2. I. Journey of Companies Bill
II. Background
III. New Introduction:
1. One Person Company (OPC)
2. Small Company
3. Special Courts
4. Class Action Suit
5. Key Managerial Personnel [Clause 2(51)]
6. Dormant Company
7. Woman Director
8. Secretarial Audit
9. Secretarial Standards
10. Independent Directors
11. Prohibition of Insider Trading & Forward Dealings
12. Board’s Report
13. Provision for Entrenchment
14. Corporate Social Responsibility (CSR) (Clause 135)
15. Rotation/ Appointment / Re-Appointment of Auditors
IV. Modifications
1. Financial year
2. Members in Pvt. Ltd. Companies
3. Notice for change of Registered office
4. Disposal of application for change of Registered office by CG
5. Registered office of Company.
Particulars Page No.
3. IV. Modifications
5. Commencement of Business
6. Restriction on multilayer Investment subsidiaries
7. Statutory Meeting to be conducted
8. Printing of CIN (Corporate Identity Number)
9. Number of Directors
10. Alteration in AOA
11. Object Clause in MOA
12. Appointment of Debenture Trustees (DT)
13. Directors
14. Board of Directors
15. Related Party Transactions
16. Key Managerial Personnel (KMP) [Clause 203(1)]
17. National Financial Reporting Authority (NFRA) (Clause 132)
18. Removal of names of companies from the Register of Companies [Clause 248]
19. Winding up of a company [Clause 213]
20. Restructuring and Liquidation
21. Company Liquidators (Clause 275)
22. National Company Law Tribunal and Appellate Tribunal [Clause 408]
23. Inspection, Inquiry and Investigation
24. Acceptance of Deposits
25. Shares and Debentures: Issue, Allotment and Transfer of Securities
26. Dividend
27. Financial Statements
Particulars Page No.
4. IV. Modifications
28. Annual Return
29. Annual General Meetings
30. Compromises, Arrangements and Amalgamations
31. Depreciation
Particulars Page No.
5. 2008 2009 2010 2011 2012 2013
Companies Bill, 2008 was
introduced on 23 October 2008
in the Lower House (Lok
Sabha) to replace existing
Companies
Act 1956 (the Act)
Due to the dissolution of the
14th Lok Sabha, the
Companies Bill, 2008 had
lapsed
Companies Bill, 2009
(Bill) was reintroduced on
3 August 2009 in the Lok
Sabha to replace existing
Companies Act 1956
with minor modifications
to the Companies Bill,
2008)
Bill was referred to the Standing
Committee on Finance of the
Parliament (the SCF) for
examination and report on 9
September 2009
Report of the SCF on
Companies Bill, 2009
was introduced in the
Lok Sabha on 31
August 2010
Companies Bill 2011
introduced in the Lok
Sabha on
14th December 2011
Companies Bill 2012
was passed in the Lok
Sabha on
18th December 2012
and introduced in Rajya
Sabha
Companies Bill 2013 was
passed in Rajya Sabha
now awaits with
President Pranab
Mukherjee for his assent
before it becomes law
6. Structure of the Companies Act 1956 & the Companies
Bill 2013
Background
Companies Act 1956 Companies Bill 2013
• 13 Parts
• 750+ Sections
• 15 Schedules
• 29 Chapters
• 470 Clauses(i.e. sections)
• 7 Schedules
8. New Introduction
One Person Company
(OPC)
No Provision
New concept of One Person Company has been introduced in
Clause 3(1)(C), while Clause 2(62) defines the same.
Here, the formation of the Company requires only one
member. The provision relating to holding of AGM is not
mandatory for OPCs’.
The Memorandum of an OPC should include :
• Name of Nominee
• Consent of Nominee
• Nominee can be changed (and such change not treated
as Alteration of MOA)
One person Company can be:
• Limited by shares
• Limited by guarantee
• Unlimited company
Capital : Minimum – Rs. 100,000
Maximum – No limit
Exemptions:
1. Financial Statement doesn’t need to include cash flow
statement
2. Signing of Annual Return:
• By Company Secretary in employment or
• By 1 Director (Where no CS)
3. Exemption from conducting AGM, while GM/EGM are not
applicable.
4. Approval of Financial statements can be done by only one
director for submission to auditors
5. Only 1 board meeting conducted in each half calendar
year, deemed proper compliance.
[For facilitating
Individuals to adopt
Corporate Structures
for carrying out
Business under a
simplified regime]
Companies Act 1956 Companies Bill 2013Particulars
9. New Introduction
Small Company No Provision Separate Regime for ‘Small Company’ has been introduced
in Clause 2(85). A Small Company is a company whose:
•paid up share capital does not exceed 50 Lakh rupees or
such higher amount as may be prescribed (which shall not
be more than 5 Crore Rupees); OR
•Turnover of which as per last profit and loss account does
not exceed two crore rupees or such higher amount as may
be prescribed which shall not be more than twenty crore
rupees;
Provided that this would not apply to:
i) a holding company or a subsidiary company,
ii) a company registered under sections 8; or
iii) a company or a body corporate governed by a special
Act;
[For facilitating
Individuals to adopt
Corporate Structures
for carrying out
Business under a
simplified regime]
Companies Act 1956 Companies Bill 2013Particulars
Special Courts No Provision For the speedy trial of offences, the Central Government has
been empowered to establish special courts in consultation
with the Chief Justice of the High Court within whose
jurisdiction the judge is to be appointed. [clause 435].
All offences under this Act shall be triable by the Special Court
established for the area in which the registered office of the
company in relation to which the offence is committed or
where there are more special courts than one for such area, by
such one of them as may be specified in this behalf by the High
Court concerned. [clause 436]
The Special Court would have the liberty to try summary
proceedings for offences punishable with imprisonment for a
term not exceeding three years, although it may order for the
regular trial [clause 436].
10. New Introduction
Companies Act 1956 Companies Bill 2013Particulars
Class Action Suit No Provision Clause 37:
For the first time, a provision has been made for class action
suits. It is provided that specified number of member(s),
depositor(s) or any class of them, may, if they are of the
opinion that the management or control of the affairs of the
company are being conducted in a manner prejudicial to the
interests of the company or its members or depositors or
affected by any misleading statement or the inclusion or
omission of any matter in the prospectus, can file an
application before the Tribunal on behalf of the members or
depositors.
Where the members or depositors seek any damages or
compensation or demand any other suitable action from or
against an audit firm, the liability shall be of the firm as well
as of each partner who was involved in making any improper
or misleading statement of particulars in the audit report or
who acted in a fraudulent, unlawful or wrongful manner.
The order passed by the Tribunal shall be binding on the
company and all its members, depositors and auditors
including audit firm or expert or consultant or advisor or any
other person associated with the company. (clause 245)
Key Managerial
Personnel [Clause 2(51)]
Includes CEO, MD, Manager, Company Secretary and CFO (if
appointed by the Board of Directors).
