Maximum number of members in a Private Company increased from 50 to 200.

The Companies Act, 2013: Major Provisions at a GlanceMaximum number of members in a Private Company increased from 50 to 200.Provision made for One Person Company (OPC) a new vehicle for individuals for carrying on business with limited liability. Certain privileges and concessions for Small Companies provided for the first time.Certain companies will require setting up Corporate Social Responsibility (CSR) Committees wherein CSR spending shall be mandatory.Maximum number of directors in a company has been increased from 12 to 15. Maximum number of Directorships has been increased from 15 to 20. Every listed public company shall have at least one-third of the total number of directors as Independent Directors. The scope of Officer in Default widened and shall now include specified external agencies and individuals.The provision for at least one Resident Director becomes compulsory.One Woman Director shall be compulsory for such class or classes of companies as may be prescribed.Maximum tenure of Auditors and Independent Directors specified.Severe penalty for those found indulged in fraud within the company, directly or indirectly. Establishment of National Financial Reporting Authority (NFRA) and National Financial Reporting Appellate Authority (NFRAA), by the Central Government. Certificate of Commencement of Business made compulsory even for a private company.Companies to have a uniform financial year ending on 31 March each year. Secretarial audit has been made mandatory for every listed company and other specified companies.Certain Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) shall be mandatory.National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) shall now be a reality.The existing restrictions on the merger of an Indian company with a foreign company in specific jurisdictions removed, allowing for corporate flexibility.20. A new provision prohibiting insider trading in securities by a Director or Key Managerial Personnel (KMP) with criminal implications for non-compliance introduced.

The Companies Act, 2013PREAMBLEThe Companies Act, 2013, which has replaced 57-year old legislation as many of its (existing Companies Act, 1956) provisions found to be outdated and inadequate, attempts to make the registration process faster and compatible with e-governance. It seeks to enhance corporate governance by clearly defining the duties of directors and fixing additional responsibilities and the attributes and role of independent directors to preserve their independence. The new legislation has increased the responsibility of auditors by imposing certain restrictions on providing services other than audit so as to make them act diligently and independently. It provides for severe penalty for those (within the company), found indulged in any fraud. Disclosure of related party transactions and approvals for such transactions is one such area which is intended to prevent directors, Key Managerial Personnel (KMP) from taking undue advantage of their position for their personal benefit and ensure transparency in dealings of the company. This is a landmark legislation that will have a wide ranging impact on corporate India as it inter alia introduces higher standards of corporate governance and makes spending on corporate social responsibility (CSR) mandatory; promotes gender equality on corporate boards; allows for class action suits; and looks forward to overhaul the way companies function and are regulated in the country. IMPORTANT PROVISIONS OF THE ACT IN A NUT SHELLOrganisation and Applicability of the ActThe Companies Act, 2013 comprises of 29 Chapters, 470 Sections and 7 Schedules as against 658 Sections, 13 parts and 14 Schedules in the existing Act. However, substantial part of 2013 Act is governed via company rules (Rules) which are in the process of being drafted and notified in due course. The new Act, which has been developed with a view to enhance selfregulation, encourage corporate democracy and reduce the number of required government approvals, extends to the whole of India.Vital Concepts Introduced/Redefined in the ActSeveral significant concepts have been introduced or redefined and their implications made clear under the new Act such as: Associate Company 2013 Act now defines the much controversial Associate Company to mean a company which has Significant Influence over the other company and which is not a subsidiary company but includes a joint venture company. Further it has been explained that Significant Influence shall mean control of at least having 20% of total share capital or control of the business decision under an agreement. [Section 2(6)] Related party includes Associate Company. Hence, contract with Associate Company will require disclosure/ approval / entry in statutory register as is applicable to contract with a related party. [Section 2 (76)] Expert An Expert is a person who has authority to issue certificates e.g. Chartered Accountant, Company Secretary etc. A stakeholder may claim damage from the expert under the Act. Hence, an expert should take utmost care while issuing certificate/giving advice to a company. An expert should maintain records to defend his position if claim is made against him. [Section 2 (38)] Free Reserves Free Reserves are the reserves available for distribution as dividend as per the latest audited balance sheet of the company but exclude:(i) any amount representing unrealised gains, notional gains or revaluation of assets, whether shown as a reserve or otherwise, or(ii) any change in carrying amount of an asset or of a liability recognised in equity, including surplus in profit and loss account on measurement of the asset or the liability at their fair value. [Section 2 (43)]

