Chapter II of Companies Act, 2013

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  • Chapter II of Companies Act, 2013

    1. 1. Companies Act, 2013 AT ‘YOU’ Institute for Professionals By CS Mamta Binani Past Chairperson (Year 2010), EIRC of ICSI Practising Company Secretary mamtab@mamtabinani.com 01.02.2014 Room No.6, 4th Floor, Commerce House 2A, Ganesh Chandra Avenue, Kolkata 700013 Connect me @ : (033) 3028 8955-57; (033) 3002 5630-33; 98310 99551 mamtab@mamtabinani.com Visit me @ : www.mamtabinani.com
    2. 2. UNDER THE COMPANIES ACT, 2013 & Draft Companies Rules, 2013 Room No.6, 4th Floor, Commerce House 2A, Ganesh Chandra Avenue, Kolkata 700013 Connect me @ : (033) 3028 8955-57; (033) 3002 5630-33; 98310 99551 mamtab@mamtabinani.com Visit me @ : www.mamtabinani.com
    3. 3. One Person Company concept has been introduced for the 1st time. Private Companies Company Public Company Limited by Shares/ Guarantee /Unlimited Foreign Co. / Part XXI Co. / Section 8 Co. One Person Company Small Company
    4. 4. Private Company COMPANIES ACT, 2013 Section: 2(68)  Same as previous minimum paid-up capital of one lakh rupees or such higher paidup share capital as may be prescribed and which by its articles: COMPANIES ACT, 1956 Section: 3 (1)(iii) means a company which has a minimum paid-up capital of one lakh rupees or such higher paidup capital as may be prescribed and which by its articles: (a) restricts the right to transfer  Same as previous (i) It also restricts the right to transfer its shares; its shares, if any;
    5. 5. contd…… Private Company COMPANIES ACT, 2013 COMPANIES ACT, 1956 (ii) except in case of One (b) limits the number of its members to 50; Person Company, limits the number of its members to 200; In the counting of 200, what shall not be included is: Same as previous (It is to be noted here that where 2 or more persons hold one or more shares in a company jointly, they are to be treated as a single member) In the counting of 50, not including – (i) persons who are in the employment company ; and of the
    6. 6. contd…… Private Company COMPANIES ACT, 2013 Same as previous COMPANIES ACT, 1956 (ii) persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased; and
    7. 7. contd…… Private Company COMPANIES ACT, 2013 COMPANIES ACT, 1956 (iii) prohibits any invitation to:  the public to subscribe for any securities of the company; (Mark the word ‘securities’) (c) Prohibits any invitation to the public  to subscribe for any shares in, or  debentures of the company. The point of prohibiting invitation or acceptance of deposits is not there (Refer draft rules-Acceptance of Deposits by Companies) (d) Prohibits any invitation or acceptance of deposits from  persons other than its members, directors or their relatives
    8. 8. Public Company COMPANIES ACT, 2013 Section 2(71) COMPANIES ACT, 1956 Section: 3(1)(iv) Means a company which— (a) is not a private company (no change) Means a company which (a) is not a private company; (b) has a minimum paid-up share capital of:  Rs. 5 lakhs;  or such higher paid-up capital, as may be prescribed (b) has a minimum paid-up share capital of:  Rs. 5 lakhs;  or such higher paid-up capital, as may be prescribed
    9. 9. contd….Public Company COMPANIES ACT, 2013 Provided that a company which is a subsidiary of a company, not being a private company, shall be deemed to be public company for the purposes of this Act even where such subsidiary company continues to be a private company in its articles COMPANIES ACT, 1956 (c) is a private company which is a subsidiary of a company which is not a private company
    10. 10. One Person Company(OPC) Definition – Section 2(62)  Definition-A Company which has only 1 person as a member;  Is a Private Company (section 3(1)(c));   Only natural person, who is an Indian citizen and resident in India can become a member/nominee [Rule 2.1(1)]; Name of the person nominated shall be mentioned in the memorandum of One Person Company and the nomination in Form no. 2.1 along with consent of such nominee obtained in Form no. 2.2 and fee as provided in Annexure ‘B shall be filed with the Registrar at the time of incorporation of the company along with its memorandum and articles.