No Provision
11. New Introduction
Dormant Company No Provision Separate Regime for ‘Dormant Company’ has been
introduced. A company which is formed and registered
under this Act for a future project or to hold an asset or
intellectual property and which has not been carrying on any
business or operation or has no significant accounting
transaction during the last 2 FYs, such a company or an
inactive company may make an application to the Registrar
for obtaining the status of a Dormant Company.
A company which has not filed financial statements or
annual returns for 2 FYs consecutively will be classified as
Dormant Company by the ROC.
A company can get its removed from the Register of
Companies by obtaining a status of a dormant company
under section 455. A company not carrying on any business
or operation for a period of two years immediately
preceding financial year and has not made any application
within such period, make an application to the Registrar.
[For facilitating flexibility
to create entity to house a
future project/valuable
assets such as
IPRs(Intelectual Property
Rights ), Etc.]
Woman Director No Provision At least 1 woman director shall be on the Board of such
class or classes of companies as may be prescribed.
Secretarial Audit No Provision to mandate. Every Listed company and such companies as may be
prescribed shall annex with its Board’s report under section
134, a SECRETARIAL AUDIT Report, given by a Company
Secretary in practice, following the Secretarial Standards
issued by ICSI, as per section 204.
Companies Act 1956 Companies Bill 2013Particulars
12. New Introduction
Companies Act 1956 Companies Bill 2013Particulars
Independent Directors No Provision All listed companies are required to appoint 1/3rd of the
board as independent directors. The manner of selection of
independent directors shall be prescribed by the Central
Government. The independent director would be appointed
for a period of 5 years and is eligible of re-appointment for
the following consecutive term. However a director cannot
hold for more than two consecutive terms (i.e. 10 years).
Prohibition of Insider
Trading & Forward
Dealings
No Provision No person including any director or KMP of a company shall
enter into insider trading (as defined) except to any
communication required in the ordinary course of business or
profession or employment or under any law.(Clause 195).
Further, Directors and the key managerial personnel of a
company are prohibited from forward dealings in securities of
the company (Clause 194)
Board’s Report Not mandatory to include
Secretarial Audit Report
Mandatory to include Secretarial Audit Report
Secretarial Standards No provisions relating to
applicability
Statutory Recognition given under Clause 118(10) and Clause
205
Provision for
Entrenchment
Earlier there was no provision
for entrenchment.
Articles may contain provisions for entrenchment u/s 5(3).
14. Corporate Social Responsibility is the continuing commitment by business to behave ethically
and contribute to economic development while improving the quality of life of the workforce and
their families as well as of the local community and society at large.
New Introduction
Corporate Social Responsibility (CSR) (Clause 135)
The Bill has made it mandatory for profit making companies to spend on activities related to Corporate Social
Responsibility (CSR). India would possibly become the first country to have Corporate Social Responsibility (CSR)
spending through a statutory provision.
Provisions applicable to every company having:
net worth of ` 5 billion or more; or
turnover of ` 10 billion or more; or
net profit of ` 50 million or more
during any FY.
Such companies to constitute CSR committee of its BOD consisting of minimum 3 directors including 1
Independent Director.
CSR committee shall formulate and recommend to the BOD, CSR Policy which shall indicate the activity or
activities to be undertaken by the company as specified in schedule VII and shall also recommend the
amount of expenditure to be incurred on the CSR activities
BOD of such companies shall mandatorily spend, in every FY, minimum 2% of the average net profits of the
company made during the 3 immediately preceding FYs, in pursuance of its CSR Policy. If the company fails to
spend such amount, BOD shall specify the reasons for not spending the amount in the BOD report.
The company shall give preference to local areas where it operates, for spending amount earmarked for
Corporate Social Responsibility (CSR) activities.
16. Appointment of Auditor in unlisted companies [Clause 139]:
New Introduction
Rotation, Appointment & Re-Appointment of Auditors:
Appointment Period of Appointment
At first AGM to hold office till conclusion of 6th AGM subject
to ratification by members at every AGM
Appointment Period of Appointment
Individual 1 term of 5 consecutive years, subject to
ratification by members at every AGM
Appointment of Auditor in listed and specified class of companies [Clause 139]:
Audit Committee:
The Board of Directors of every listed company and such other class or classes of companies, as may be prescribed,
shall constitute an Audit Committee u/s 177. All appointments, including the filling of a casual vacancy of an auditor
under this section shall be made after taking into account the recommendations of such committee.
to hold office till the next AGM and can
be reappointed thereat.
Subsequent to hold office till conclusion of 6th meeting,
subject to ratification by members at every
AGM
to hold office till the next AGM and can
be reappointed thereat.
Companies Bill, 2013 Companies Act, 1956
Cooling off period
Audit Firm 2 terms of 5 consecutive years, subject to
ratification by members at every AGM
5 years before next appointment
Companies Bill, 2013 Companies Act, 1956
to hold office till the next AGM and can
be reappointed thereat.
to hold office till the next AGM and can
be reappointed thereat.
No such Provision
17. Provisions relating to auditors applicable to all companies:
1. Company may resolve [Clause 139(3)] :
• If Audit firm is appointed, the audit partner and his team shall rotate at such intervals as may be resolved by
members.
• Audit shall be conducted by more than 1 auditor (i.e. joint auditor).
2. Qualification of firm as auditors [Clause 141] :
• Majority of partners practicing in India are qualified for appointment;
• If LLP is appointed as auditor, only partners who are CA shall be authorized to sign.
New Introduction
Removal/ Resignation of Auditors [Clause 140]:
• The auditor appointed u/s 139 may be removed from his office before the expiry of his term only by a Special
Resolution, after obtaining the previous approval of the CG in the prescribed manner. Provided that before taking
any action, the auditor concerned shall be given a reasonable opportunity of being heard [Clause 140(1)].
• The auditor who has resigned from the company shall file within a period of 30 days from the date of resignation, a
statement in the prescribed form with the ROC and in case of Govt. Co. held by CG/ SG/ Both u/s 139(5), the auditor
shall also file such statement with the C AG of India, indicating the reasons and other facts as may be relevant with
regard to his resignation [Clause 140(2)], failure of which may attract fine of Rs.50000 which may extend to Rs.
500000 u/s 140(3).
Rotation, Appointment & Re-Appointment of Auditors:
Common conditions for appointment of auditor in listed and specified class of companies:
• Incoming audit firm should not have any common partners who were the partners of the outgoing audit firm, i.e., the
audit firm whose tenure expired in the immediately preceding FY by virtue of mandatory rotation requirement
[Clause 139(2) 1st proviso] .
• CG shall prescribe the manner in which the companies shall rotate their auditors [Clause 139(4)].
• Transition period of 3 years provided to the companies to comply with the mandatory rotation of auditor
requirement [Clause 139(2) 2nd proviso].
18. New Introduction
Rotation, Appointment & Re-Appointment of Auditors:
An auditor or audit firm who or which has been performing any non-audit services on or before the commencement
of 2013 Act shall comply with the above before the closure of the 1st FY after the date of such commencement.
