1. www.sanjivanimba.org.in
207- Legal & Business Environment
Unit No.3.1
Company Law – 2013(Amendment)
Presented By:
Dr. K. Meenakshi
1
Sanjivani College of Engineering, Kopargaon
Department of MBA
www.sanjivanimba.org.in
2. www.sanjivanimba.org.in
Introduction
The Companies Amendment Act, 2013 is an important piece of legislation that
amended various provisions of the Companies Act, 1956, which has since been replaced by the
Companies Act, 2013.
The Companies Amendment Act, 2013 was enacted with the aim of improving
corporate governance, enhancing transparency and accountability, and providing greater
protection to investors and other stakeholders.
3. www.sanjivanimba.org.in
Key Changes
• Introduction of the concept of One Person Company (OPC) to encourage entrepreneurship
and promote small businesses.
• Mandating companies to spend a certain percentage of their profits on Corporate Social
Responsibility (CSR) activities.
• Requirement for companies to obtain shareholder approval for related party transactions.
• Setting up of a National Company Law Tribunal (NCLT) to deal with matters related to
corporate law.
• Increased penalties for non-compliance with various provisions of the Companies Act.
Overall, the Companies Amendment Act, 2013 has had a significant impact on the
corporate sector in India and has helped to improve the regulatory framework for companies
operating in the country.
4. www.sanjivanimba.org.in
Kinds of Companies As Per Amendments
• One Person Company (OPC): OPC is a type of company in which only one person can be
the shareholder and the director of the company. OPCs were introduced to promote
entrepreneurship and make it easier for small businesses to operate.
• Small Company: A company that has a turnover of less than Rs. 50 crore or a paid-up
capital of less than Rs. 2 crore is considered a Small Company. Small companies are eligible
for several exemptions and relaxations under the Companies Act, 2013.
• Dormant Company: A company that is inactive or has not carried out any business
operations for a certain period of time is known as a Dormant Company. Such companies
can maintain their status as a registered company without incurring any compliance costs.
5. www.sanjivanimba.org.in
• Producer Company: Producer companies are formed by farmers, agriculturists, and other
primary producers to carry out activities related to production, harvesting, procurement,
grading, pooling, handling, marketing, and selling of primary produce.
• Public Company: A company that issues shares to the public and is not a private company is
known as a Public Company. Public companies are required to comply with more stringent
regulations as compared to private companies.
6. www.sanjivanimba.org.in
• Private Company: A company that restricts the transferability of its shares and has a
maximum of 200 members is known as a Private Company. Private companies are subject to
less stringent regulatory requirements as compared to public companies.
• Section 8 Company: Section 8 companies are formed for promoting commerce, art, science,
religion, charity, or any other useful object and are not intended to generate profits. Such
companies are eligible for several exemptions and relaxations under the Companies Act,
2013.
7. www.sanjivanimba.org.in
Memorandum of Association
MOA stands for Memorandum of Association, and it is a legal document that outlines
the company's objectives, scope of operations, and the nature of its business.
It also contains the company's name, registered office address, and details of the initial
shareholders or members of the company.
The MOA is a public document and can be accessed by anyone who wishes to view it.
The MOA is a fundamental document that must be prepared and filed with the Registrar of
Companies during the incorporation of a company.
8. www.sanjivanimba.org.in
The Memorandum of Association contains the following information:
• Name of the company: The MOA specifies the name of the company, which must be unique
and not already registered with the Registrar of Companies.
• Registered office: The MOA specifies the address of the registered office of the company,
which is the official address where all legal communication is sent.
• Objectives: The MOA defines the main objectives and scope of activities of the company.
The objects clause of the MOA contains a list of the objects for which the company is
established.
9. www.sanjivanimba.org.in
• Capital: The MOA specifies the authorized share capital of the company, which is the
maximum amount of capital that the company can raise by issuing shares.
