#ic#!oes nt e=cee!fift( #a,hrpees or sc# #i#er amontas ma" *e prescri*e! w#ic#

sha## nt *e )%e t#an fi*ec%%esrpees> or

t$%n*e%of w#ic# as per its +ast&%fit an! #ss acc$nt !oes

nte=cee!T" c%%e rpees orsc# #i#eramont as ma" *eprescri*e! w#ic#s#a++ nt *emore t#an t"ent( c%%erpees

Provi!e! t#at not#in in t#is c+ases#a++ app+" to (

a a #o+!in compan" or as*si!iar" compan">

* a compan" reistere! n!ersection >

c a compan" or *o!" corporateoverne! *" an" specia+ act

s*ecte! to a +esser strinent re+ator"framewor.

2)%7

N Sic.In!stria+Companies

Treatment mete! ot n!erSICA,1$% coverae +imite!on+" to In!stria+ companiesSICA !etermines sic.ness*ase! on neative net wort#criteria

Treatment mete! ot n!er c#apter Iof t#e 5i++(

Covers reviva+ an! re#a*i+itation of a++companies irrespective of t#e in!str"t#e" are inSic.ness of compan" to *e !etermine!on t#e *asis of w#et#er co is a*+e to pa"its !e*ts or not

O 8ormant Compan" Not !efine! C+ase 9%% !efines inactive compan" asa compan" w#ic#(

Has not *een carr"in on an"*siness or operation or #as notma!e an" sinificant accontintransaction !rin t#e +ast twofinancia+ "ears, or

Has not fi+e! financia+ statementsan! anna+ retrns !rin t#e +asttwo financia+ "ears

9%%

P Ni!#i Companies Section &20A=Necessar" forCentra+ Govt to notif" acompan" as a Ni!#i for it to?a+if" as sc#

No sc# notification re?ire!Ni!#i !efine! in t#is c+ase

90&

P*+icCompan" Consi!ers aprivatecompan"w#ic# isas*si!iar" ofap*+iccompan"as ap*+iccompan"


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S One personCompan"

No provision e:ists Concept of One Person Compan" #as*een intro!ce! an! t#e OPC can *eforme! as private +imite! compan"Privi+ees Provi!e!to OPCs

T#e financia+ statement ma" notinc+!e t#e cas# f+ow statementProviso to C+ase 2)907@

T#e anna+ retrn to *e sine!*" t#e compan" secretar", orw#ere t#ere is no compan"secretar", *" t#e !irector of t#ecompan"

No re?irement of #o+!in anAGM C+ase $&)17@

Inapp+ica*i+it" of t#e provisionsof Section $ an! Sections 100 to111 )*ot# inc+sive7 C+ase122)17@

Minimm nm*er of !irectors(1C+ase 19$)17@

5oar! Meetins= Minimm 1ineac# #a+f of a ca+en!ar "earan!t#e Gap*etween t#etwomeetins s#a++ not *e +esst#an$0 !a"s Notapp+ica*+ew#eret#ere is on+" one8irectorC+ase 1/3 )%7

orm for 5oar! Meetinsnotapp+ica*+e w#ere t#ere ison+" 1!irector in OPC )C+ase1/97

3

II. Inc%&%atinIncorporation of

compan"

Certificate of Incorporation to

*econc+sive evi!ence

Action can *e ta.en even after

incorporation, if incorporation is on t#e*asis of fa+se or incorrect incorporationT#s t#e certificate is not treate! asconc+sive evi!ence

/

Companies t#at can*e forme!

P*+ic 6imite! , private 6imite!companies, Section 2%companies, Governmentcompanies

6ist inc+!esOne &e%sn c)&an( as a&%i*ate c)&an(

3

'eservation of newname=proce!ra+aspects

Proce!ra+ aspects not covere! On pa"ment of prescri*e! fees to 'OCan! *" an app+ication t#e new namec#ane of name can *e reserve!

9)97, 9)%7

Memoran!m ofAssociation

MoA s#o+! #ave C+ases sc#as Name, state, main o*ects,

ot#er o*ects, s*scriptionc+ase

MoA not to #ave ot#er o*ects, ot#ert#ins remains t#e same

9)17


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Ta*+e E= Ln+imite! compan" #avin s#are capita+


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votin *" s#ow of #an!s, votin t#ro# e+ectronic means, !eman! for po++, posta+ *a++ot, circ+ation of mem*erJs reso+tion

10/1010$110111

Contract *" OPC No OPC concept e:iste! -#ere OPC +imite! *" s#ares or *"arantee enters into a contract wit# itsso+e mem*er, w#o is a+so a 8irector> t#e

compan" s#o+! prefera*+" enter into awritten contract

If not t#e a*ove, t#e OPC wi++ #ave torecor! t#e contract in t#e *oar! mintes*oo. an! fi+e a retrn wit# t#e 'OCwit#in 1% !a"s of t#e !ate of approva+*" t#e 5O8, wit# prescri*e! fees