"Directly or Indirectly" shall include rendering of services by the auditor,—
• Where auditor is an individual - Either himself or through his relative or any other person connected or
associated with such individual or through any other entity, whatsoever, in which such individual has
significant influence or control, or whose name or trade mark or brand is used by such individual
• Where auditor is a firm – Either itself or through any of its partners or through its parent, subsidiary or
associate entity or through any other entity, whatsoever, in which the firm or any partner of the firm has
significant influence or control, or whose name or trade mark or brand is used by the firm or any of its
partners.
5. Limits on number of audits i.e. 20 has been prescribed through the Rules [Clause 141(3)(g)].
6. No person appointed u/s 139 as an auditor of the company shall be appointed for conducting the audit of cost
records [Clause 148(3) 1st Proviso].
3. Additional grounds for disqualifications for appointment as auditor provided [Clause 141(3)].
4. Auditor cannot provide following services "directly or indirectly" [Clause 144] 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) services prescribed under the Rules.
19. New Introduction
Rotation, Appointment & Re-Appointment of Auditors:
Companies Act 1956 Companies Bill 2013Particulars
Penalty for Non-
Compliance by Auditor
[Clause 147(2)]
Fine up to Rs. 10000 • Fine – Rs. 25000 to Rs. 500000
• For Willful Contravention – Imprisonment which may
extend to one year or fine not less than Rs. 100,000
which may extend to 2500000 or both
Penalty for Non-
Compliance by Company
[Clause 147(1)]
Fine up to Rs. 5000 • Fine – Rs. 25000 to Rs. 500000
• 1 year imprisonment or fine of Rs. 10,000 to Rs. 100,000
or both
Prosecution by NFRA:
Where professional or other misconduct is proved, have the power to make order for—
A. Imposing penalty of—
i. not less than 100000, but which may extend to five times of the fees received, in case of individuals; and
ii. not less than 1000000, but which may extend to ten times of the fees received, in case of firms;
B. Debarring the member or the firm from engaging himself or itself from practice as member of the ICAI refund to in
clause (e) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 for a minimum period of 6 months
or for such higher period not exceeding 10 years as may be decided by the National Financial Reporting Authority.
Explanation — For the purposes of his sub-section, the expression "professional or other misconduct" shall have the
same meaning assigned to it under section 22 of the Chartered Accountants Act, 1949.
21. Modifications
Companies Act 1956 Companies Bill 2013Particulars
Financial year The financial year was defined not to
exceed 15 months. Further, there was
no hardship to align the F.Y. to
31st March (i.e. April to March).
Now the new provision has restricted the F.Y. to
31st March (i.e. April to March) for all companies. No
question of extension of financial year. Furthermore,
as per section 2(41) all existing companies shall
within a period of two years align it financial year as
per the provisions.
Exemption can be claimed in respect of foreign
subsidiary companies which are required by the laws
of foreign countries to adopt different accounting
year, by applying to the Tribunal.
Members in Pvt. Ltd.
Companies
The maximum members were
restricted to 50 Members.
The restriction of 50 Members has been extended to
200 Members facilitating Companies to access large
pool of Capital without the need to go Public.
Notice for change of
Registered office
The time limitation was of 30 Days. Now the time limitation has been cut down to 15 Days.
Disposal of application
for change of Registered
office by CG
There was No such time limit defined. Central Government shall dispose of application with
60 days.
22. Companies Act 1956 Companies Bill 2013Particulars
Modifications
Restriction on multilayer
Investment subsidiaries
A company unless otherwise prescribed can make
investment through not more than 2 layers of
investment companies.
Exception to this rule is:
• acquisition of a foreign company which has
investment subsidiary beyond 2 layers as per the
applicable foreign law; and
• a subsidiary company making investment to
comply with any applicable law.
There was no restriction on Multilayer
Investment Subsidiary.
Registered office of
Company.
Company shall have a Registered Office from the 15th
day of its incorporation and at all times thereafter,
have a registered office capable of receiving and
acknowledging all communications and notices as may
be addressed to it.
Company shall have a Registered Office
from the 30th day of incorporation.
Commencement of
Business
Applicability : Public Company
Certificate of COB was issued.
Applicability : Both Public and Private Company
No Certificate of COB will be issued.
Documents to be submitted under new bill:
1. Declaration by Directors of payment of money by
subscribers of MOA.
2. Verification of Registered office filed with ROC
Statutory Meeting to
be conducted
Every Company:
• Limited by Shares
• Limited by guarantee
• Except Private Limited Co.
Companies are Not Required to conduct Statutory
Meeting
[To prevent the abuse
of diversion of funds
through many step-
down subsidiaries.]
23. Companies Act 1956 Companies Bill 2013Particulars
Modifications
Printing of CIN
(Corporate Identity
Number)
As per sections 12 (3), every company shall have to
from now paint or affix its name (provided that where
a company has changed its name within last two
years, shall get its name printed on along with former
name(s) changed within last two years), registered
office and Corporate Identity Number (CIN) along with
telephone number, fax number, if any, e-mail and
website address in all the business letters, billheads,
letter papers and in all its notices and other official
publications.
Also in case of an One Person Company the words One
Person Company shall be mentioned in brackets below
the name of such company, wherever its name if
printed, affixed or engraved.
There was no compulsion of printing
the CIN.
Number of Directors Minimum :
Public company -3 Private -2
Maximum :
Limit of 12, beyond which CG approval
was required u/s 259.(For Public Co.
and Pvt. Co. which is a subsidiary of
any Public Co.),while the act lies silent
in case of Private Co.
Minimum :
Public company -3 Private -2 , OPC-1.
Maximum :
Limit increased to 15 from 12 .
Moreover, directors can be added by passing of special
resolution without getting the approval of Central
Government as earlier required.
24. Companies Act 1956 Companies Bill 2013Particulars
Modifications
To be filed with ROC within 15 days Clause 12 (4).To be filed with ROC within 30 days
Sec.581 I.
Object Clause in MOA Earlier the clause was divided into :
Main objects
Incidental objects
Other objects
Now the Objects Clause of memorandum has been
relieved. As per section 4 (1) (c) object clause to
contain ‘objects for which the company is proposed
to be incorporated and any matter considered
necessary in furtherance thereof. Hence, divided into:
Objects to be pursed by Company on incorporation
Incidental Objects
Alteration in AOA
Appointment of
Debenture Trustees (DT)
Section 117B:
No such ceiling of 500 existed. Appt. of
DT compulsory for company issuing
prospectus or a letter of offer to the
public for subscription of its
debentures.
Clause 71:
Appointment of Debenture Trustees compulsory for
public issue of debentures through prospectus to
more than 500 persons.
26. Modifications
Directors
Appointment and qualifications of directors [Clause 149]:
• Limits on maximum number of directors in a company increased to 15. It can be further increased by
passing a special resolution.
• Prescribed class of companies to have at least 1 woman director. Existing companies to comply with
this requirement within 1 year.
• One of the directors in a company shall be a person who has stayed in India for 182 days or more
in the previous calendar year.
• Director to vacate office if he remains absent from all the meetings of the BOD held during 12
months whether with or without seeking leave of absence of the BOD [Clause 167].