Net-worth Net-worth inter alia includes securities premium account but excludes writing back of depreciation in Net-worth. [Section 2 (57)] Officer-in-default Officer-in-default includes Key Managerial Personnel (i.e., MD, CEO, CFO, Company Secretary and other prescribed authorities). [Section 2 (60)]Hence, Key Managerial Personnel should take utmost care while discharging their respective responsibility to avoid damage claim, penalty and prosecution under the Act. Private Company 2013 Act permits a private company to have total members up to 200 persons. It also relaxes restriction of not accepting deposits from public. Submissions of Memorandum and Articles of Associate of aprivate company to be incorporated must have clauses strictly as per the Act. [Section 2 (68)] Public Company Publiccompanywillincludeaprivatecompanywhichisasubsidiaryofapublic company. [Section 2 (71)] Independent DirectorIndependent Director means a director other than a managing director or a whole-time director or a nominee director,(a) who, in the opinion of the Board, is a person of integrity and possesses relevant expertise and experience;(b) (i) who is or was not a promoter of the company or its holding, subsidiary or associate company;(ii) who is not related to promoters or directors in the company, its holding, subsidiary or associate company;(c) who has or had no pecuniary relationship with the company, its holding, subsidiary or associate company, or their promoters, or directors, during the two immediately preceding financial years or during the current financial year;(d) none of whose relatives has or had pecuniary relationship or transaction with the company, its holding, subsidiary or associate company, or their promoters, or directors, amounting to two per cent or more of its gross turnover or total income or INR fifty lakh or such higher amount as may be prescribed, whichever is lower, during the two immediately preceding financial years or during the current financial year;(e) who, neither himself nor any of his relatives(i) holds or has held the position of a key managerial personnel or is or has been employee of the company or its holding, subsidiary or associate company in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed;(ii) is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed, of(A) a firm of auditors or company secretaries in practice or cost auditors of the company or its holding, subsidiary or associate company; or(B) any legal or a consulting firm that has or had any transaction with the company, its holding, subsidiary or associate company amounting to ten per cent. or more of the gross turnover of such firm;(iii) holds together with his relatives two per cent. or more of the total voting power of the company; or(iv) is a Chief Executive or director, by whatever name called, of any nonprofit organisation that receives twenty-five per cent. or more of its receipts from the company, any of its promoters, directors or its holding, subsidiary or associate company or that holds two per cent or more of the total voting power of the company; or (f) who possesses such other qualifications as may be prescribed. [Section 149 (6)] Key Managerial Personnel (KMP)Key Managerial Personnel, in relation to a company means (i) the Chief Executive Officer or the managing director or the manager;(ii) the company secretary;(iii) the whole-time director;(iv) the Chief Financial Officer; and(v) such other officer as may be prescribed. [Section 203 (1)] One Person CompanyOne Person Company (OPC), as the term indicates, is a company which has only one person as a member. For the first time, the Companies Act will allow individuals to incorporate a company as OPC a new vehiclefor individuals for carrying on business with limited liability. This is expected to have a significant effect on the way individuals and family owned businesses operate. The memorandum of such OPC is required to indicate the nameofthepersonwhoshallbecomememberintheeventofdeathorincapacityofthesolemember.ItisalsorequiredtospecificallymentionthewordOnePersonCompany below thenamewhereveritisused. [Section 2(62)] Related Party Related Party, with reference to a company, means(i) a director or his relative; (ii) a key managerial personnel or his relative;(iii) a firm, in which a director, manager or his relative is a partner;(iv) a private company in which a director or manager is a member or director;(v) a public company in which a director or manager is a director or holds along with his relatives, more than two per cent. of its paid-up share capital;(vi) a body corporate whose Board of Directors, managing director or manager is accustomed to act in accordance with the advice, directions or instructions of a director or manager;(vii) any