    11. 11.     One Person Company(OPC) Perpetual Succession – MoA to mention name of nominee [Rule 2.2(2)]; Nominee may withdraw or member nominating may withdraw; In either of these cases, new nominee to be nominated within 15 days of the receipt of notice of withdrawal [Rule 2.2(3)] and company to file the name of new nominee with the ROC within 30 days of receipt of notice of withdrawal [Rule 2.2(4)]; One Person – shall be eligible to incorporate maximum 5 OPCs [Rule 2.1(2)]; Nominee becoming sole member on death of sole member/ incapacity to contract– need to nominate within 15 days of becoming a member and also file with ROC such cessation as well as nomination within 30 days of the change [Rule 2.2(6)];
    12. 12. One Person Company (OPC) Rule 2.3 Penalty • If One Person Company or any officer of the OPC contravenes the provisions of the rules, then: • OPC or any officer of the OPC shall be punishable with: fine which may extend to Rs.5000 and with a further fine which may extend to Rs.500 for every day after the first during which such contravention continues
    13. 13. Conversion of OPC (Rule 2.4)         Mandatory Conversion into Pvt. or Public Ltd. Co. if: [Rule 2.4(1 and 2)]; paid-up share capital exceeds Rs.50 lacs; or average annual turnover exceeds Rs.2 crores (in immediately preceding 3 consecutive FYs) shall be mandatorily required to convert itself within 6 months: of the date on which its paid up share capital is increased beyond Rs.50 lacs; or of the last day of the relevant period during which its average annual turnover exceeds Rs.2 crores; or of the close of the FY during which its balance sheet total exceeds Rs. 1 crore; as the case may be Into either a private company or a public company;
    14. 14. Conversion of OPC (Rule 2.4)  Increase no. of members and directors to 2 or minimum of 7 members and 3 directors as the case may be [Rule 2.4(2)];  Alter MoA and AoA by passing Ordinary Resolution/ Special Resolution (also refer section 122(3)) [Rule 2.4(3)];  Notice to ROC in Form no. 2.6 within 30 days, informing that it has ceased to be a One Person Company and that it is now required to convert itself [Rule 2.4(4)];.  For conversion to any class of companies-compliance with section 18 of the new Act (section 32 is the corresponding old section to section 18 of the new Act)
    15. 15. Conversion of OPC (Rule 2.4) Suo-motu conversion  Increase no. of members and directors to 2 or minimum of 7 members and 3 directors as the case may be [Rule 2.4(2)];  Alter MoA and AoA by passing Ordinary Resolution/ Special Resolution (also refer section 122(3)) [Rule 2.4(3)];  Maintaining the minimum paid-up capital as per requirements of the Act;  For conversion to any class of companies-compliance with section 18 of the new Act (section 32 is the corresponding old section to section 18 of the new Act)
    16. 16. Section 3 Formation of Company {corresponding Section 12} 3(1): A company may be formed for any lawful purpose by- (a) 7 or more persons, in case of public company (b) 2 or more persons, in case of private company; or (c) 1 person, in case of One Person Company. By subscribing their names or his name to a memorandum and complying with the requirements of this Act in respect of registration.
    17. 17. Section 3(2) 3(2): A company formed under sub-section (1) may be either- (a) a company limited by shares; or (b) a company limited by guarantee; or (c) an unlimited company
    18. 18. Section 4 Memorandum {corresponding Sections 13, 14, 20, 23} 4(1): The memorandum of a company shall state: (a) the name of the company with the last word “Limited” in the case of a public limited company;  “Private Limited” in the case of a private limited co. Nothing in this clause shall apply to a company registered under section 8 (akin section 25 of old act); (b) the State in which the registered office of the company is to be situated;
    19. 19. contd…. Section 4(1) (c) the objects of the company (main objects and incidental objects). It is to be noted here that other objects will no more be allowed (d) the liability of members of the company, whether limited or unlimited, and also state(i) in the case of a company limited by shares: that liability of its members is limited to the amount unpaid, if any, on the shares held by them; and (ii) in the case of a company limited by guarantee: the amount up to which each member undertakes to contribute.
    20. 20. contd…. Section 4(1) (e) in the case of a company having a share capital,— (i) the amount of share capital with which the company is to be registered> the division thereof into shares of a fixed amount; > the number of shares which the subscribers to the memorandum agree to subscribe which shall not be less than one share; and (ii) indicated opposite his name- the number of shares each subscriber to the memorandum intends to take; (f) in the case of OPC, the name of the person who, in the event of death of the subscriber, shall become the member of the company.
    21. 21. Section 4(2) 4(2): The name stated in the memorandum shall not(a) be identical with or resemble too nearly to the name of an existing company registered under this Act or any previous company law; or (b) be such that its use by the company— (i) will constitute an offence under any law; or (ii) is undesirable in the opinion of the CG.