Independent Directors(IDs) [Clause149(5)]:
•Listed companies to have at least 1/3rd of its total number of directors as IDs (as defined – further, the Rules may
prescribe additional qualifications to be an ID). CG may prescribe minimum number of IDs in case of any class of
public companies. This requirement is to be complied within 1 year:
a) By existing listed companies from the commencement of 2013 Act; and
b) By the prescribed class of public companies from the date Rules are notified
•Alternate director of an ID can be appointed if such an alternate director is also an ID.
•ID is not liable to retire by rotation.
•ID not to be included in the ‘total number of directors’ liable to retire by rotation.
• OPC should have minimum 1 director.
• Duties of directors have been defined under Clause 166.
27. Modifications
Directors
• IDs not entitled to any stock option but may receive remuneration by way of sitting fee, re-imbursement of
expenses for participation in meetings, profit related commission as approved by the members of the company.
• ID and Non Executive Director (not being promoter or Key Managerial Personnel), shall be held liable, only for such
acts by a company which had occurred with his knowledge, attributable through Board processes, and with his
consent or connivance or where he had not acted diligently.
• Only an independent director can be appointed as alternate director to an independent director [Clause 161(2)].
• Nominee director nominated by any financial institution, or in pursuance of any agreement, or appointed by any
government to represent its shareholding shall not be deemed to be an independent director.
Director elected by small shareholders [Clause 151]:
• A listed company may have 1 director elected by a small shareholders i.e. shareholders holding shares of
nominal value of not more than ` 20,000 or such other sum as may be prescribed.
• Manner, terms and conditions of appointment of such director will be prescribed.
Independent Directors(IDs) [Clause149(5)]:
• ID shall be appointed for a term upto 5 consecutive years and are eligible for re-appointment subject
to compliance with conditions including performance evaluation by the entire BOD and approval by
members through special resolution.
• Once the 2 consecutive terms are completed, the ID shall be eligible for appointment after a cooling
period of 3 years, provided he is not associated with the company during this 3 years period in any
capacity, either directly or indirectly.
• An ID may be selected from data bank maintained by notified institute or association having expertise
in creation and maintenance of such data bank [Clause 150].
28. Modifications
Directors
Maximum number of directorship [Clause 165]:
• A person cannot be a director, including alternate director, in more than 20 companies including not
more than 10 public companies.
For determination of public companies for this purpose, directorship in private companies that are
either holding or subsidiary company of a public company shall be regarded as a public company.
• Shareholders may specify lesser number of companies in which a director of the company may act as
director.
• Transition period to comply with the limit on directorship - 1 year from the commencement of 2012
Act.
Resignation of directors [Clause 168]:
• Resignation of director to take effect from the date on which notice of resignation is received by the company, or
the date, if any, specified by director in the notice, whichever is later [Clause 168(2)].
• Resigning director to also file his resignation letter with the ROC within 30 days, in prescribed manner, giving
detailed reasons for resignation [Clause168(1)].
• Where all directors of a company resigns or vacate office, the promoter or in his absence, the CG to appoint the
required number of directors till new directors are appointed in a general meeting [Clause 168(3)].
Additional grounds for disqualification of Director:
• A person who has been convicted of offence dealing with related party transactions at any time during the
preceding 5 years [Clause 164 (1) (g)].
• Directorship in private companies too under ambit of disqualification on ground of non-filing of financial
statements or annual return for any continuous 3 years or failure to repay deposits accepted by it or redeem
debentures on due date or pay interest due thereon or pay any dividend declared and such failure continues for 1
year or more.
29. Modifications
Directors
Loan to Directors:
• Company shall not directly or indirectly make any loan including book debt or give any guarantee or
provide any security to its director or to any other persons in whom the director is interested. This
provision is not applicable to
Loan to MD / WTD
as a part of contract of services extended to all its employees; or
Pursuant to scheme approved by members by special resolution
A company which in the ordinary course of its business provides loan, guarantee or security for due
repayment of any loan and charges interest thereon being not less than bank rate declared by RBI.
• Provisions made applicable to private companies and need to obtain CG approval for such loans are
removed.
Duties of Directors [Clause 166]:
In Companies Act 1956, no provision regarding Duties of Directors has been specified, but Companies Bill has
incorporated it u/s 166, levying obligation on part of Directors .These duties will include:
• Acting in accordance with the articles of the company.
• Acting in good faith in order to promote the objects of the company for the benefit of its members as a whole, and
in the best interests of the company, its employees, the shareholders, the community and for the protection of
environment.
• Exercising his duties with due and reasonable care, skill and diligence and shall exercise independent judgment.
• Shall not achieve or attempt to achieve any undue gain or advantage either to himself or to his relatives, partners,
or associates. If found guilty, shall be liable to pay an amount equal to that gain to the company.
• Shall not assign his office and any assignment so made shall be void.
Contravention of provisions of this act will attract fine of 1 lakh to 5 lakhs rupees.
31. Modifications
Board of Directors
Meetings of BOD:
• First meeting of the BOD of a company must be held within 30 days of its incorporation. Minimum 4 meetings of
BOD to be held every year with the gap between the 2 consecutive meetings not exceeding 120 days. CG may by
notification provide different requirement or modify the requirement for specific class or description of companies.
• In case of OPC, small companies and dormant companies 1 board meeting to be in each half of the calendar year
and gap between 2 meetings should not be less than 90 days.
• Participation in the board meeting through prescribed video conferencing or other audio visual means (VC)
recognized. CG may provide a list of businesses where meeting by means of VC will not be recognized [Clause 173].
• At least 7 days’ notice for board meeting shall be given. A board meeting may be called at a shorter notice to
transact urgent business, if at least 1 ID is present at such meeting. Decision taken at such meeting in absence of
an ID is final only on ratification thereof by at least 1 ID.
Committees of BOD:
1. Audit Committee:
• Mandatory for listed companies and other prescribed classes of companies.
• Composition – Minimum 3 directors with majority comprising of IDs.
• Chairperson and majority of directors shall be persons with ability to read and understand the financial
statement.
• Transitional period for compliance – 1 year from the commencement of this Act.
• Listed companies and prescribed companies to have vigil mechanism for directors and employees to report
genuine concern in prescribed manner.
32. Modifications
Board of Directors
Committees of BOD:
2. Nomination and Remuneration Committee:
• Mandatory in case of listed companies and other prescribed classes of companies.
• Composition – 3 or more NED of which at least ½ shall be IDs. The Chairperson of the company can be a
member of the committee but cannot be a chairperson of the committee.
• This committee shall amongst other:
Identify persons who are qualified to be directors and who can be appointed in senior management;
Recommend to BOD, policy relating to remuneration to directors, KMP and other employees keeping in mind
appropriate performance bench mark; striking a balance between fixed and incentive pay etc.;
be responsible for evaluation of every director of BOD.
3. Stakeholders Relationship Committee:
• SRC mandatory where total number of shareholders, deposit holders, debenture holders and other security
holder exceeds 1,000 at any time during a FY.
• Composition – Chairperson shall be NED and such other number of directors as determined by the BOD.