person on whose advice, directions or instructions a director or manager is accustomed to act. However, nothing in sub-clauses (vi) and (vii) shall apply to the advice, directions or instructions given in a professional capacity;(viii) any company which is(A) a holding, subsidiary or an associate company of such company; or(B) a subsidiary of a holding company to which it is also a subsidiary;(ix) such other person as may be prescribed. [Section 2(76)] Small CompanySmall Company means a company, other than a public company,(i) paid-up share capital of which does not exceed INR fifty lakh or such higher amount as may be prescribed which shall not be more than INR five crore; or(ii) turnover of which as per its last profit and loss account does not exceed INR two crore or such higher amount as may be prescribed which shall not be more than INR twenty crore.Small companyshall be subjected to a lesser stringent regulatory framework. [Section 2(85)] Subsidiary Company If a company holds more than one-half of total share capital of other company, then the other company will be subsidiary of the former company. Hence, target percentage is more than 50% (and not 51% or more) and holding in total capital including preference shares is to be considered. [Section 2 (87)] Fraud and Punishment ForFraud, in relation to the affairs of a company or anybody corporate, includes any act, omission, concealment of any fact or abuse of position committed by any person or any other person with the connivance in any manner, with intent to deceive, to gain undue advantage from, or to injure the interests of, the company or its shareholders or its creditors or any person, whether or not there is any wrongful gain or wrongful loss. [Explanation to Section 447]The 2013 Act provides for punishment for fraud as under:A person, found to be guilty of fraud, shall be punishable with imprisonment for a term of 6 months to 10 years and shall also be liable to fine shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud.[Section 447]

Establishment of Serious Fraud Investigation Office The Companies Act, 2013 provides for establishment of Serious Fraud Investigation Office (SFIO) by Central Government through a notification to investigate frauds, relating to a company.The Serious Fraud Investigation Office shall be headed by the Director and consist of such number of experts from the following fields to be appointed by the Central Government from amongst persons of ability, integrity and experience in, (i) banking; (ii) corporate affairs; (iii) taxation; (iv) forensic audit; (v) capital market; (vi) information technology;(vii)law;or(viii)suchotherfieldsasmaybeprescribed.The Director shall be an officer not below the rank of a Joint Secretary to the Government of India having knowledge and experience in dealing with matters relating to corporate affairs. [Section 211]Commencement of BusinessA company having a share capital shall not commence business or exercise any borrowing powers unless a declaration is filed with the Registrar of Companies (ROC) by a director, verified in the manner as may be prescribed, that: Every subscriber to the memorandum has paid the value of shares agreed to be taken by him; Paid-up capital is not less than INR five lakhs in the case of public company and INR one lakh in case of a private company; and The company has filed with the ROC the verification of its registered office. [Section 12(1)]Acceptance of DepositsUnder new Companies Act, there are elaborated provisions for acceptance and/or renewal of deposits from members and public.No company shall invite, accept or renew deposits under this Act from the public except in a manner provided under the Act.However, the above shall not apply to a banking company and non- banking financial company as defined in the RBI Act, 1934 and to such other company as the Central Governmentmay,afterconsultationwiththeRBI,specifyinthisbehalf[Section 73(1)]A company may, subject to passing of a resolution in general meeting and subject to such rules as may be prescribed in consultation with the RBI, accept deposits from its members on such terms and conditions, including the provision of security, if any, or for the repayment of such deposits with interest, as may be agreed upon between the company and its members, subject to the fulfilment of the following conditions, namely:(a) Issuance of a circular to its members including therein a statement showing the financial position of the company, the credit rating obtained, the total number of depositors and the amount due towards deposits in respect of any previous deposits accepted by the company and such other particulars in such form and in such manner as may be prescribed;(b) Filing a copy of the circular along with such statement with the Registrar within thirty days before the date of issue of the circular;(c) Depositing such sum which shall not be less than fifteen per cent of the amount of its deposits maturing during a financial year and the financial year next following, and kept in a scheduled bank in a separate bank account to be called as deposit repayment reserve account;(d) Providing such deposit insurance in such manner and to such extent as may be prescribed;(e) Certifying that the company has not committed