    22. 22. Section 4(3) 4(3): A company shall not be registered with a name which contains(a) any word or expression which is likely to give the impression that the company is in any way connected with, or having the patronage of, the followings:  Central Government (CG); Any State Government; Any local authority; Corporation;  Body constituted by the CG or any State Government
    23. 23. contd…. Section 4(3) (b) such word or expression, as may be prescribed; For both (a) and (b), it cannot be used unless the previous approval of the Central Government has been obtained for the use of any such word or expression.
    24. 24. Undesirable Names (Rule 2.5) • Identical names: In considering whether identical or not, the below mentioned points shall be disregarded: 1. The words private, limited, LLP etc. written in different ways 2. Company, co., corporation written in different ways 3. Plural version 4. Type and case of letters, punctuation, spacing etc. 5. Joining words or separating the words 6. Use of different tense or number of the same word
    25. 25. Undesirable Names (Rule 2.5) • Identical names: 7.Using different phonetic spellings of spelling variations (e.g P.Q. written as Pee Que Industries Limited) 8. Misspelled words, whether intentional or not 9. Addition of internet related designation (e.g. .com, .edu etc.) 10. Addition of words like New, Modern etc. or adding the name of the place (may be allowed-no obj-B/R) 11. Different combination of the same words (e.g. Builders & Contractors Limited/ Contractors & Builders) 12. Translation/ Transliteration of existing company/ llp
    26. 26. Undesirable Names (Rule 2.5) • Undesirable names: 1.If it attracts the provisions of sec 3 of the Emblems and Names (Prevention and Improper Use) Act, 1950 2. Includes the name of a registered trade mark 3. Includes the name of a TM which is the subject matter of application for registration 4. Includes any word which is offensive to any section of people 5. Not in consonance with the principal objects of the Co. 6.Identical or too closely resembles the name of the Company/ LLP incorporated outside India and reserved by such Company
    27. 27. Undesirable Names (Rule 2.5) • Undesirable names: 7. Foreign Subsidiary (with the addition of ‘India’) 8.Indicating a separate type of business constitution e.g. sehkari, trust, HUF, firm etc. 9. Implying connection with embassy or consulate etc. 10.Implying patronage of a national hero/ persons held in high esteem 11. Is vague, e.g. ABC Limited 12.Is abbreviated, e.g. DJMO Limited etc. 13. Subsidiary/ Joint Venture/ Associate company can use but shall carry the object of the Company
    28. 28. Undesirable Names (Rule 2.5) • Undesirable names: 14. A period of 2 years have not elapsed from the date of dissolution of the company 15. If company struck off, then only after an elapse of 20 years 16. Is identical/ too clearly resembles the name of a LLP in liquidation or the LLP which has been struck off (in this struck off case, name is blocked upto 5 years) 17. Includes ‘Insurance’, ‘Bank’ etc. unless a declaration that the mandated requirements of the respective Act(s) have been complied with 18. If the name ‘State’ – only with the approval of State Govt.
    29. 29. Undesirable Names (Rule 2.5) • Undesirable names: 19. If it only contains the name of a continent, country etc. e.g. Germany Limited 20. The name is only a general one, like Cotton Textile Mills 21. Misleading impression regarding the scope/ scale 22. Includes the names of any foreign country or any city of foreign country (allowed if MOU produced showing business relations) 23. Cannot use name of an enemy country 24. Names combining the name of a foreign country with the use of India, e.g. India Japan (shall be allowed, if government to government participation)
    30. 30. Section 4(4) A person may make an application, in Form no.2.7 (akin Form no.1A) along with a fee, to the ROC for the reservation of a name set out in the application as (Rule 2.6)(a) the name of the proposed company; or (b) the name to which the company proposes to change its name.
    31. 31. Section 4(5) (i) Upon receipt of an application under subsection (4), the ROC mayreserve the name for a period of 60 days from the date of the application (No additional 30 days after expiry of its original period)
    32. 32. contd….Section 4(5) (ii) After reservation of name, if it is found that name was applied by furnishing wrong or incorrect information, then(a) if the company has not been incorporated, the reserved name shall be cancelled; and the person making application shall be liable to a penalty which may extend to Rs.1 lakh;
    33. 33. contd…. Section 4(5) (b) if the company has been incorporated, the ROC may, after giving the company an opportunity of being heard- (i) either direct the company to change its name within a period of 3 months, after passing an OR; (ii) take action for striking off the name of the company from the register of companies; or (iii) make a petition for winding up of the company.
    34. 34. Section 4(6) 4(6): The memorandum of a company shall be in respective forms specified in: Table A Table B Table C Table D Table E in Schedule I as may be applicable to such company.
    35. 35. Section 4(7) Any provision in the memorandum or articles, in the case of a company limited by guarantee and;  not having a share capital, purporting to give any person a right to participate in divisible profits-will be void.