• This committee to consider and resolve grievances of the security holders of the company.
Restrictions on powers of BOD:
• Restriction on power of BOD to exercise specified powers with general meeting approval extended to private
companies. In all cases approval of shareholders by a special resolution is made necessary.
• In case of sale, lease or otherwise disposal of one or more undertaking or the whole or substantially the whole of
undertaking, quantitative tests provided for determination of ‘undertaking’ and ‘substantially the whole of the
undertaking.
33. Modifications
Related Party Transactions:
• Without the consent of the Board of Directors given by a resolution at a
Board Meeting and subject to such conditions as may be prescribed, no company
shall enter into any contract or arrangement with a related party with respect to—
a) sale, purchase or supply of any goods or materials; selling /disposing of/ buying property of any kind; leasing
of property of any kind; availing or rendering of any services;
b) appointment of any agent for purchase or sale of goods, materials, services or property;
c) such related party's appointment to any office or place of profit in the company, its subsidiary company or
associate company; and
d) underwriting the subscription of any securities or derivatives thereof, of the company:
• Every contract or arrangement entered into with a related party shall be referred to in the Board's Report along
with the justification for entering into such contract or arrangement [Clause 188(2)].
• Any arrangement between a company and its directors in respect of acquisition of assets for consideration other
than cash shall require prior approval by a resolution in general meeting and if the director or connected person is
a director of its holding company, approval is required to be obtained by passing a resolution in general meeting of
the holding company [Clause 192].
• Where a one person company limited by shares or by guarantee enters into a contract with the sole member of the
company who is also its director, the company shall, unless the contract is in writing, ensure that the terms of the
• contract or offer are contained in the memorandum or are recorded in the minutes of the first Board meeting held
after entering into the contract. The company shall inform the Registrar about every contract entered into by the
company and recorded in the minutes [Clause 193].
• Related party transactions by a company having prescribed paid-up capital or value of transaction exceeding
prescribed limits will require prior approval of members by special resolution. The related party who is a member
of such a company cannot vote in such special resolution.
• The provisions would not apply to transactions entered into in the ordinary course of business, unless they are not
on an arms’ length basis.
• BOD report to disclose related party transactions along with the justification.
34. Modifications
Key Managerial Personnel (KMP) [Clause 203(1)] :
• Prescribed class of companies should have Whole-time KMP:
A Chairperson can be an MD or CEO at the same time, if the Articles of the company
permits or if the company does not have multiple businesses or where the company has
multiple businesses and has appointed 1 or more CEOs for each such business as may notified by CG,
A whole-time KMP shall not hold office in more than 1 company at the same time.
CFO made responsible and liable for penalty and / or prosecution for compliance with various provisions such as
– maintenance of books of accounts, preparation & filing of annual accounts, disclosure of financial
information in offer document, risk management, internal control etc.,
• In case of companies with no profits or inadequate profits, managerial remuneration can be paid as per Schedule
of remuneration (Schedule V – similar to existing Schedule XIII to 1956 Act). If the conditions of such Schedule are
not complied with, payment of managerial remuneration will require approval of CG.
• Insurance premium paid by company for indemnifying specified KMPs against the liabilities for negligence, breach
of duty etc. of such specified KMPs shall not be treated as part of remuneration of such KMPs.
• MD or WTD of the company who is in receipt of any commission from the company shall not be disqualified
from receiving any remuneration / commission from its holding company or subsidiary company subject to
necessary disclosures in the BOD report.
• Prior approval of shareholders required in general meeting for a company to enter into an arrangement
specified in [Clause 192].
• Director or KMP of a company shall not buy in the company, its holding, subsidiary or associate company
[Clause194(1)] –
a right to call for delivery or a right to make delivery at a specified price and within a specified time, of a
specified number of relevant shares or a specified amount of relevant debentures; or
a right, as he may elect, to call for delivery or to make delivery at a specified price and within a specified time,
of a specified number of relevant shares or a specified amount of relevant debentures.
36. 1
Modifications
National Financial Reporting Authority (NFRA) (Clause 132) :
• The functions of NFRA shall include:
Make recommendations to CG on the formulation of accounting and
auditing policies and standards;
Monitor and enforce compliance with accounting and auditing standards;
Oversee the quality of service of the professions and suggest measures required for improvement in quality of
services and such other related matters as may be prescribed;
Perform other prescribed functions in relation to above as may be prescribed.
• NFRA shall consist of a Chairperson and other part time and the full time members not exceeding the prescribed
limit of 15 [Clause 132(3)].
• The Chairperson and full time members of NFRA shall not be associated with any audit firm (including related
consultancy firms) during the course of their appointment and 2 years thereafter [Clause 132(3)].
• Powers of NFRA shall include:
Investigate into the matters of professional or other misconduct committed by member or firm of CA.
Powers as are vested in a civil court under the Code of Civil Procedure, 1908 while trying a suit.
Where professional or other misconduct is proved, NFRA have the power to make order for imposing monetary
penalty or debarring the member or the firm from engaging himself or itself from practice as member of the
institute for a minimum period of 6 months or for such higher period not exceeding 10 years.
• Any person aggrieved by the order of NFRA can prefer appeal to Appellate Authority constituted by the Central
Government
• The Central Government may, by notification, constitute a NFRA, to be
headquartered at New Delhi, to provide for matters relating to Accounting
and Auditing Standards applicable to companies or their auditors.
38. 1
Modifications
Removal of names of companies from the Register of Companies
[Clause 248]:
• A company may be struck off by ROC for following reasons -
subscribers to MOA have not paid the subscription money within 180 days from the date of incorporation;
company has failed to commence its business within 1 year of its incorporation;
company is not carrying on any business or operation for 2 immediately preceding FY and has within such
period applied for status of a dormant company.
• Companies can also by passing a special resolution apply for removal of name.
Winding up of a company [Clause 213]:
There are still 9 Circumstances in which a Company may be wound up by Tribunal, but, 3 Circumstances
has been Removed while 3 Circumstances has been added:
3 Circumstance which have been removed :
• Failure to commence business within 1 year
• Minimum no. of members falling below prescribed limit
• Failure to hold statutory meeting or deliver statutory report
3 Circumstance which have been added :
• Affairs of the Company conducted in fraudulent manner
• Company has been incorporated for fraudulent or unlawful means
• persons concerned in the formation of the company or the management of its affairs have in connection
therewith been guilty of fraud, misfeasance or other misconduct towards the company or towards any of its
members
39. 1
Modifications
Restructuring and Liquidation :
• The entire rehabilitation and liquidation process has been made time bound.
• Winding up is to be resorted to only when revival is not feasible. (clause 258).
• The Tribunal may appoint an interim administrator or a company administrator from the panel of Company
Secretaries, CAs, CWAs, etc. maintained by the Central Government. [clause 259(1)].
• The Company Administrator shall prepare a scheme of revival and rehabilitation [clause 261(1)].
• If revival scheme is not approved by the creditors, the Tribunal shall order for winding up of the company
(clause 258).
• No civil court shall have jurisdiction in respect of any matter on which Tribunal or Appellate Tribunal is
empowered. (clause 268).