1$3

Conversion of 66PsintoCompanies

Not permitte! n!er t#e presentreime

Provi!es for conversion of 66Ps intocompanies

3/1

Companiesincorporate! otsi!e

In!ia

Service of !ocments on foreincompan" now can *e serve!

t#ro# an" e+ectronic mo!e T#e forein offices are a+so

re?ire! to comp+" wit# t#eprovisions ofwin!in p

33

3$1

E=overnance No sc# provision Maintenance an! a++owin inspection of!ocments *" companies in e+ectronicform

120

Qii+ Mec#anism No provision e:ists 1//)$7=Ever" +iste! compan" or sc#c+ass orc+asses of companies, as ma"*eprescri*e!,s#a++ esta*+is# avii+mec#anism for !irectors an!emp+o"eesto report enine concernsinsc#manner as ma" *e prescri*e!

1//)107= T#e vii+ mec#anism n!ers*=section )$7 s#a++ provi!e fora!e?atesafear!saainstvictimisation ofpersons w#o se sc#mec#anism an!ma.e provision for !irectaccess to t#ec#airperson of t#eA!it Committee inappropriate ore:ceptiona+ cases

1//)107

III. Di%ect%s-omen 8irector No sc# provision e:iste! In prescri*e! c+ass or c+asses of

companies t#ere s#o+! *e 1women!irector

19$)17

'esi!ent 8irectors No sc# provision e:iste! Ever" compan" s#a++ #ave at +east one

8irector w#o #as sta"e! in In!ia for atota+ perio! of not +ess t#an 12 !a"s int#e previos ca+en!ar "ear

Pane+ of I8Js to *e maintaine! *" a*o!"institte notifie! *" t#eCGfaci+itatin appointment ofIn!epen!ent 8irectors

6iste! companies ma" #ave one !irector

19$)17

1%0

1%1


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*" sma++ s#are #o+!er

In!epen!ent !irectors No sc# provision e:iste! Tenre of sc# !irectors= note:cee!in two consective term of %"ears

Can *e reappointe! after a ap of 3"ears, #owever #e s#o+! not *eassociate! wit# t#e compan" !irect+"or in!irect+" in t#is ap

Not +ia*+e to retire *" rotation

E:c+!e! for t#e prpose ofcomptin K13r! of t#e retirin!irectorsJ

19$

Ma:imm nm*er of8irectors

Section 2%$ provi!e! forma: 12 an! *e"on! 12re?ire! prior Centra+ GovtApprova+

provi!es for ma: 1% an! *e"on! 1%*" passin a specia+ reso+tion

19$)17

'i#t of t#e personot#er t#an retirin!irectors to stan! for!irectors#ip

Section 2%/ provi!es t#atsc# a person #as to!eposit 's %00 w#ic#wo+! *e refn!e! in case#e is appointe! as 8irector

C+ase 1&0 #as increase! t#is amontto 's 100,000 w#ic# is refn!a*+ew#en #e is appointe! or even w#en#e ets more t#an 2%R of t#e tota+va+i! votes cast eit#er on s#ow of

#an!s or on po++ on sc# reso+tion

1&0

A+ternate 8irector Section 313=A*sence for 3mont#s from t#e Kstate w#eret#e 5oar! Meetins areor!inari+" #e+!J, is t#ecriteria

C+ase 1&1=#as *een mo!ifie! toinc+!e KIn!iaJ, instea! of t#e Kstatew#ere t#e *oar! meetins areor!inari+" #e+!J, to *e t#e criteria

1&1

8ties of 8irector Not specifica++" provi!e! Provi!es for t#e fo++owin !ties(

To act in accor!ance wit#coJsAoA>

Act in oo! fait#> E:ercise #is !ties wit# !e

care an! !i+ience

A !irector s#a++ not invo+ve inan" conf+ictin interest wit# t#ecompan"

Ac#ieve or attempt to ac#ievean" n!e a!vantae>

Assin #is office.

1&&

'esination of !irectors No sc# provisionspecifica++" e:iste!

Provision for !irector to resin *"ten!erin #is resination +etter( w#ic#t#e 5oar! #as to note an! p+ace *eforet#e mem*ers in t#e ne:t enera+meetin

8ate of resination wi++ *e !atementione! in t#e +etter or t#e !ate of

receipt of t#e resination *" t#ecompan", w#ic#ever is +ater

8irector w#o #as resine! s#a++ *e +ia*+eeven after #is resination for offencesw#ic# occrre! !rin #is tenre

1&

6oan to 8irectors sec 2$%=not app+ica*+e toprivate companies an! priorapprova+ of t#e CG re?ire!