    36. 36. Section 5 Articles {corresponding Sections 26, 27, 28 & 29} 5(1): The articles of a company shall contain the regulations for management of the company
    37. 37. contd…. Section 5(2) • The articles shall also contain such matters, as may be prescribed. • And of course the company can include such additional matters in its articles as may be considered necessary for its management.
    38. 38. Section 5(3) The articles may contain provisions for entrenchment to the effect that specified provisions of the articles may be altered only if conditions or; procedures as that are more restrictive than those applicable in the case of a SR; are met or complied with.
    39. 39. Section 5(4) Entrenchment provisions can be made: • either at the time of formation; or • by an amendment in the AOA For amendments: • in case of private company-the said amendment to be agreed by all the members • in case of public company- SR
    40. 40. Section 5(5) Entrenchment notice to ROC • In either of the cases (formation or amendment), the company to give notice to the ROC • Form no. 2.8 along with fee • Within 30 days from the date of formation of the company or amendment, as the case may be (Rule 2.7)
    41. 41. Section 5(6) The articles of a company shall be in respective forms specified in (Rule 2.8): Table F Table G Table H Table I Table J in Schedule I as may be applicable to such company. {The Co. can also provide additional matters}
    42. 42. Section 5(7) A company may adopt all or any of the regulations contained in the model articles applicable to such company.
    43. 43. Section 5(8) In case of any company, which is registered after the commencement of this Act, in so far as the registered articles of such company do not exclude or;  modify; the regulations contained in the model articles will apply as if they were contained in the duly registered articles of the company.
    44. 44. Section 6 Act to override Memorandum, Articles {corresponding Section 9} The provisions of this Act shall have effect notwithstanding anything to the contrary contained in the:  MOA; or  AOA of the company; or  In any agreement executed by it; or  In any resolution passed by the company-be it BOD or GM
    45. 45. contd…. Section 6 To the extent that it is repugnant to the provisions of the Act, it will become or be void; Section 6 (akin section 9) did not introduce anything new.
    46. 46. Section 7 Incorporation of Companies {corresponding sections 15, 30, 33} 7(1): The following documents shall be filed with the ROC for registration (Form no.2.9, Rule 2.9): 7(1)(a): Rule 2.10: the MoA and AoA of the company duly signed by all the subscribers to the memorandum who shall give the following details:  name  address  description and occupation, if any.
    47. 47. contd…. Section 7(1) In the presence of at least one witness who shallattest the signature and shall likewise  sign and add his  name  address  description occupation, if any and shall also state: ‘Further I have verified his/ their ID for their identification and satisfied myself of his/her/ their identification particulars as filled in’
    48. 48. contd…. Section 7(1) Where a subscriber to the memorandum are the following: 1) Illiterate (Rule 2.10(2)) he shall affix his thumb impression. The number of shares taken by him shall be written against his name (by the person writing for him. Such person shall also read and explain the contents of the MoA/AoA to the subscriber and make an endoresment to that effect on the MoA/AoA
    49. 49. contd…. Section 7(1) 2) Body corporate (Rule 2.10(3)) The memorandum and articles of association shall be signed by the:  director;  officer; or  employee of the body corporateduly authorized in this behalf by a resolution of the BOD of the body corporate.
    50. 50. contd…. Section 7(1) 3) Limited Liability Partnership (Rule 2.10(3)) it shall be signed by a partner of the LLP,  duly authorized by a resolution approved by all the partners of the LLP • Provided that in either case, the person so authorized shall not, at the same time, be a subscriber to the MoA and AoA
    51. 51. contd…. Section 7(1) 4) Foreign national residing outside India (Rule 2.10(4)- : (a) in a country in any part of the Commonwealthhis signatures and address on the MoA/AoA and proof of identity • shall be notarized by a Notary (Public) in that part of the Commonwealth.
    52. 52. contd…. Section 7(1) (b) in a country which is a party to the Hague Apostille Convention, 1961 his signatures and address on the MOA/AOA and proof of identity • shall be notarized before the Notary (Public) of the country of his origin and be duly apostillised in accordance with the said Hague Convention.
    53. 53. contd…. Section 7(1) (c) in a country outside the Commonwealth and which is not a party to the Hague Apostille Convention, 1961his signatures and address on MOA/AOA and proof of identity • shall be notarized before the Notary (Public) of such country and the certificate of the Notary (Public) shall be authenticated by a Diplomatic or Consular Officer.
    54. 54. contd…. Section 7(1) (d) If a foreign national visited in India and intended to incorporate a company, in such case the incorporation shall be allowed ifHe/she is having a valid Business Visa. In case the person is of Indian Origin or Overseas Citizen of India, requirement of Business Visa will not be applicable.