any default in the repayment of deposits accepted either before or after the commencement of this Act or payment of interest on such deposits; and(f) Providing security, if any for the due repayment of the amount of deposit or the interest thereon including the creation of such charge on the property or assets of the company.However, if a company does not secure the deposits or secures such deposits partially, then the deposits shall be termed as unsecured deposits and shall be so quoted in every circular, form, advertisement or in any document related to invitation or acceptance of deposits. [Section 73(2)]Filing ofAnnual ReturnEvery company shall prepare a return in the prescribed form containing the particulars as they stood on the close of the financial year. Rules applicable to the returns are summarized below:1. Annual Return is required to be signed by a director and the Company Secretary, or where there is no Company Secretary, except in case of OPC and Small Company, by a Company Secretary in whole-time practice.2. In addition to the above, the annual return, filed by a listed company or by a company having such paid-up capital and turnover as may be prescribed, shall be certified by a company secretary in practice that the annual return discloses the facts correctly and adequately and that the company has complied with all the provisions of the Act.3. In case of an OPC and a Small Company, the annual return is required to be signed by the Company Secretary, or where there is no Company Secretary, by one director of the company.4. Every company shall file with the Registrar a copy of the annual return, within sixty days from the date on which the annual general meeting is held or where no annual general meeting is held in any year within sixty days from the date on which the annual general meeting should have been held together with the statement specifying the reasons for not holding the annual general meeting, with such fees or additional fees as may be prescribed, within the time as specified, under section 403.5. If a company fails to file its annual return under sub-section (4), before the expiry of the period specified under section 403 with additional fee, the company shall be punishable with fine which shall not be less than INR fifty thousand but which may extend to INR five lakhs and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than INR fifty thousand but which may extend to INR five lakh, or with both.6. If a company secretary in practice certifies the annual return otherwise than in conformity with the requirements of this section or the rules made thereunder, he shall be punishable with fine which shall not be less than INR fifty thousand but which may extendtoINRfivelakh. [Section 92]Place of Keeping and Inspection of Registers and ReturnsThe new Act permits a company to keep its registers or copies of returns at any other place other than the registered office in India (not necessarily within the city, village or town in which the registered office is situated) if following conditions are fulfilled:1. More than 10% of the total members entered in the register of members reside at that place;2. The keeping of registers or copies at that place is approved by a special resolution passed by the members in the general meeting; and3. The ROC has been given a copy of the proposed special resolution in advance.Any such member, debenture-holder, other security holder or beneficial owner or any other person may (a) take extracts from any register, or index or return without payment of any fee; or (b) require a copy of any such register or entries therein or return on payment of such fees as may be prescribed.If any inspection or the making of any extract or copy required under this section is refused, the company and every officer of the company who is in default shall be liable, for each such default, to a penalty of INR one thousand for every day subject to a maximum of INR one lakh during which the refusal or default continues.The Central Government may also, by order, direct an immediate inspection of the document, or may direct that the extract required shall forthwith be allowed to be taken bythepersonrequiringit.[Section 94]Annual General Meeting and Extra Ordinary General Meeting1. Every company other than a One Person Company shall in each year hold in addition to any other meetings, a general meeting as its annual general meeting (AGM) and shall specify the meeting as such in the notices calling it, and not more than fifteen months shall elapse between the date of one annual general meeting of a company and that of the next.First AGM shall be held within a period of nine months from the date of closing of the first financial year of the company and successive AGMs, within a period of six months, from the date of closing of the financial year.2. Every AGM shall be called during business hours, i.e. between 9 a.m. to 6 p.m. on any day that is not a national holiday. A notice of clear 21 days is required to be given to each shareholder. The new Act now permits notice to be sent through electronic mode and should also be given to all the directors.2. The requirement of holding Statutory Meeting has been done away.3. A general meeting of a company may be called by giving