CG approva+ !one awa" wit# an!app+ica*+e to private companies as we++

1%

'emneration of Governe! *" Sc#e!+e III To *e overne! *" sc#e!+e Q I8s not


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manaeria+ personne+ incase of no profits orina!e?ate profits

to et stoc. option *t ma" et pa"mentof fees an! profit +in.e! commissions*ect to +imits CG ma" prescri*eamont of fees n!er t#e r+es

Appointment of -#o+eTime 8irector

Section 2&$=ever" p*+iccompan" #avin capita+ ofmore t#an 's % cr=to #ave aManain !irector -T8Manaer

Ever" compan" *e+onin to sc#c+assor !escription of companies as ma"*e prescri*e! s#a++ #ave M8 or CEO orManaer an! in t#eir a*sence, a -T8an! a Compan" Secretar"In!ivi!a+ not to *e t#e C#airman of t#eCo as we++ as t#e M8 or CEO of t#e Coat t#e same time )AoA can provi!e fort#is7>

Ever" w#o+e time MP to *e appointe!*" a reso+tion at 5O8 meetin>A -TMP not to #o+! office in moret#an one compan" at t#e same timeAn" vacanc" in t#e office of an" MP to*e fi++e! p *" t#e 5O8 wit#in & mProvisions re+atin to separation ofoffice of C#airman an! Manain8irector )M87 mo!ifie! to a++ow, incertain cases, a c+ass of companies#avin m+tip+e *siness an! separate!ivisiona+ M8s to appoint same personas Kc#airman as we++ as M8J

203

Nm*er of !irectors#ip 20, ot of w#ic# not more t#an 10 can *ea p*+ic companies an! inc+!esa+ternate !irectors#ip a+so

1&%

IV. Sha%e ca&ita#Increase in s*scri*e!capita+

Apart from e:istin s#are#o+!ers, if t#ecompan" #avin s#are capita+atan"time, proposes to increase itss*scri*e!capita+ *" t#e isse offrt#ers#ares, sc# s#ares ma" a+so *eoffere! toemp+o"ees *" wa" ofESOPs*ect to approva+ ofs#are#o+!ers *" wa" of specia+reso+tion )C+ase&27

&2

Isse of *ons s#ares No sc# provisions e:iste!However r+es frame! forp*+ic n+iste! compan"

Private +imite! companies are notpermitte! to isse *ons s#ares

&3 an!23

5" *ac. of s#ares //5 P'OHI5ITION


13/31

companies > orc7 if a !efa+t, *" t#e

compan", in repa"ment of!eposit or interest pa"a*+et#ereon, re!emption of!e*entres orpreferences#ares or pa"ment of!ivi!en! to an"s#are#o+!er or repa"mentof an" term +oan or interestpa"a*+e t#ereon to an"financia+ instittion or*an. is, s*sistin

2 No compan" s#a++!irect+" or in!irect+"prc#ase its owns#ares orot#er specifie! secrities incase, sc# compan" #asnot comp+ie! wit# t#eprovisions of sections 1%$,20/an! 211@

s*sist

E:it option ofs#are#o+!er

No provision S#are#o+!ers #ave e:it option if t#emone" raise! #as not *een ti+ise!

2/

Permissi*+e mo!e ofissance of secrities

Companies co+!issesecrities *" wa" ofp*+icisse, privatep+acement,ri#ts isses or*ons isse

Private companies can isse secritieson+" t#ro# private p+acements aftercomp+"in wit# Part II of C#apter II T#s Private companies cannot ri#tss#ares or *ons s#ares

23, &2,&3

Qotin ri#ts onpreference s#ares

Section /=8ifferentcriteriaforcm+ativean!non=cm+ativepreferences#aresfortrier ofvotinri#ts

No !ifference *etween cm+ative ornon cm+ative, votin ri#ts arise if!ivi!en!s pa"a*+e are in arrears for aperio! of two "ears or more

9/

Pro#i*ition of isse ofs#ares at !iscont

Section /$=Isse of s#aresat!iscont permissi*+es*ectto con!itions an! Centra+Government approva+

Isse of s#ares at !iscont is voi! an!not permissi*+e e:cept for Sweat e?it"s#ares

%9

Preference s#ares*e"on! 20 "ears

Section 0=Isse ofirre!eema*+epreferences#aresorre!eema*+e*e"on! 20 "rsis pro#i*ite!

On+" infrastrctre companies can issepreference s#ares *e"on! 20 "earss*ect to anna+ re!emption of sc#percentae of preference s#ares as ma"*e prescri*e! on anna+ *asis at t#eoption of sc# preferentia+ s#are#o+!ers

%%

'e!emption ofnre!eeme! preferences#ares *" isse offrt#er s#ares

No sc# provision Compan" ma" re!eemnre!eeme! preference s#ares *"issin frt#er re!eema*+e preferences#ares e?a+ to t#e amont !e, a+onwit# t#e !ivi!en! t#ereon , wit# t#econsent of /%R of s#are#o+!ers )inva+e7 an! approva+ from tri*na+ on apetition ma!e

Sc# isse or re!emption s#a++not *e !eeme! to *e an increase or ast#e case ma" *e re!ction of s#arecapita+ of t#e compan"