    55. 55. Section 7(1)(b) A declaration in Form no.2.10 (Rule 2.11) by an advocate; or  a chartered accountant; or  a cost accountant; or  a company secretary in practice, who is engaged in the formation of the company; And also by a person named in the articles as  a director;  manager, or  secretary of the company, that all the requirements of this Act and the rules have been complied with.
    56. 56. Section 7(1)(c) An affidavit in Form no.2.11 (Rule 2.12)from –  each of the subscribers to the memorandum,  from persons named as the first directors, if any, in the articles that he is not convicted of:  any offence in connection with the promotion;  formation; or  management of any company; or  that he has not been found guilty of any fraud; or  misfeasance; or  of any breach of duty to any company under this Act or any previous company law during the preceding 5 years .  All the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of his knowledge and belief
    57. 57. Section 7(1)(d) The address for correspondence till its registered office is established.
    58. 58. Section 7(1)(e) (1)The particulars of name of subscriber(s), including (Rule 2.13)- Surname or family name, Recent photograph affixed and scan with MoA and AoA Father’s/Mother’s/ Spouse’s name Nationality Date of birth Place of birth (District and State) Occupation Income-tax permanent account number Email id of subscriber  Mobile no. of subscriber  Phone no. of subscriber  Fax no. of subscriber
    59. 59. contd…. Section 7(1)(e) residential address nationality Along with other particulars of every subscriber to the memorandum along with:  proof of identity; Proof of Identity, such as:  For Indian Nationals:  PAN Card (mandatory) and any one of the following:  Voter’s identity card  Passport copy  Driving License copy  Unique Identification Number (UIN)
    60. 60. contd…. Section 7(1)(e) For Foreign nationals and Non Resident Indians :  Passport  Others  Proof of nationality in case the subscriber is a foreign national Residential proof such as :        Ration Card Voter’s card Driving licence Passport Unique Identification Number (UIN) Registered Rent Agreement etc. Bank Statement, Electricity Bill, Telephone / Mobile Bill (not be more than two months old)etc.
    61. 61. contd…. Section 7(1)(e) Each subscriber (including first directors of the company) to the MoA/AoA shall furnish the specimen signature duly verified by their respective banker at the time of incorporation (Rule 2.13) The specimen signature shall be in the prescribed form no 2.32.
    62. 62. contd…. Section 7(1)(e) If the subscriber (in case of an individual) is already a director or promoter of a company(s), the following details (Rule 2.13)(i) Name of the company (ii) CIN (iii) Whether interested as a director or promoter
    63. 63. contd…. Section 7(1)(e) If the subscriber is a body corporate, then the following particulars shall be filed with the Registrar (Rule 2.13)- (a) CIN of the Company/ Registration no. of the body corporate, if any (b) GLN, if any (c) Name of the body corporate (d) Registered office address/ principal place of business (e) E-mail Id
    64. 64. contd…. Section 7(1)(e)  If the subscriber is a company:  CTC of the BR specifying the authorization to subscribe to the MoA of the proposed company and to make investment in the proposed company; the number of shares proposed to be subscribed by the the company;  the details like the name; address; and designation of the person authorized to subscribe to the MoA for and on behalf of the company
    65. 65. contd…. Section 7(1)(e) If the subscriber is LLPCTC of the resolution agreed to by all the partners specifying the authorization to subscribe to the MoA of the proposed company and to make investment in the proposed company; the number of shares proposed to be subscribed in the company; the name of the partner authorized to subscribe to the MOA
    66. 66. contd…. Section 7(1)(e) (g) In case of foreign bodies corporate, following additional details to be submitted: i) copy of certificate of incorporation of the foreign body corporate; and ii) registered office address along with proof.
    67. 67. contd…. Section 7(1)(f) About Directors (Rule 2.14): The particulars of the persons mentioned in the AoA as the first directors of the company: Their names, including:  surnames or family names  the Director Identification Number  residential address  nationality and such other particulars and  proof of identity shall be filed in Form no. 2.12 with a fee
    68. 68. contd…. Section 7(1)(g) The particulars of the interests of the persons mentioned in the AoA as the first directors of the company (Rule 2.14): • in other firms or • bodies corporate along with their • consent to act as directors of the company Shall be filed in Form No. 2.12 with a fee.
    69. 69. Section 7(2) The Registrar on the basis of:  documents and  information filed • shall register all the documents and information referred to in that subsection in the register • and issue a COI in the prescribed form (2. 13), rule 2.15 • to the effect that the proposed company is incorporated under this Act
    70. 70. Section 7(3) The ROC shall allot to the company a CIN• which shall be a distinct identity for the company and • which shall also be included in the certificate.