not less than clear twenty-one days notice either in writing or through electronic mode in such manner as may be prescribed.5. To encourage wider participation of shareholders at general meetings, the Central Government may prescribe the class or classes of companies in which a member may exercise his or her right to vote by electronic means.6. Every listed company shall prepare a report on each AGM including confirmation to the effect that the meeting was convened, held and conducted as per the provisions of the Act and the Rules made there under. A copy of the report shall be filed with the Registrar within 30 days of the conclusion of the AGM.7. If any default is made in holding a meeting of the company in accordance with Sections 96 - 98 or in complying with any directions of the Tribunal, the company and every officer of the company who is in default shall be punishable with fine which may extend to INR one lakh and in the case of a continuing default, with a further fine which may extend to INR five thousand for every day during which such default continues.8. Quorum for an AGM of the public company has been increased from 5 to 30 members personally present depending upon the number of members as under: Up to 1000 members = 5 members personally present 1001 to 5000 members = 15 members personally present More than 5000 members = 30 members personally presentHowever, in case of private companies, two members personally present shall form the quorum for the meeting.9. The Board may, whenever it deems fit, call an extraordinary general meeting of the company. The Board shall, at the requisition made by,(a) in the case of a company having a share capital, such number of members who hold, on the date of the receipt of the requisition, not less than one-tenth of such of the paid-up share capital of the company as on that date carries the right of voting;(b) in the case of a company not having a share capital, such number of members who have, on the date of receipt of the requisition, not less than one-tenth of the total voting power of all the members having on the said date a right to vote,call an extraordinary general meeting of the company within twenty-one days from the date of receipt of a valid requisition in regard to any matter.If the Board does not, within the stipulated period of twenty-one days proceed to call a meeting for the consideration of that matter on a day not later than forty-five days from the date of receipt of such requisition, the meeting may be called and held by the requisitonists themselves within a period of three months from the date of the requisition. [Sections 96 -110]Corporate Social Responsibility (CSR)With a view to engage businesses in contributing to the societies where they operate the New Companies Act has introduced provisions requiring certain companies to set up CSR Committee and mandates CSR spending too.Constitution of CSR Committee, adoption of CSR Policy and spending on CSR has become compulsory for companies having net worth of INR 500 crore or more, or turnover of INR 1000 crore or more or a net profit of INR 5 crore or more during any financial year.Every company satisfying any of the above criteria has to mandatorilyspend 2% of the average net profits of the 3 immediately preceding financial years on CSR activities and if not spent, an explanation with the reasons thereof shall be required to be given in the DirectorsReport. [Section 135]Appointment of AuditorsEvery company has to appoint, at the first AGM, an individual or a firm, being later shall include LLP, as auditor(s) who shall hold office till the conclusion of the sixth AGM and thereafter (in case of re-appointment) till the conclusion of every sixth AGM. The appointment or re-appointment shall be subject to the ratification of the members at every AGM.Listed and certain other prescribed classes of companies cannot appoint or reappoint:-(a) an individual as auditor for more than one term of five consecutive years; and(b) an audit firm as auditor for more than two terms of five consecutive years.Moreover, (i) an individual auditor who has completed his term under clause (a) shall not be eligible for re-appointment as auditor in the same company for five years from the completion of his term; and (ii) an audit firm which has completed its term under clause (b), shall not be eligible for re-appointment as auditor in the same company for five years fromthecompletionofsuchterm. [Section 139]Cost AuditThe prior approval of Central Government is no longer required for appointment of Cost Auditor as the 2013 Act has dispensed with this requirement. Remuneration of the Cost Auditor also will also be decided by the company. [Section 148]Directors 1. Maximum Number of Directors: The maximum number of directors for a public company has been increased from 12 to 15. However, a company may appoint more than 15 directors after passing a special resolution in this behalf. The requirement of taking permissionoftheCentralGovernment,asprovidedearlier,isdoneawaywithin2013Act. [Section 149(1)]2. Resident Director: The new Act requires every company to have on its Board at least one director who is a resident of India, having stayed in India for a total period of at least 182 days in the previous calendar