Company Liquidators (Clause 275):
• The Tribunal may appoint Provisional Liquidator or the Company Liquidator from a panel maintained
by the Central Government consisting of Company Secretaries, Chartered Accountants, Advocates
and Cost Accountants.
• On an appointment as provisional liquidator or Company Liquidator, such liquidator is required to
file a declaration in the prescribed form disclosing conflict of interest or lack of independence in
respect of his appointment, if any, with the Tribunal.
• Professional assistance to Company Liquidator (Clause 291)
The Company Liquidator may, with the sanction of the Tribunal, appoint one or more professionals
including Company Secretaries to assist him in the performance of his duties and functions under
the Act.
41. Modifications
National Company Law Tribunal and Appellate Tribunal [Clause 408]:
• On the date of the constitution of NCLT [Clause 434]:
All matters, proceedings or cases pending before CLB shall stand transferred to NCLT;
All proceedings under 1956 Act, including proceedings relating to arbitration, compromise, arrangements and
reconstruction and winding up of companies, pending before any District Court or High Court, shall stand
transferred to NCLT and NCLT may proceed to deal with such proceedings either de novo or from the stage
before their transfer.
• Appeals against the order of NCLT shall lie to NCLAT.
• An appeal arising out of order of NCLAT on any question of law shall lie to Supreme Court.
• A party to any proceeding or appeal before NCLT or NCLAT, may either appear in person or authorize one or more
CA or CS or CWA or legal practitioners or any other person to present his case [Clause 432].
• Central Government shall, by notification, constitute, a Tribunal known as NCLT
consisting of a President and such number of Judicial and Technical members, as the
CG may deem necessary, 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.
• Principal bench of NCLT shall be at New Delhi and there may be such other benches
as may be specified by CG [Clause 419].
• NCLT to endeavor to dispose of the proceedings within 3 months from the date of
commencement of the proceeding [Clause 422].
42. Modifications
Inspection, Inquiry and Investigation:
• CG may under the specified situations including in public interest refer affairs of a company to be investigated by
SFIO [Clause 211].
• Where pursuant to an investigation or a compliant, NCLT is of the opinion that there is good reason to find
relevant facts about any securities and such facts cannot be found out unless certain restrictions are imposed,
NCLT may provide restrictions on securities for a period not exceeding 3 years [Clause 222].
• Where it appears to NCLT in specified circumstances that there are reasonable grounds to believe that the
removal,
• transfer or disposal of funds, assets, properties of the company is likely to take place in a manner that is prejudicial
to the interests of the company or its shareholders or creditors or in public interest, NCLT may direct such transfer,
assets, properties, etc. of the company shall not take place during a period not exceeding 3 years [Clause 221].
• Notwithstanding anything contained in the Code of Criminal Procedure, 1973,
• KMP, auditors and practicing CS also subject to search and seizure of documents by ROC and the
Inspector appointed by CG.
• CG to establish Serious Fraud Investigation Office (SFIO) for investigation of frauds relating to a
company. Till the time SFIO is not established, SFIO already set up by CG in terms of directions of
Government of India to be used.
Special Court may try in a summary way any offence under 2012 Act which is punishable
with imprisonment for a term not exceeding 3 years.
every offence under this Act except certain offences shall be deemed to be non-cognizable
within the meaning of the said Code [Clause 439(1)]. Offences under this Act which are
cognizable within the meaning of the said Code include those specified in Clause 212(6).
44. Modifications
Acceptance of Deposits:
• Companies prohibited from inviting, accepting or renewing deposits from public except following:
a) Banking company;
b) NBFC;
c) such other company as CG may specify; and
d) Public companies having such net worth or turnover and subject to prescribed Rules [Clause 76].
• Company other than those covered above can accept deposit only from its members by passing a resolution in
general meeting and subject to Rules and conditions including the following:
a) Credit rating;
b) Deposit insurance;
c) Depositing in scheduled bank 15% of amount of its deposits maturing during the current and next FY, etc.
• The Rues regarding Deposits from Members will be prescribed in consultation with the Reserve Bank of India as per
Companies Bill instead of Companies (acceptance of deposits) Rules, 1975 as per Companies Act 1956.
• Any deposit accepted before the commencement of this Act or any interest due thereon to be repaid within 1 year
from the commencement of this Act or from the date on which such payments are due, whichever is earlier.
• Penalty Provisions:
The penalty for failure to repay deposit has been made extremely stringent. If a company fails to repay the deposit
or part thereof or any interest thereon within the time specified u/s 74(1) or such further time as may be allowed by
the Tribunal u/s 74(2) the company shall, in addition to the payment of the amount of deposit or part thereof and
the interest due, be punishable with fine of Rs.1 crore which may extend to Rs.10 crore and every officer of the
company who is in default shall be punishable with imprisonment which may extend to 7 years or with fine of Rs.25
lakhs but which may extend to Rs.2 crore, or with both. Where a company fails to repay the deposit and it is proved
that the deposits had been accepted with intent to defraud the depositors or for any fraudulent purpose, every
officer of the company who was responsible for the acceptance of such deposit shall, without prejudice to liability
u/s 447 i.e. punishment for fraud), be personally responsible, without any limitation of liability, for all or any of the
losses or damages that may have been incurred by the depositors [Clause 75]. Stringent punishment is proposed for
failure to distribute dividend within 30 days of its declaration [Clause 127].
46. Modifications
Companies Act 1956 Companies Bill 2013Particulars
Issue of Securities in
Dematerialized Form
Only
Mandatory Sec 68B
for every listed company
making IPO of any security for a
sum of 10 crore or more.
Mandatory Clause 29 for:
• Companies Making public offer
• Certain Companies as may be specified
Issue of Shares at
Discount
Under Section 79
Shares can be issued at discount
Under Clause 53
• Issue of shares at discount prohibited
• Sweat Equity shares can be issued at Discount
Exit Offer by promoters to
Dissenting shareholders
No such Provision Exists Under clause 27(2)
• Exit offer should be given to dissenting shareholders by
promoters or controlling shareholders
Offer of Sale No such provision exists under
the Act
Under Clause 28
• Members of the Company in consultation with the board
can offer there shares to public
• Such Offer of Sale shall be deemed to be a “Prospectus
issued by the Company”
Certificate of
Incorporation
It is considered as a Conclusive
evidence u/s 35.
Now it is not considered as a Conclusive evidence [Clause 7].
Issue, Allotment and Transfer of Securities :
Issue of Convertible
Debentures
No provision for requirement
existed.
Needs special resolution of the members for the issue of
debentures with conversion option, wholly or partly.
47. Modifications
Issue, Allotment and Transfer of Securities :
Companies Act 1956 Companies Bill 2013Particulars
Voting Rights of
Preference Shareholders
Different period are specified
for Cumulative and Non-
Cumulative Preference Shares
after which preference
shareholders have voting rights.
Under Clause 47
•Bill Doesn’t Differentiate cumulative and non-cumulative
preference shares
•Same period prescribed after which preference
shareholders have voting rights
Issue of preference
Shares
Preference shares with a term
of more than 20 years cannot
be issued under the act.