    71. 71. Section 7(4) The company shall maintain and preserve at its registered office copies of all documents and information as originally filed under sub-section (1) till its dissolution under this Act.
    72. 72. Section 7(5) If any person furnishes any: false or incorrect particulars of any information and/or suppresses any material information; • of which he is aware in any of the documents filed with the ROC • in relation to the registration of a company • he shall be liable for action under section 447 (fraud)
    73. 73. Section 7(6) If after the incorporation of a company, it is proved that the company has been got incorporated by furnishing any false; or incorrect information; or Incorrect representation; or by suppressing any material fact; or by suppressing any information in any of the documents; or the declaration filed; or made for incorporating such company; or  by any fraudulent action; the promoters, the persons named as the first directors of the company and the persons making declaration under clause (b) of subsection (1) shall each be liable for action under section 447
    74. 74. Section 7(7) Without prejudice to the provisions of sub-section (6), where a company has been got incorporated by furnishing any  any false or incorrect information; or  representation; or  by suppressing any material fact; or  information in any of the documents; or  declaration filed; or made for incorporating such company; or  by any fraudulent action; the Tribunal may, on an application made to it, on being satisfied that the situation so warrants-
    75. 75. contd…. Section 7(7) (a) pass such orders, as it may think fit, for regulation of the management of the company including changes, if any, in its MoA/AoA, in public interest or in the interest of the company and its members and creditors; or (b) direct that liability of the members shall be unlimited; or (c) direct removal of the name of the company from the register of companies; or (d) pass an order for the winding up of the company; or (e) pass such other orders as it may deem fit:
    76. 76. contd…. Section 7(7) Provided that before making any order under this sub-section: • the company shall be given a reasonable opportunity of being heard in the matter; and • the Tribunal shall take into consideration the transactions entered into by the company, including the obligations, if any, contracted or payment of any liability.
    77. 77. Section 8 Formation of Companies with Charitable Objects etc. {corresponding Section 25} New:  Under this Act, OPC can also be incorporated for charitable purposes.  A firm can be a member of the Company with Charitable Objects.  The CG at the time of revoking the license under this section may, if it is satisfied that it is essential in the public interest, order that the Co. be wound up under this Act or amalgamated with another Co. registered under this section.
    78. 78. In contd…. Section 8 case of winding up or dissolution of an association not for profit under this section, there remain, after the satisfaction of its debts and liabilities, any assets Then that may be transferred to another Co. registered under this section and having similar objects But subject to such conditions as the Tribunal may impose Or may be sold and proceeds thereof credited to the Rehabilitation and Insolvency Fund formed u/s 244.
    79. 79. contd…. Section 8 A company with charitable objects can only amalgamate with a company registered under same section having similar objects Where it is proved that the affairs of the company registered under same section were conducted fraudulently, every officer in default shall be liable for action u/s 447 and Will be subject to stringent punishment
    80. 80. contd…. Section 8 Documents with Application (Rule 2.16):  Draft MOA & AOA;  Declaration in Form No. 2.15;  An estimate of the annual income and expenditure (3 yrs);  Declaration by each persons making application in Form no. 2.16;  A copy of the board resolution (in case of change of name);  Financial statements, Board’s reports, audit reports for two years (in case of change of name);  Shareholders Resolution (in case of change of name).
    81. 81. Contd…. Section 8 Conditions and Process for registration (Rule 2.17):  Publish a notice in form no. 2.18;  Copy of the notice, as published, shall be sent forthwith to the Registrar;  Approval or concurrence of appropriate authority, regulatory body to be submitted (if applicable);  The ROC after considering the objections received by it, if any, within 30 days from the date of publication  To decide, whether the license should or should not be granted
    82. 82. contd…. Section 8 Key modifications: In the Act, activities like :  sports  education  research  social welfare  protection of environment have been specifically added in the ambit of the objects, for which an Association not for profits, can be formed. • Under the Companies Act 1956 these activities were covered under the general term i.e. any other useful objects.
    83. 83. contd…. Section 8 Now the Memorandum & Articles of such company can only be altered with the prior approval of CG.  Earlier prior CG approval was required only for alteration of objects.
    84. 84. contd…. Section 8 The punishment has been introduced for a default by a company in complying with any of the requirements laid down in the section of formation of companies with charitable objects- the company will be punishable with fine which shall not be less thanRs.10 lakhs which may extend to Rs.1 crore; or  with both. Further the director of the company and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to 3 years; or  with fine which shall not be less than Rs. 25000. which may extend to 25 lakh rupees or with both.