%% )37

A+teration of s#are Section $9)17permitte! Can *e ma!e on+" after ma.in &1 )*7


14/31

capita+ *" conso+i!ationor !ivision of s#arecapita+ into s#ares of+arer amont

t#esame if t#erewas aprovisionfor t#e same int#eAoA treatinit as amerea+teration notinvo+vinan"re!ction in t#es#arecapita+

Noapprova+ of t#eCort oran"ot#er at#orit"re?ire!

app+ication an! o*tainin approva+ fromTri*na+

Approva+ is re?ire! for conso+i!ationan! !ivision of s#are capita+ on+" if t#evotin percentae of s#are#o+!ersc#anes conse?ent on sc#conso+i!ation

Isse of *ons s#ares No provision int#e actHowever'+es frame!forp*+ic n+iste!Compan"

Private companies are e:c+!e! in t#isc+ase for isse of *ons s#ares, *tapparent+" c+ase 23 !oes not permitprivate companies to isse *ons s#ares

&3 an!23

No re!ction of capita+if !eposits not repai!

No sc# provision e:iste! No re!ction of capita+ s#a++ *e ma!e *"a compan" if t#e compan" is in arrearsin t#e repa"ment of an" !epositsaccepte! *" it or t#e interest pa"a*+et#ereon irrespective of t#e !eposits*ein accepte! *efore or after t#ecommencement of t#is act

&&

Isse of !e*entres wit#conversion option an!ot#er provisions

No sc#re?iremente:iste! Nee!s specia+ reso+tion of mem*ers fort#e isse of !e*entres wit# conversionoption w#o++" or part+"

/1

Private p+acements a+ifie! Instittiona+ 5"ers s#a++ not*e covere! n!er t#e provisionsre+ate!to Private P+acement

Appointment of8e*entre trstee

Section 11/5=Nosc# cei+in of%00 e:iste!Appointment of 8e*entretrstee comp+sor"forcompan"issinprospects or a+etterof offer tot#e p*+icfors*scription ofits!e*entres

Is comp+sor" for p*+ic isse of!e*entre t#ro# prospects to moret#an %00 persons

/1

V. Acce&tance f !e&sits '( C)&aniesAcceptance of 8eposits*" Companies

Private companies arepro#i*ite! from invitin oracceptin !eposits frompersons ot#er t#an itsmem*ers, !irectors or t#eirre+atives

N5


15/31

VII. +,s f Acc$nts an! -inancia# ea%


16/31

VIII. /e&%tsSecretaria+ a!it report Section 33A provi!e! on+"

for secretaria+ a!it *"companies #avin pai! pcapita+ *etween 's 10 +a.#to 's %crores 8i! notspecifica++" provi!e forattac#ment of sc# report tot#e 8irectorsJ report

Ever" +iste! compan" an! ot#erprescri*e! companies s#a++ anne: wit#its 5oar!Js 'eport, a Secretaria+ A!it'eport 8irectors s#a++ e:p+ain in f++ int#eir 8', ?a+ification o*servationremar.s in t#e secretaria+ a!it report

209

I. P%s&ect$s /aising f f$n!s A##t)ent'aisin capita+ t#ro#P*+ic= offer

No sc# provision e:iste! On+" p*+ic companies can issesecrities *" ma.in p*+ic offer an!t#at too *" comp+"in Part I of c#apterIII

2

Mis+ea!in statement inProspects

No sc#provisione:iste! An" rop of persons or AOP affecte!*" t#is mis+ea!in prospects , ma" ta.eaction aainst t#e i+t" persons

3/

Pnis#ment forfra!+ent+" in!cin aperson to invest mone"

Section &=An" person w#o,eit#er *" .nowin+" orrec.+ess+" ma.in an"statement, promise orforecast w#ic# is fa+se,!eceptive or mis+ea!in, or*" an" !is#onestconcea+ment of materia+facts, in!ces or attempts toin!ce anot#er person toenter into, or to offer to enterinto

an" areement for, orwit# a view to,ac?irin, !isposin of,s*scri*in for, orn!erwritin s#ares or!e*entres > or

an" areement t#eprpose or preten!e!prpose of w#ic# is tosecre a profit to an" oft#e parties from t#e"ie+! of s#ares or!e*entres, or *"reference to f+ctationsin t#e va+e of s#ares or!e*entres >

s#a++ *e pnis#a*+e wit#imprisonment for a termw#ic# ma" e:ten! to five"ears, or wit# fine w#ic#ma" e:ten! to one +a.#rpees, or wit# *ot#

No c#ane, *t in a!!ition to w#ic# itinc+!es pnis#ment for fa+se+"in!cin a person to enter into an"areement wit# *an. or financia+instittion, wit# a view to o*tainincre!it faci+ities

3&

A++otment of secritiesan! minimms*scription

Section &$=Minimms*scriptionapp+ica*+eon+" tos#ares

Minimm s*scription e:ten!e! to a++secrities

3$


17/31

Isse of G+o*a+8epositor" receipts)G8'7

No sc# provision e:iste! Compan" ma" after passin a specia+reso+tion in its enera+ meetin ,isseG8'Js s*ect to con!itions

