Companies Act 2013

1. Companies Act 2013
Presented by Prof V.S.Gopal

2. Objectives of the Act :
 To Promote the development of economy by
encouraging entrepreneurship and enterprise
efficiency & creating flexibility and simplicity &
maintenance of the Company.
 Encourage transparency, accountability & high
Standards of Corporate governance.
 To recognize various new concepts, procedures
facilitating ease of doing business while the
interest of all stake holders are protected.

3.  To enforce strict action against frauds & gross non
compliance with the company law provisions.
 To set up institutional structure in the form of various
authorities, bodies, panels aw well as by including
the recognition of various roles for professionals and
other experts
 To cater to the needs for more effective and time
bound approvals & compliance requirements.
 To set and follow – Accounting & Auditing Standards
compatible to Universal norms.

4. Important Definitions –
“ Accounting standards” – u/s 2(2) – means standards of
accounting as applicable uniformly to all the companies
referred to in Section 133.
“ Auditing Standards” – u/s 2(7) – means auditing standards
hitherto followed uniformly by all the companies or class of
companies referred to sub – section (10) of Section 143.
“Books Of Accounts” – u/s 2(13) includes records maintained
in respect of the requirements under the Auditing standards.
“Financial Year” – April 1st
to March 31st
.
Deposits – Section 2(13) includes receipt of money by way of
Deposit or loan in any form as prescribed in consultation with RBI.

5. Foreign Company – u/s 2(42) means any body corporate
Incorporated outside Indis which:
a)Has a place in India whether by itself or through agent,
physically or through electronic mode; and
b)Conducts any business activity in India in any other manner
Independent Directors – 2(47) means an independent director
Referred to sub section (5) of section 149.
Indian Depository Receipts u/s 2(48) – means any instrument in
the form of depository receipt created by a domestic depository
in India and authorized by a company incorporated outside India
making an issue of such depository receipts.
One man company – Section 2(62) means a company which has
only one person as a member.

6. Small Company – Section 2 (85) – means a company, other
than a public company :
 Paid up share capital of which does not exceed fifty lakh
rupees or such higher amount as may be prescribed which
shall not be more than five crore rupees; or
 turnover of which as per the last profit and loss account does
not exceed two crore rupees or such higher amount as may
be prescribed whch shall not be more than twenty crore
rupees.
Provided that nothing in this clause shall apply to:
A ) A holding company or a subsidiary company
B)A Company registered under section 8 or
C) A company or body corporate governed by a special act.

7. Chapter – 2 Incorporation of Company :
The 2013 Act introduced new form of entity “ One Person
Company” and incorporated certain new provisions in
respect of memorandum & articles of association.
“ Company Limited by Guarantee” – means a company
having the liability of its members limited by the memorandum
to such amount as the members may respectively undertake to
contribute to the asset of the company in the event of being
wound up.
“Company Limited by Shares” – means a company having the
liability of its members limited by the memorandum to the
amount if any, unpaid on the shares respectively held by them.

8. “ Company Liquidator : - in so far as it relates to the winding
up of a company means a person appointed by :
a)Tribunal in case of winding up by the Tribunal.
b) The Company or creditors in case of voluntary winding up.
As a company Liquidator from the panel of professionals
maintained by the Central Government under sub – section (2)
of section 275.
“ Body corporate” includes company incorporated outside ,
India, but does not include :
i)a co-operative society registered under any law relating to
Co – operative societies: and
ii) Any other body corporate (not being company defined in
this act), which the Central Government may by notification,
specify in this behalf.

9. “Private Company” – means a company having minimum paid
up share capital of one lakh rupees or such higher paid up
Capital as may be prescribed and which by its articles, :
i)Restricts the rights to transfer its shares:
ii) except in case of One Person Company, limits the number
of its members to 200.
Provided that where 2 or more persons hold one or more shares
in a company jointly, they shall, for the purpose of this clause, be
treated as single member, provided further that :
a)persons who are in the employment of the company; and
b)Persons, who, having been formerly in the employment of
the company, were members of the company after the
employment ceased, shall not be included in the number of
members; and
iii) Prohibits any invitation to the public to subscribe for any
securities of the company

10. Formation of a Company :
A company may be formed for any lawful purpose by :
 7 or more persons where the company to be formed is to be
a public company.
 2 or more persons, where the company to be formed is to be
a private company.
 One person, where the company to be formed is to be One
Person Company, that is to say, a private company, by
subscribing their names to a memorandum & complying
with the requirement of this act in respect of registration.
One Person Company shall indicate the name of the other
person with his prior consent, in the prescribed form, who shall
in the event of the death or incapacity of the subscriber shall
become the member of the company and such consent is filed

11. Steps for Incorporation of a Company
 Process of Incorporation of One Person Company (OPC)
 Obtain Digital Signature Certificate (DSC) of the Proposed
Directors.
 Obtain Director Identification Number (DIN) – proposed
directors
 Select suitable name, and make an application to Ministry of
Corporate affairs for the availability of name.
 Draft MOA & AOA
 Sign & file various documents including MOA & AOA with ROC
electronically.
 Payment of requisite fee to Ministry of Corporate Affairs and
Stamp duty.
 Scrutiny of documents by ROC
 Receipt of Certification of Registration / Incorporation from ROC

12. Section 7 of Companies Act 2013 – sets standard procedures:
 Documents with ROC – Jurisdiction set – MOA & AOA signed
by all the subscribers.
 Declaration in the prescribed form – CA, Advocate, Company
secretary, a person named in Articles as director.
 Affidavit from each of the subscribers to the MOA named as first
directors – not convicted for an offence in connection to the
formation of the company, he has not been found guilty of
any misfeance, and moral turpitude.
 On and from the date mentioned in Certificate of Incorporation,
ROC shall allot to the company identification number which
shall be a distinct identity for the company posted in the
certificate.
 The company shall maintain & preserve at its registered office
all documents as originally filed till its dissolution.
 No person shall furnish any false & suppress material facts, they
may be criminally prosecuted, fraudulent actions initiated under
section 447.