year. Accordingly, existing companies with all the foreign directors will need to now add at least one resident director. [Section 149(3)]3. Woman Director: Such class or classes of companies as may be prescribed shall have awomandirectorontheirboard. [Section 149(1)]4. Independent Directors: The Companies Act, 2013 introduces higher standards of corporate governance for Indian companies. To align the company law with this, the new Act has introduced the concept of Independent Directors. The Act in this behalf inter alia provides as under:(a) Every listed publicly traded company shall have at least one-third of the total number of directors as independent directors. Independent directors shall be entitled to sitting fees, commission from the profit and reimbursement of expenses. However, they will not beentitledtostockoptions. [Section 149 (9)](b) An independent director shall hold office for a term up to five consecutive years on the Board of a company, but shall be eligible for reappointment on passing of aspecial resolutionby the company and disclosure of such appointment in the Board's report. This means, no independent director shall hold office for more than two consecutive terms, but such independent director shall be eligible for appointment after the expiration of three years of ceasing to become an independent director. [Section 149 (11)](c) Independent director shall only be liable for such act of omission, commission by a company which had occurred with his or her knowledge, attributable through Board processes, and with his/ her consent or connivance or where he or she had not acted diligently. [Section 149(12)](d) The appointment of the independent director shall be approved by the members in a general meeting and they will not be required to retire by rotation. [Section 149(13)](e) Nominee director shall not be considered as an independent director. [Section 149(6)]5. No. of Directorships: No person shall hold office as a director, including any alternate directorship, in more than twenty companies at the same time. However, the maximum number of public companies in which a person can be appointed as a director shall not exceed ten.2013 Act now restricts over all directorship of any individual as compared to 1956 Act which allowed 15 directorships of any person in a public company and any numberofdirectorshipsinaprivatecompany. [Section 165]6. Duties of the Directors: 2013 Act attempts to codify the duties of directors, including but not limited to the following, they are required to (a) act in good faith and in the best interest of the company; (b) not to have direct or indirect conflict of interest with the interest of the company; and (c) exercise duties with diligence and reasonable care and declares that it would be punishable offence to commit a breach of those duties. The liability of the director in default for contravention, for which no specific penalty is prescribed, has been increased from INR 50,000 to INR 500,000. [Section 166)]Board Meetings1. The first Board meeting is required to be held within 30 days of its incorporation and a minimum of four Board meetings should be hold every year in such a manner that not more than 120 days shall intervene between 2 consecutive board meetings. [Section 171(1)]2. The participation of directors in a meeting of the Board may be either in person or through video conferencing or other audio visual means, as may be prescribed, which are capable of recording and recognizing the participation of the directors and of recording and storing the proceedings of such meetings along with date and time. Participation of directors through video conferencing shall also be counted for the purpose of quorum. [Section 171(2)]3. Not less than 7 days notice is to be given for convening a board meeting which may be given electronically as well. The board meetings can be held at a shorter notice to transact urgent business provided that an independent director, if any, is present in the meeting. In case of absence of independent directors from such a meeting, the decisions taken at such a meeting shall be circulated to all the directors and shall be final only upon the ratificationthereofbyatleastoneindependentdirector,ifany. [Section 173 (3)]Appointment of KeyManagerial PersonnelEvery company belonging to such class or classes of companies as may be prescribed shall have the following whole-time key managerial personnel,a. Managing Director (MD), or Chief Executive Officer (CEO) or manager and in their absence, a whole-time director;b. Company Secretary; andc. Chief Financial Officer (CFO).Every whole-time key managerial personnel of a company shall be appointed by means of a resolution of the Board containing the terms and conditions of the appointment including the remuneration.Every whole-time key managerial personnel of a company shall be appointed by means of a resolution of the Board containing the terms and conditions of the appointment including the remuneration.Whole-time key managerial personnel shall not hold office in more than one company except in its subsidiary company at the same time.However, key managerial personnel shall not be disentitled from being a director of any company with the permission of the Board. Whole-time key managerial personnel holding