Under Clause 55(2)
Redeemable preference shares with a term of more than 20
years can only be issued by a company limited by shares for
infrastructural projects.
Restriction of further
offer of Buy-Back
In case buy-back is made by
BOD (10% of the total paid-up
equity capital and free
reserves), no further offer of
buy-back is permissible within
a period of 365 days reckoned
from the date of the preceding
offer of buy- back.
No buy-back up to period of 1 year from the date of
preceding buy-back whether approved by BOD or
shareholders
Utilization of Securities
Premium
Clause 52(3):
prescribed class of companies whose financial statements
comply with accounting standards prescribed for such class
cannot utilize SPA for writing off preliminary expenses and
premium on redemption of preference shares or
debentures.
Section 78:
It can be utilized for writing off
preliminary expenses or for
providing premium payable on
redemption of preference
shares or debentures.
48. Modifications
Issue, Allotment and Transfer of Securities :
Companies Act 1956 Companies Bill 2013Particulars
Issue of bonus shares No provision in the act.
However, Rules framed for
public unlisted Company.
Clause 63 provides for issue of bonus shares. Private
companies are not excluded in clause 63 for issue of bonus
shares but apparently clause 23 does not permit private
companies to issue bonus shares. Provided that no issue of
bonus shares shall be made by capitalizing reserves created
by the revaluation of assets. Further, no company shall
capitalize its profits or reserves for the purpose of issuing
fully paid-up bonus shares, unless—
• it is authorized by its articles;
• it has, on the recommendation of the Board, been
unauthorized in the general meeting of the company;
• it has not defaulted in payment of interest or principal in
respect of fixed deposits or debt securities issued by it;
• it has not defaulted in respect of the payment of statutory
dues of the employees, such as, contribution to provident
fund, gratuity and bonus;
• the partly paid-up shares, if any outstanding on the date of
allotment, are made fully paid-up;
• it complies with such conditions as may be prescribed
bonus shares shall not be issued in lieu of dividend.
Transfer of shares of
Public Company
Shares of public company are
freely transferable
Shares of public company are freely transferable. However,
Contract or arrangement between two or more persons in
respect of transfer of securities shall be enforceable as a
contract
49. Modifications
Issue, Allotment and Transfer of Securities :
Companies Act 1956 Companies Bill 2013Particulars
Voting rights on
Preference Shares
Section 87:
Different criteria for cumulative
and noncumulative preference
shares for trigger of voting
rights.
Clause 47:
No such difference between cumulative and noncumulative.
Voting rights to arise if dividends payable are in arrears for a
period of two years or more.
When is dividend said to
be payable for
determination of voting
rights as above.
Explanation to clause 87
provides for the same.
Explanation omitted. May give rise to needless litigation.
Variation in rights of one
class of shareholders
affects rights of other
class of shareholders
If variation by one class of shareholders affects the rights of
any other class of shareholders; the consent of at least
75% of such other class shall also be obtained.
Section 106-107 :
Variation in rights of
shareholders of any class can
be made by obtaining consent
in writing of not less than 3/4th
of the issued shares of that
class or with the sanction of the
Special Resolution passed at a
separate meeting of the holders
of the issued shares of that
class.
50. Modifications
Issue, Allotment and Transfer of Securities :
Companies Act 1956 Companies Bill 2013Particulars
Reduction of capital if
deposits not repaid
No such provision existed. No reduction of capital shall be made by a company if the
company is in arrears in the repayment of any deposits
accepted by it or the interest payable thereon irrespective of
the deposits being accepted before or after the
commencement of this Act [Clause 66]
Consolidation or Sub-
Division of Share Capital
Section 94(1) permitted the
same if there was a provision
for the same in the AOA
treating it as a mere alteration
not involving any reduction in
the share capital. No approval
of the Court or any other
authority required.
Clause 61(1) (b) provides that such alteration shall be made
only after making application to the Tribunal and obtaining
the approval of the Tribunal. Approval of the Tribunal shall
be required for consolidation and division of share capital
only if the voting percentage of shareholders changes
consequent on such consolidation.
Raising Capital through
Private Placement
Offer can be made to such number of persons as may be
prescribed and for prescribed amount without issue of
prospectus. If offer is made to more than prescribed no. of
persons, the same shall be deemed to be an offer to the
public. ‘Private Placement’ has been defined u/s 42(2)(i) to
bring clarity.
No such provision existed.
Transfer of profits not
exceeding 10% to
Reserves
Clause 123:
Company to use its wisdom to decide % of profits to be
transferred to reserves. Its no longer mandatory for
companies to transfer its profits to Reserves.
Section 205:
Company could not transfer
more than 10% profits except in
accordance with the rules.
51. Modifications
Other Provisions:
1. Public company permitted to issue securities through:
• public offer; or
• private placement by complying with the provisions of Part II of this Chapter III; or
• issue of rights issue or bonus issue
Subject to compliances with the Rules and SEBI Act and rules and regulations made there under.
2. Private company permitted to issue securities through:
• rights issue or bonus issue in accordance with the provisions of the Act
• through private placement by complying with the provisions of Part II of this Chapter III
3. A person who has been convicted for personation for acquisition etc. of securities shall also be liable for suffering
disgorgement of gains, seizure and disposal of such securities and such amount received through disgorgement or
disposal of securities shall be transferred to Investor Education and Protection Fund [Clause 38].
4. Authorized, subscribed and paid-up capital of a company to be mentioned in all notices, advertisement or other
official publication or any business letter, billhead or letter paper.
5. Every company shall deliver debenture certificate within six months of allotment [Clause 56(4)(d)].
6. If a company with intent to defraud, issues a duplicate certificate of shares, the company shall be punishable with
fine which shall not be less than 5 times the face value of the shares involved in the issue of the duplicate
certificate but which may extend to 10 times the face value of such shares or rupees 10 crores, whichever is higher.
Stringent penalties have also been imposed for defaulting officers of the company. [Clause 46(5)].
7. Where any depository has transferred shares with an intention to defraud a person, it shall be liable u/s 447 i.e.
provisions for punishment for fraud [clause56(7)]. Security Premium Account may also be applied for the purchase
of its own shares or other securities [Clause 52(2)(e)].
Issue, Allotment and Transfer of Securities :
52. Modifications
Dividend:
Companies Act 1956 Companies Bill 2013Particulars
Restriction on Interim
Dividend
No such restriction existed. BOD to declare interim dividend out of the surplus in the
P&L A/c as well as the profits for the financial year in which
the Interim Dividend is sought to be declared. In case of loss,
interim dividend rate not to exceed average dividends
declared during preceding 3 F.Y. [Clause 123 (3)]
Transfer of shares to
Investor Education &
Protection Fund (IEPF)
Only Unclaimed Dividend to be
transferred to IEPF.
Clause 124:
Along with the unclaimed dividend, the shares on which
dividend is unclaimed, also to be transferred to the IEPF.