91

. ti#ising Sec$%ities P%e)i$) Acc$ntLti+isation of secritiesPremim accont )SPA7

Section /=SPA can*eti+ie! for writinoffpre+iminar" e:penses orforprovi!in premimpa"a*+eon re!emption ofpreferences#ares or!e*entres

Prescri*e! c+ass of companies w#osefinancia+ statements comp+" wit#Accontin stan!ar!s prescri*e! forsc# c+ass cannot ti+ie for SecPremim Accont for writin offpre+iminar" e:penses an! premim onre!emption of preference s#ares or!e*entres

%2)37

I. Ann$a# %et$%ns an! %e#ate! iss$esAnna+ retrn)A'7 8etai+s to *e frnis#e! in

Anna+ retrn

its reistere! office, t#e reister of its

mem*ers,

t#e reister of its!e*entre #o+!ers,

its s#ares an! !e*entres,

its in!e*te!ness, its mem*ers an!

!e*entre #o+!ers, pastan! present, an!

its !irectors, manain!irectors manaers an!secretaries, past an!present


18/31

Ot#er Companies *" a !irector an! aCS, w#ere t#ere is no CS t#en *" a PCS

Time +imit for fi+in A' Ever" compan" s#a++, wit#insi:t" !a"s from t#e !a" onw#ic# eac# of t#e anna+enera+ meetins referre! toin section 1&& is #e+!, preparean! fi+e wit# t#e 'eistrar aretrn containin t#epartic+arsspecifie! in Part Iof Sc#e!+e Q, as t#e" stoo!on t#at !a",

-#ere AGM is #e+! t#en wit#in 30 !a"sfrom t#e !ate of AGM-#ere AGM is not #e+! wit#in 30 !a"sof t#e !e !ate of t#e AGM a+on wit#reasons for not #o+!in t#e AGM

$2)37

Conse?ences for!efa+t in fi+in A'

1 If a compan" fai+s tocomp+"wit# an" of t#eprovisionscontaine! insection 1%$, 1&0or 1&1T#e compan", an!ever"officer of t#ecompan"w#o is in!efa+t, s#a++*epnis#a*+e wit# finew#ic# ma" e:ten! tofive #n!re!@rpees forever" !a" !rin w#ic#t#e !efa+t contines

2 Po+ic" !eve+ope! on Corporate Socia+

'esponsi*i+it">

Statement of forma+ eva+ation of t#eperformance of t#e *oar! an! itscommittees in case of +iste! an!p*+ic companies, as ma" *eprescri*e!

139

8irectorsJ responsi*i+it"statement

21/)2AA7 >8isc+osres re?ire! on for

Provi!es for a!!itiona+ !isc+osres(In case of a +iste! compan"(

139)%7


19/31

fronts(

App+ica*+e accontinstan!ar!s fo++owe!>

Tre an! fair view of t#efinancia+s>

8etectin an! preventinfra!>

Acconts on a oinconcern *asis

a7 8irectors #ave +ai! !own interna+financia+ contro+s an! t#e" #ave *eencomp+ie! wit#>

*7 8irectors #ave !evise! propers"stems to ensre comp+iance wit#t#e provisions of t#is Act, r+es, an!t#at sc# s"stems were a!e?ate an!operatin effective+"

'eport on AGMre?ire! to *e s*mitte!*" +iste!compan"

No provision e:iste! provi!es t#at ever" +iste! compan" s#a++prepare a report on eac# AGM an! fi+e acop" of t#e same wit# t#e 'OC wit#in30 !a"s from t#e AGM

121

II. Ntices Meetings 4$%$)s Vting /es#$tins Min$tesNo of meetins In t#e case of ever"

compan", a meetin of its5oar! of !irectors s#a++ *e#e+! at +east once in ever"t#ree mont#s an!at +east forsc# meetins s#a++ *e #e+!in ever" "ear

At+east 9 meetin s#o+! *e #e+! eac#"ear

T#ere is no re?irement of#o+!in t#emeetin ever" ?arter> t#e on+"re?irement is t#at not moret#an 120!a"s s#a++ e+apse *etween two

consective meetins

1/3 )17

Ho+!in of an! if sc#enera+ meetin is #e+!wit#in t#at perio!, it s#a++not *e necessar" for t#ecompan" to #o+! an" anna+enera+ meetin in t#e "earof its incorporation or in t#e

fo++owin "ear t#at t#e 'eistrarma", foran" specia+ reason,e:ten! t#e time wit#inw#ic# an" anna+enera+meetin )not *eint#e first anna+ enera+meetin7 s#a++ *e #e+!, *" aperio! not e:cee!in t#reemont#s

To !o awa" wit# 1 mont#s time+ine incase of t#e 1stAGM

$&

Timin of AGM 1&&)27=Ever" anna+ enera+meetin s#a++ *e ca++e! for atime !rin *siness #ors,

on a !a" t#at is not ap*+ic#o+i!a", an! s#a++ *e#e+! eit#er at t#e reistere!office of t#e compan" or atsome ot#er p+ace wit#in t#ecit", town orvi++ae in w#ic#t#e reistere! office of t#ecompan" is sitate

8rin t#e *siness #ors *etween $00to &00 !efine!