office in more than one company at the same time on the date of commencement of this Act, shall, within a period of six months from such commencement, choose one company, in which he wishes to continue to hold the office of key managerial personnel:If the office of any whole-time key managerial personnel gets vacated, the resulting vacancy shall be filled-up by the Board at its meeting within a period of six months from thedateofarisingofsuchvacancy. [Section 203]Audit and Accounting 1. Companiestohave auniformfinancialyear, endingon 31 March each year and only exception is for companies, which are holding/subsidiary of a foreign entity requiring consolidation outside India, to have a different financial year with the approval of the Tribunal. [Section 41]3. NationalFinancialReportingAuthority(NFRA)tobe constituted by Central Government to provide for dealing with matters relating to accounting and auditing policies and standards to be followed by companies and their auditors. [Section 132]4.Restrictionhasbeenimposedonprovisionofspecifiednon-audit services by an auditor to ensure independence and accountability of the auditor. An auditor appointed under this Act shall provide to the company only such other services as are approved by the Board of Directors or the audit committee, as the case may be, but which shall not include any of the following services (whether such services are rendered directly or indirectly to the company or its holding company or subsidiary company, namely:(a) accounting and book keeping services; (b) internal audit; (c) design and implementation of any financial information system; (d) actuarial services; (e) investment advisory services; (f) investment banking services; (g) rendering of outsourced financial services; (h) management services; and (i) any other kind of services as may be prescribed.However, an auditor or audit firm who or which has been performing any non-audit services on or before the commencement of this Act shall comply with the provisions of thissectionbeforetheclosureofthefirstfinancialyearafterthedateofsuchcommencement [Section 144]5.Internalauditforprescribedclassesofcompanies will be mandatory by an auditor who shall either be a chartered accountant or a cost accountant, or such other professional as may be decided by the Board to conduct internal audit of the functions and activities of the company. The Central Government may, by rules, prescribe the manner and the intervals in which the internal audit shall be conducted and reported to the Board [Section 138]Secretarial Audit for Bigger Companies1. Every listed company and a company belonging to other class of companies as may be prescribed shall annex with its Boards report, a secretarial audit report, given by a company secretary in practice, in such form as may be prescribed.2. It shall be the duty of the company to give all assistance and facilities to the company secretary in practice, for auditing the secretarial and related records of the company. 3. The Board of Directors, in their report shall explain in full any qualification or observation or other remarks made by the company secretary in practice in his secretarial audit report.4. If a company or any officer of the company or the company secretary in practice contravenes the provisions of this section, the company, every officer of the company or the company secretary in practice, who is in default, shall be punishable with fine which shall not be less than INR one lakh but which may extend to INR lakh. [Section 204]Functions of Company SecretaryFunctions of company secretary have been prescribed which include:a. to report to the Board about compliance with the provisions of this Act, the rules made thereunder and other laws applicable to the company;b. to ensure that the company complies with the applicable secretarial standards; andc. to discharge such other duties as may be prescribed. [Section 205]For the purpose of the above section, the expression secretarial standards means secretarial standards issued by the Institute of Company Secretaries of India constituted under Section 3 of the Company Secretaries Act, 1980 and approved by the Central Government. Constitution of National Company Law TribunalThe Central Government shall, by notification constitute, with effect from such date as may be specified therein, a Tribunal to be known as the National Company Law Tribunal (NCLT), consisting of a President and such number of Judicial and Technical members, as the Central Government may deem necessary, to be appointed by it by notification, to exercise and discharge such powers and functions as are, or may be, conferred on it by or under this Act or any other law for the time being in force. [Section 408]Class Action Suits2013 Act introduces the western concept of class action suits which allows requisite number of members, depositors or any class of them file a suit against the company, its directors, auditors and/or other experts or consultants or advisors, if they believe that affairs of the company are conducted in a manner prejudice to the company or its members or depositors. [Section 245]Compromises, Arrangements and Amalgamations1. No compromise or arrangement shall be sanctioned by the Tribunal unless a certificate by the