Claim from IEPF after
7 years
Claim of an investor over a dividend not claimed for more
than a period of 7 years not to be extinguished and shall be
entitled to refund in accordance with the rules.
No claim should lie against the
Fund or the Company in respect
of Individual amounts which
were unclaimed or unpaid for a
period of 7 years.
54. Modifications
Financial Statements :
Companies Act 1956 Companies Bill 2013Particulars
Inclusions in Financial
Statements &
Submission at AGM
• Balance Sheet
• Statement of Profit and Loss
• Notes
• Balance sheet
• Statement of Profit and Loss/ Income and Expenditure
Account
• Cash Flow statement
• Statement showing Changes in equity
• Notes of the above
Revision of Financial
Statements
No such revision possible Under clause 131, voluntary revision of Financial statements
and Boards report for any of the 3 previous FY is possible
Un-adopted Financial
Statements
No such provision To be filed with ROC with 30 days of AGM or adjourned
AGM
Companies Act 1956 Companies Bill 2013
Authentication of
Financial Statements
For Banking Co (Sec. 215):
Sec. 29(2) of Banking Companies
Act 1949.
For Other Companies ( Sec.215):
i. 2 director out of which one
shall be managing director,
Manager and Company
Secretary, OR
ii. Manager, Company
Secretary, 1 director along
with explanation for non
compliance with (i).
Clause 134 (1):
i. Chairperson of the company where he is authorized by
the BOD
ii. 2 director out of which one shall be managing director
iii. Chief Executive Officer, if he is director of the company
iv. Chief Financial Officer
v. Company Secretary
No separate provision for Banking Companies.
55. Modifications
Annual Return :
Contents of Annual Return:
More Disclosures are introduces u/s 92 instead of Minimal
Disclosures in Companies Act 1956.
Return by Listed Company – Clause 93:
Every listed Company shall file with ROC, within 15 days a
return with respect to change in number of shares:
Held by promoters
Top Ten Shareholders of such company
New Disclosures to be Made:
• Change of promoters/ KMP since previous FY
• Details of meetings of Board/Committee’s/ Members or
class thereof along with attendance details
• Remuneration of Directors, KMP
• Certification of Compliances, Disclosures
• Details of shares held by or on behalf of FII
• Penalties/Punishment imposed on:
Company
Directors or Officers
Compounding of offences
Appeals against penalty or punishment
Particulars Companies Act 1956 Companies Bill 2013
Signing Authorities
i. Director and
Manager/Secretary
ii. If No Manager/Secretary,
then by 2 Director &CS in
practice
i. Not Applicable
i. Only Listed Companies-
Certified by CS
a) General Companies:
b) One Person/ Small
Company
c) Listed Company/ Other
prescribed Companies
i. Director and CS
ii. Where no CS, by CS in Practice
i. Company Secretary
ii. If no, CS, by Director
i. To be also certified by CS in practice
Clause 92 :
57. Modifications
Annual General Meetings :
Companies Act 1956 Companies Bill 2013Particulars
First AGM Within 18 months from date of
incorporation
Within 9 months of end of FY
Quorum Public Company:
5 members personally present
Private Company:
2 members personally present
In case of Public Co. :
• 5 members where no. members is < 1000
• 15 members where no. of members is 1000 >≤ 5000
• 30 members where no. of members is > 5000
In case of Private Company:
2 members personally present
Demand For Poll
By Person/Proxy Holding:
• ≥ 1/10 voting power
• Paid up Shares with value of
more than Rs. 50,000
By Person/ Proxy Holding:
• ≥ 1/10 voting power or shares
• Shares with value of more than Rs. 500,000
A. Public Company
Private Company with:
• <7 members personally
present , by any member
• >7 members, by two members
Other Company:
By member(s)/proxy with >
1/10 voting power
By any member(s)/proxy with ≥ 1/ 10 voting powerB. Other Company
58. Modifications
Annual General Meetings :
Companies Act 1956 Companies Bill 2013Particulars
Mode of Notice In writing Either in writing or through electronic mode
Shorter Notice Consent of All members
entitled to vote required
Consent of not less than 95 % of members entitled to vote
at that meeting required
AGM cannot be held on Public Holidays and
Outside Business Hours
National holidays
Outside Business Hours (9am to 6pm)
59. Modifications
Registration of Charge:
Scope of Registration of
Charge
Definite and clear Under clause 77
• Wide and ambiguous
• Covers
Property
Assets
Any of its undertaking, whether tangible or otherwise
Power of ROC ROC can condone delay for
registration beyond 30 and
within 60 days from date of
creation of charge
Can allow registration within period of 300 days of creation
of charge on payment of additional fee.
Particulars Companies Act 1956 Companies Bill 2013
61. Modifications
Compromises, Arrangements and Amalgamations:
Cross Border Mergers No such provision existed. Clause 234 :
Provides for cross border mergers where a foreign company
may with prior approval of RBI, merge or amalgamate in to a
co. registered under this Act or vice-versa. Payment of
consideration to the shareholders of the merged company in
Cash, or in Depository Receipts or partly by Cash and
Depository Receipts.
Holding of Treasury Stock Clause 233(10):
A transferee company shall not on merger or amalgamation,
hold any shares in its own name or in the name of any trust
either on its behalf or on behalf of any of its subsidiary or
associate company and all such shares shall be cancelled or
extinguished on the merger or amalgamation.
Particulars Companies Act 1956 Companies Bill 2013
No provision existed.
Fast Track Merger Clause 233:
Simplified procedure has been introduced for merger of :
• Holding company and wholly owned subsidiary
• Two small companies
No provision existed.
Objections to
Compromise and
Arrangements
Can be Raised only by persons:
• Holding ≥ 10% of shareholding
• ≥ 5% of total outstanding debt
Any Member/ Creditor/
Member through proxy
62. Modifications
Compromises, Arrangements and Amalgamations:
Notice of Meeting in case
of Merger
To be given to Regional Director Should be sent to the Central Government, the Income-tax
authorities, the RBI, Securities and Exchange Board, ROC,
respective stock exchanges, Official Liquidator, Competition
Commission of India and such other sectoral regulators or
authorities which are likely to be affected by the
compromise or arrangement [Clause 230(5)].
Particulars Companies Act 1956 Companies Bill 2013
Takeover Offer Can not be included in
Compromise and Arrangements
Clause 230(11):
• Can be included
• In case of Listed Companies, SEBI Regulations need to be
complied with.
64. Modifications
Depreciation:
Schedule and
Depreciation Rates
Schedule XIV provides different
depreciation rates specified.
Schedule II provides useful Lives of assets and no rates (SLM
or WDV)
Particulars Companies Act 1956 Companies Bill 2013
Separate Rates Separate rates for
Intangibles/electricity
companies/EST etc
No Separate Rates are available.
Low Value Items Assets having value of Rs. 5K to
be fully depreciated.
No provision for low value items or rates for intangibles.
Multiple Shifts Different shifts’ rates are
defined in the Schedule.
The Rates defined in the Schedule is on Single shift basis. For
Double shift the rates will increase by 50% and for Third
shift the rates will increase by 100%.