AGM cannot *e ca++e!on w#ic# !a"s

AGM can *e ca++e! on a !a"t#at is not a p*+ic#o+i!a",

Can *e ca++e! on a p*+ic #o+i!a" *tcannot *e ca++e! on nationa+ #o+i!a"s


20/31

an! s#a++ *e #e+! eit#er at t#ereistere! office of t#ecompan" or at some ot#erp+ace wit#in t#e cit", townorvi++ae in w#ic# t#ereistere! office of t#ecompan" is sitate

Nationa+ #o+i!a"s means an! inc+!es a!a" !ec+are! as sc# *" t#e centra+ ovt

E:p+anator" statementin respect of materia+facts

1/3)27=-#ere an" items of*siness to *e transacte! att#e meetin are !eeme! to *especia+ as aforesai!, t#eres#a++ *e anne:e! to t#e noticeof t#e meetin a statementsettin ot a++ materia+ factsconcernin eac# sc# item of*siness,inc+!in inpartic+ar t#e natre of t#econcern or interest, if an",t#erein, of ever" !irector,an! t#e manaer, if an"

8efines materia+ facts to *e set ot in t#ee:p+anator" statement,name+", t#enatre of t#econcern or interest,financia+ or ot#erwise, if an", in respectof eac# item of ever" !irector an!manaer, ever" ot#er MP an! re+ativesof a++ t#e a*ove an! sc# ot#erinformation an! facts t#at ma" ena*+emem*ers to n!erstan! t#e meanin,scope an! imp+ications of t#e items of*siness an! to ta.e !ecision t#ereon

102

orm Section 1/9=orm was %mem*erspersona++"presentn+essAoA provi!es fora*ier ?orm

If Mem*ers on t#e !ate of meetin is1000 % mem*ers persona++"present1000=%000 = 1% mem*ers persona++"presentU%000 = 30 mem*ers persona++"present

103

Qotin t#ro#e+ectronic means

No sc# provisions e:iste! Centra+ overnment ma" provi!e forc+ass companies w#ic# can provi!e forvotin t#ro# e+ectronic means

10

'eso+tions re?irinSpecia+ notice

Section 1$0=nocriteria forvotinpower or s#ares

Sc# a notice can *e iven *" sc#nm*er of mem*ers #o+!in not +esst#an 1R of t#e tota+ votin power or#o+!in s#ares on w#ic# an areatesm of not +ess t#an 's100000 #as *eenpai! p

11%

Gap *etween two *oar!Meetins

Section 2% provi!e! for onemeetin to *e #e+! in ever"ca+en!ar ?arter So one*oar! meetin co+! *e #e+!in t#e first mont# of t#e?arter an! t#e ne:t co+! *e#e+! in t#e +ast mont# of t#ene:t ?arter, t#ere*" a apof a+most & mont#s

Provi!es t#at t#e ap *etween an" two*oar! meetins s#o+! not e:cee! 120!a"s


21/31

?orm means

Notice for*oar!meetins)5M7

Section 2& mere+" provi!e!for notice of 5Ms to *e ivento !irectors in writin *t!i! not specif" t#e +ent# ofsc# notice

Provi!es for / !a"sJ notice for 5M)can*e e+ectronic a+so7 S#orter consentpossi*+e if at +east one in!epen!ent!irector is present at sc# meetin

1/3)37

-it#!rawa+ of'eso+tion *"circ+ation

Section 2$ provi!e! forpassin of *oar! reso+tions*" circ+ation wit# noprovision of wit#!rawa+

C+ase 1/% provi!es t#at if a !eman! isma!e *" not +ess t#an 13r! of 5oar! of8irectors )5O87 t#at reso+tion n!ercirc+ation *e !eci!e! at a 5M t#ec#airman s#a++ circ+ation an! #ave t#e?estion !eci!e! at a 5M

1/%

Tamperin wit#mintes

No sc# provisions e:ist An" person fon! i+t" of tamperinan" mintes of t#e procee!in of an"meetin s#a++ *e pnis#a*+e wit#imprisonment w#ic# ma" e:ten! ptotwo "ears an! wit# fine w#ic# s#a++ not*e +ess t#an 's2%000 *t w#ic# ma"e:ten! to 's100000

11

III. Inte%na# A$!itComp+sor" Interna+A!it )IA7

No sc# provision e:iste! Prescri*e! companies to #ave anInterna+ A!itor to con!ct IA, w#ocan *e a CA or IC-A or sc# ot#erprofessiona+ as ma" *e !eci!e! *"t#e 5oar!