    85. 85. Section 9 Effect of Registration • From • • • • • • {corresponding Section 34} the date of incorporation, the subscribers become the members of the company The company shall be a body corporate With a name Capable of exercising all the functions of an incorporated company Shall have perpetual succession Shall have a common seal Power to acquire, hold and dispose of property
    86. 86. contd…. Section 9 • Power to enter into contracts • Power to sue and be sued
    87. 87. No changes in section 9
    88. 88. Section 10 Effect of Memorandum & Articles {corresponding Section 36} 10(1): Subject to the provisions of this Act, the MoA/AoA shall, when registered, bind the company and the members thereof to the same extent • as if they respectively had been signed by the company and by each member and • therefore all covenants become individually applicable 10(2): All monies payable by any member to the company under the memorandum or articles shall be a debt due from him to the company.
    89. 89. No changes in section 10
    90. 90. Section 11 Commencement of Business {corresponding Section 149} Key modifications:  As per the Act, for commencement of business by public company, the following documents are required to be submitted with ROC: i. A declaration by Directors in prescribed form providing that the subscribers have paid the value of shares agreed to be taken by them. ii. A confirmation that the Company has filed with the Registrar, a verification of its registered office.
    91. 91. contd…. Section 11 Where no declaration is filed by the Director within180 days of incorporation and the Registrar has sufficient reasons to believe that the Company is not carrying any business or operations, then it may initiate action for removal of the name of the Company from the Register of the Companies. In case of default, the prescribed punishment has increased. Further now, as opposed to Companies Act, 1956, the Company shall also be liable for punishment along with officer in default. For Company: Fine which may extend to Rs.5000; and every officer who is in default shall be punishable with the fine which may extend to Rs.1000 for every day of continuing default
    92. 92. contd…. Section 11 New :- In the Act, in addition to the public Limited Companies, even the private companies would be required to file the following, with the Registrar of Companies, for commencement of business: i. a declaration by the Directors in prescribed form providing that the subscribers have paid the value of shares agreed to be taken by them, and ii. a confirmation that the Company has filed with the Registrar, a verification of its registered office.
    93. 93. Section 12 Registered Office of Company {corresponding Sections 17A, 146, 147} New:Every company is required to print CIN Telephone no. Fax no. Email Website address On all its >business letters >billheads >letter paper and >all its notices and >other official publications.
    94. 94. contd…. Section 12 In case of change of name, each company is required to mention its old name for a period of 2 years, at its registered & other offices & other stationery like: Business letters Letter head Letter paper etc.
    95. 95. contd…. Section 12  OPC needs to mention in brackets, below the name of the Co. wherever its name is printed affixed or engraved the words “One Person Company”
    96. 96. contd…. Section 12 Key Modifications Under the Act, the intimation of change of registered office is required to be given with in 15 days of change, instead of 30 days. Punishment has been increased, in case of default & now the company and every officer who is in default shall be liable to a punishment of Rs.1000 for every day during which the default continues but not exceeding Rs.1 lakh.
    97. 97. contd…. Section 12 Instead of having Registered office from the date of incorporation, a company may have registered office on & from the 15th day of its incorporation. Verification of registered office has to be filed within30 days of its incorporation.
    98. 98. Section 13 Alteration of Memorandum {corresponding Sections 16, 18, 21} New:-  In case of change of registered office from one state to another, new COI will be issued. Any alteration of Memorandum of Company limited by guarantee and not having share capital for giving right to participate in the divisible profits of the Company otherwise than as a member shall be void.
    99. 99. contd…. Section 13  Now a Co. which has raised money from public through prospectus & still has any unutilised amount out of the money so raised, shall not change its objects for which it raised the money through Prospectus unless a SR is passed by the company and i. the details as may be prescribed, in respect of such resolution shall also be published in the newspapers One in English  One in vernacular language And shall also be placed on the website of the Co.
    100. 100. contd…. Section 13 ii. the promoters & shareholder having the control shall give an opportunity to the dissenting shareholder to exit, in accordance with the regulations to be specified by SEBI.  Approval of the CG is not required for change of in name if there is only addition or deletion of the word  “Public”  “Private” to the name.
    101. 101. contd…. Section 13 The limit of 60 days has been provided for disposal of application of change of registered office from one sate to another, by CG.
    102. 102. Section 14 Alteration of Articles {corresponding Section 31} New: Provision of Conversion of Public Company into “One Person Company” with the approval of the Tribunal has been provided in the Act. No approval is required for conversion of private company into One Person Company or One Person Company into a private company.