companys auditor has been filed with the Tribunal to the effect that the accounting treatment, if any, proposed in the scheme of compromise or arrangement is in conformity with theaccounting standards prescribed.2. Separate provisions have been provided for the merger or amalgamation between two small companies or between a holding company and a wholly owned subsidiary company.3. Provision for cross border amalgamations between Indian Companies and companies incorporated in the jurisdictions of such countries as may be notified from time to time by the Central Government.4. Specific provision for purchase of minority shares in case an acquirer or person acting in concert with the acquirer become holder of 90% or more of the issued capital of the company, either directly or by virtue of any amalgamation, share exchange, conversion of securitiesoranyotherreason. [Section 230]Revival and Rehabilitation of Sick Company 1. The existing provisions for revival and rehabilitation of sick companies have been substantially amended. 2013 Act now permits any company and not just an industrial company to be declared as sick company and avail benefits of this scheme. 2. The determination of whether a company is a sick company or not has moved from the concept of erosion of net worth to inability to pay debt. If a company fails to repay its debt within 30 days from receipt of a demand from the secured creditor representing 50% or more in value of the outstanding debt of the company, the company would be considered as a sick company. 3. A secured creditor whose debt has not been repaid can apply to the Tribunal for declaration of the company to be sick. If the said company is unable to provide a scheme to the Tribunal for its revival, an interim administrator may be appointed by the Tribunal to take over the management of the sick company. The Tribunal may consider various options for the revival of the sick company including its acquisition by a solvent company, restructuring of its assets, etc. If the Tribunal is satisfied that revival is not possible, it will pass an order for winding up of the company. [Chapter XIX]Winding up of Company1. New Act prescribes only two modes of winding up (i) By Tribunal; and (ii) voluntary;2. Powers of courts have been shifted to Tribunal;3. Certain new grounds for winding up have been introduced while some have been omitted;4. Circumstances in which company may be wound up by Tribunal include:a. If the company is unable to pay its debts;b. If the company has, by special resolution, resolved that the company be wound up by the Tribunal;c. If the company has acted against the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, publicorder, decency or morality;d. If the Tribunal has ordered the winding up of the company under Chapter XIX;e. If on an application made by the Registrar or any other person, authorized by the Central Government by notification under this Act, the Tribunal is of the opinion that the affairs of the company have been conducted in a fraudulent manner or the company was formed for fraudulent and unlawful purpose or the persons concerned in the formation or management of its affairs have been guilty of fraud, misfeasance or misconduct in connection therewith and that it is proper that the company be wound up;f. If the company has made a default in filing with ROC its financial statements or annual returns for immediately preceding five consecutive financial years; org. If the Tribunal is of the opinion that it is just and equitable that the company should be woundup. [Sections 271-272]Powers of TribunalThe Tribunal may, on receipt of a petition for winding up under Section 272 pass any of the following orders, namely: (a) dismiss it, with or without costs; (b) make any interim order as it thinks fit; (c) appoint a provisional liquidator of the company till the making of a winding up order; (d) make an order for the winding up of the company with or without costs; or (e) any other order as it thinks fit:However, an order under this sub-section shall be made within ninety days from the date of presentation of the petition.Provided further that before appointing a provisional liquidator, the Tribunal shall give notice to the company and afford a reasonable opportunity to it to make its representations, if any, unless for special reasons, to be recorded in writing, the Tribunal thinks fit to dispense with such notice.Provided also that the Tribunal shall not refuse to make a winding up order on the ground only that the assets of the company have been mortgaged for an amount equal to or in excess of those assets, or that the company has no assets.Where a petition is presented on the ground that it is just and equitable that the company should be wound up, the Tribunal may refuse to make an order of winding up, if it is of the opinion that some other remedy is available to the petitioners and that they are acting unreasonably in seeking to have the company wound up instead of pursuing the other remedy. [Section 273]

It should be noted that the important provisions discussed above give a snapshot view of the 2013 Act. For a thorough understanding of the new legislation, kindly refer the bare Act of Company Law, 2013.

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