CG ma" prescri*e r+es for con!ctan! report of IA

13

IV. Cst A$!itCost A!it -#ere in t#e opinion of t#e

Centra+ Government it isnecessar" so to !o in re+ationto an" compan" re?ire!n!erc+ase )!7 of s*=section )17 of section 20$ toinc+!e in its *oo.s ofaccont t#e partic+arsreferre! to t#erein, t#eCentra+ Government ma", *"or!er, !irect t#at an a!it ofcost acconts of t#e compan"s#a++ *e con!cte! insc#manner as ma" *especifie! in t#e or!er *" ana!itor w#o s#a++ *e a costaccontant wit#in t#emeanin of t#e Cost an!-or.s Accontants Act, 1$%$)23 of 1$%$7

Instea! of compan" pertainin toan"c+ass of companies enae!inpro!ction, processin,manfactrin or minin activities, t#ecentra+overnment can on+" !irect costa!it to*e con!cte! in sc# c+assofcompanies enae! in t#e pro!ctionof sc#oo!s or provi!in sc#services, w#ic# #ave t#e prescri*e! networt#ortrnover an! w#o #as*een !irecte! toinc+!e t#e partic+ars re+atin to t#eti+iation of materia+or +a*or or toot#er items of cost as ma" *e prescri*e!in t#eir *oo.s ofaccont

No approva+ is re?ire! ofcentra+overnment for t#e appointmentof costa!itor to con!ct t#e cost a!it

V. Stat$t%( c)ianceStattor" reconition toSecretaria+Stan!ar!s)SS7

SS were recommen!ator" It provi!es t#at ever" compan" s#a++fo++ow SSwit# respect to Genera+ an! 5oar!Meetins an!approve! *" t#e Centra+ overnment

11

VI. T%ansfe% t %ese%*esTransfer of specifie! R Section 20% Compan" to se its wis!om to 123


22/31

of profits not e:cee!in10R to'eserves

Compan" co+! not transfermore t#an 10R profits e:ceptin accor!ance wit# t#e r+es

!eci!e R of profits to *e transferre!to reserves

Its no +oner man!ator" forcompanies to transfer its profits to'eserves

VII. Di*i!en!s'estriction on interim8ivi!en! intro!ce!

No sc# restriction e:iste! 5O8 to !ec+are interim !ivi!en! otof t#e srp+s in t#e PF6 ac as we++as t#e profits for t#e financia+ "ear inw#ic# t#e interim !ivi!en! is so#tto *e !ec+are!

In case of +oss, interim !ivi!en! ratenot to e:cee! averae !ivi!en!s!ec+are! !rin prece!in t#reefinancia+ "ears

123)37

Transfer of s#ares toInvestor E!cation FProtection


23/31

is twent" companies

'e=appointment ofstattor" a!itors

5oar! recommen!e! t#e re=appointment of retirina!itors an! retirina!itors co+! *e re=appointe! at t#e AGM

After t#e e:pir" of term mentione!in previos point, t#ere #as to *e aap of % "rs for reappointment afterever" cessation


24/31

A!itors a!itors *efore t#e e:pir" oft#eir term, on+" wit# t#eprior approva+ of t#e Centra+Government

its a!itors on *ein satisfie! t#at t#ea!itors #as acte! in a fra!+entmanner or a*ette! or co++!e! in an"fra!

8ties ofa!itorsecretaria+a!itorcost a!itor toreport fra! to t#e CG

No sc# provision e:iste! A!itorsC-ACS to inform t#efra! to t#e CG wit#in prescri*e!time an! manner an! t#e same s#a++not *e constre! as *reac# of !t"

193)127=)197

6imite! 6ia*i+it"Partners#ip )66P7can act as anA!itor

Section 22&)37 66P was not to *e treate! asa 5o!" Corporate for t#e+imite! prpose of t#issection an! #ence co+!*eappointe! as an A!itor

-#ere a firm inc+!in an 66P isappointe! as an a!itor of acompan", on+" t#e partners w#o areC#artere! accontants s#a++ *eat#orie! to act an! sin on *e#a+fof t#e firm

M+ti!iscip+inar" partners#ip isa++owe!

191

191)17

A!itor not toren!er certainservices

No sc#provisione:iste! a!itor not to ren!er !irect+" orin!irect+" t#e fo++owin services tot#e compan", its #o+!incompan" or its s*si!iaries, orassociate compan"(

Accontin an! *oo. .eepinservice> Interna+ a!it>

8esin an! imp+ementation of an"financia+information s"stem>

Actaria+ services> Investmenta!visor" services> Investment *an.in services> 'en!erin of otsorce! financia+

services>

Manaement services> an! An" ot#er .in! ofcons+tanc"

services

Provisions re+atin torestrictions onnon=a!it services mo!ifie! toprovi!et#at sc# restrictions s#a++not app+" to associate companies an!frt#er to provi!e fortransitiona+perio! for comp+"inwit# sc# provisions

199

A!itorsJatten!ance atAGM propose! to*e ma!eo*+iator"