    103. 103. contd…. Section 14 Key Modifications: In case of alteration of Articles of Association of a Company, the copy of alteration along with the altered Article shall be filed with Registrar of Companies within 15 days instead of 30 days In case of conversion of Public Company into Private Company, approval of the Tribunal is required instead of CG as provided under the Companies Act, 1956.
    104. 104. Section 15 Alteration of MOA & AOA to be noted in every copy {corresponding Section 40} Key Modifications :- • The penalty provided for not making the alteration in • copies of Memorandum & Articles has been increased. In case of such default, the Company and every Officer in default shall be liable to a penalty of Rs.1000 for every copy of MoA/AoA issued without such alteration.
    105. 105. Section 16 Rectification of Name of Company {corresponding Section 22} New:- If the Companies rectifies its name under the order of CG, then such notice along with the copy of the CG’s Order shall be given to the ROC within 15 days of such order.
    106. 106. contd…. Section 16 Key Modifications: A registered trademark owner has to file an application for rectification of name, which is similar to name of its trademark: Within 3 years (instead of 5 years) of incorporation of Company or change of name.
    107. 107. contd…. Section 16 In case of rectification of name due to similarity with registered trademark, on the order of the CG Rectification shall be done within 6 months (instead of 3 months) as was provided under the Companies Act, 1956
    108. 108. contd…. Section 16 In case of default of the aforesaid provisions, the punishment has been increased. The Company shall be punishable with fine of Rs.1000 for every day during which the default continues and Every officer who is in default shall be punishable with fine which shall not be less than Rs.5000 but may extend to Rs.1 lakh.
    109. 109. Section 17 Copies of MOA/AOA {corresponding Section 39} Key Modifications:MoA/AoA to be sent within 7 days of request Fees to be charged for sending MoA/AoA, agreement/resolution -to be prescribed. In case of default of the said section, the penalties have been increased and for each default, the Company shall be liable to a penalty of Rs.1000 for every day of continuing default but not exceeding Rs.1 lakh.
    110. 110. Section 18 Conversion of Companies Already Registered {corresponding Section 32} New:Any company of any class registered under this Act, may convert itself into a co. of other class under this Act byAlteration of its MOA/ AOA with their respective new sets. The Registration of a Co. under this section shall not affect any debts, liabilities, obligations or contracts or entered into by or on behalf of company before reregistration.
    111. 111. APPLICABLE Section 19 Subsidiary company not to hold shares in its holding co. {corresponding Section 42} New:- Subsidiary can hold shares in a holding company as trustee, even if holding or Subsidiary is beneficiary of the same, which is not allowed under the Companies Act, 1956.
    112. 112. contd…. Section 19 Key Modifications: No holding company shall allot or transfer its shares to any of its subsidiary companies and any such allotment/ transfer shall be void
    113. 113. Section 20 Service of Documents {corresponding Sections 51, 52, 53} New; It is clarified that a document may be served upon a Company or its officer (at the registered office) by registered post or by speed post or by courier service or by leaving it at its registered office or by means of such electronic or  other mode as may be prescribed
    114. 114. contd…. Section 20 A document to Registrar of Companies, and members may be served by sending it to him by post or registered post or by speed post or by courier service or by leaving it his office or address or by means of such electronic or other mode as may be prescribed
    115. 115. contd…. Section 20 Proviso to section 20(2): If a member requests delivery of any document through a particular mode, he shall pay such fee. Such fee as may be determined by the Company in its AGM. Courier service means the agency which provide the services with proof of delivery.
    116. 116. APPLICABLE Section 21 Authentication of Documents, Proceedings & Contracts {corresponding Section 54} In the next slide
    117. 117. contd…. Section 21 Any document, proceeding requiring authentication by a Company or contract entered into by or on behalf of a Company may now be signed by any KMP or an officer of the Company Only after having due authorization by the Board of Directors.
    118. 118. APPLICABLE Section 22 Execution of Bills of Exchange, etc {corresponding Section 47} 22(1): A bill of exchange, hundi or promissory note shall be deemed to have beenmade, accepted drawn or endorsed on behalf of the company: If it is made, accepted, drawn etc. in the name of, or on behalf of the company by any person acting under its authority, express or implied.
    119. 119. contd….Section 22(2) A company may: a. by writing b. under its common seal c. authorize any person (either generally or in respect of any specified matters) d. as its attorney to execute other deeds on its behalf in any place either in or outside India.
    120. 120. contd….Section 22(3) a. A deed signed by such an attorney on behalf of the company and under his seal shall bind the company; and b. have the effect as if it were made under its common seal.
    121. 121. No changes in section 22

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