Section 231=Provi!es for a++ notices ofan! ot#er commnicationre+atin to enera+ meetin ofa compan" to *e forwar!e!

to t#e A!itor T#e A!itorwas t#s entit+e! to *t noto*+ie! to atten! an" enera+meetin

provi!es t#at a!itor s#a++, n+essot#erwise e:empte! *" t#eCompan", atten! an" enera+meetin, eit#er *" #imse+f or t#ro##is At#orie! representative w#o is

?a+ifie! to *e an a!itor

19&

Increase!acconta*i+it"of a!itors

Pena+ties were provi!e!forvio+ation of section22/)!ea+in wit# powersan!!ties of a!itors7an!section 22$ )!ea+inwit#sinatre of a!it

Pena+ties sinificant+" en#ance!=finenot +ess t#an 2%000 *t e:ten!a*+e to's % +a.#sImprisonment pto one "ear an! finein case t#ere is an intention to!eceive t#e compan", its

19/


25/31

report7Meare pena+ties offinepto 's 10000

s#are#o+!ers or cre!itors

Provisions re+atin to e:tent ofcrimina+ +ia*i+it" of a!itorspartic+ar+" in case of partners of ana!it firm reviewe! to *rin c+arit"

To !isc#are sc#ot#er !ties, as ma" *e prescri*e!

20%


26/31

II. In*estigatinsSerios


27/31

s#are#o+!ers of t#e mere! compan" incas#, or in 8epositor" 'eceipts or part+"*" cas# an! 8epositor" receipts

S?eee ot provisions No sc# provision e:iste! S?eee ot provision means provisionsw#ic# confer t#e ac?irer wit# astattor" ri#t to s?eee ot t#eminorit", ie ac?ire minorit"s#are#o+!ers on t#e same terms w#ent#e ac?irerJs s#are#o+!in crosses acertain #i# percentae of t#e votincapita+ of t#e taret compan"

23&

'e+ief for pastconc+!e! acts ofoppression

T#is was not possi*+e n!ersection 3$/ of t#e CompaniesAct, 1$%&, as t#e sameprovi!e! on+" for t#e crrentaffairs of t#e compan"

C+ase 291 ses t#e p#raseo+o"=Baffairsof t#e compan" #ave *een or are *eincon!cte!JJ T#s re+ief for past acts ispossi*+e

291

IV. C#ass actin S$itsC+ass action *"mem*ers, !epositorsor an" c+ass of t#em

No sc# provision e:iste! Provi!e! for Provisions re+atin toe:tent of crimina+ +ia*i+it" of a!itorspartic+ar+" in case of partners of ana!it firm reviewe! to *rin c+arit"


28/31


29/31

A!visor" Committee to *eca++e!t#e Nationa+ A!visor"Committee on AccontinStan!ar!s )#ereafter in t#issection referre! to as t#eA!visor" Committee7 toa!vise t#e Centra+Government on t#eform+ation an! +a"in !ownof accontin po+iciesan!accontin stan!ar!s fora!option *" companies orc+ass of companies n!er t#isAct

accontin or an" a!!en!mt#ereto, asrecommen!e! *" t#e ICAI incons+tation wit# an! aftere:aminationof t#e recommen!ations ma!e *" t#eN


30/31

Government of t#e#i#est ran.@

an!remneration> e:p+anations orcomments *" t#e 5oar! onever"?a+ification, reservation ora!verse remar. or !isc+aimer ma!e *"t#eCompan" Secretar" in #issecretaria+ a!it report, partic+ars of+oans,arantees or investments etc)C+ase 1397

I. Sche!$#es C)&anies Act 2013Sc#e!+e I Sections 9 an! %

Sc#e!+e II Lsef+ 6ives to Compte 8epreciation

Sc#e!+e III Genera+ Instrctions for Preparation of 5a+ance S#eet an!Statement of Profit an!6oss of a Compan"

Sc#e!+e IQ Co!e for In!epen!ent 8irectors

Sc#e!+e Q Con!itions to *e f+fi++e! for t#e Appointment of a Manain or-#o+e Time8irector or a Manaer wit#ot t#e approva+ of t#eCentra+ Government

Sc#e!+e QI Section %% an! 1& re+ate! to Infrastrctre Proects

Sc#e!+e QII Corporate Socia+ 'esponsi*i+it"


31/31

/efe%ences>

1 #ttp(wwwcac+*in!iacomartic+escomparison=*etween=o+!=verss=new=provisions=of=companies=act=11%1asp= Comparison of Companies Act 1$%&, an! Companies act 2013

2 #ttp(22022/1&1&30%$/c+cc20%0$p!f= Comparison of Companies Act 1$%&, an!Companies act 2013

3 #ttp(mcaovinMinistr"p!fCompaniesVActV1$%&V13n2011p!f = Companies Act 1$%&. #ttp(wwwmcaovinMinistr"p!fT#eVCompaniesV5i++V2012p!f = Companies Act

2013

Documents

Companies Act 1956 vs Companies Act 2013