• Liability: The MOA specifies the liability of the members of the company, which can be
limited or unlimited.
• Association clause: The MOA contains a clause stating that the members of the company are
associated for the purpose of carrying out the objectives specified in the MOA.
10. www.sanjivanimba.org.in
Articles of Association
• AOA stands for Articles of Association, which is a document that contains the rules and
regulations governing the internal management of a company.
• The AOA is a vital document that works in conjunction with the MOA to form the
constitution of a company.
• The AOA is a private document that is accessible only to the members of the company. It is
an essential document that provides the framework for the internal management of the
company and governs the relationship between the company, its shareholders, and its
directors.
• Any changes made to the AOA must be approved by the shareholders and filed with the
Registrar of Companies.
11. www.sanjivanimba.org.in
The Articles of Association typically cover the following areas:
• Share capital: The AOA sets out the rights and obligations of shareholders, including the
issue and transfer of shares, voting rights, and dividend entitlements.
• Directors: The AOA specifies the number of directors, their appointment, powers, and
duties. It also sets out the rules for the conduct of board meetings and decision-making.
• General meetings: The AOA sets out the procedures for holding general meetings,
including annual general meetings and extraordinary general meetings.
• Winding up: The AOA specifies the procedures for the voluntary winding up of the
company.
12. www.sanjivanimba.org.in
Winding Up of a company
Winding up of a company refers to the process of bringing the affairs of a company to a close
and distributing its assets to its creditors and shareholders.
There are two types of winding up:
• voluntary winding up and
• compulsory winding up.
13. www.sanjivanimba.org.in
Voluntary Winding Up
• A voluntary winding up of a company can be initiated by the shareholders or directors of
the company by passing a special resolution to wind up the company.
• The company must appoint a liquidator, who is responsible for winding up the company's
affairs, realizing its assets, and distributing them to its creditors and shareholders in the
prescribed manner.
• The liquidator must also prepare and file the necessary documents with the Registrar of
Companies.
14. www.sanjivanimba.org.in
Compulsory Winding Up
• A compulsory winding up of a company can be initiated by the court, a creditor, or a
shareholder. The court may order the winding up of a company if it is unable to pay its
debts, or if it is just and equitable to do so. Once the winding up order is passed, a liquidator
is appointed, and the process of winding up the company begins.
• The liquidator is responsible for taking control of the company's assets, paying off its
creditors, and distributing the remaining assets to the shareholders. The liquidator must also
prepare and file the necessary documents with the Registrar of Companies.
15. www.sanjivanimba.org.in
• During the winding up process, the company must not carry on any business, except to the
extent required for the winding up process. The company's employees are usually
terminated, and the assets are sold to pay off the creditors.
• Winding up of a company is a complex process, and it is important to seek professional
advice before initiating the process.
16. www.sanjivanimba.org.in
PROSPECTUS
• A prospectus is a legal document that companies issue to prospective investors when they
offer securities for sale to the public.
• The purpose of the prospectus is to provide investors with important information about the
company, its business operations, financial performance, and the securities being offered for
sale.
• The prospectus serves as a disclosure document that helps investors make informed
investment decisions.
17. www.sanjivanimba.org.in
• The prospectus is a critical document for companies that are raising funds through the sale
of securities.
• It helps companies to comply with legal and regulatory requirements and provides investors
with the information they need to make informed investment decisions.
• Companies are required to file the prospectus with the relevant regulatory authorities and
make it available to the public.
18. www.sanjivanimba.org.in
A prospectus typically contains the following information:
• Business operations: The prospectus describes the company's business operations,
including its products or services, market position, and competitive landscape.
• Financial performance: The prospectus provides information about the company's financial
performance, including its revenues, profits, and cash flows.
• Management: The prospectus provides information about the company's management team,
their qualifications, and their experience.
19. www.sanjivanimba.org.in
• Risk factors: The prospectus identifies and describes the risks associated with investing in
the company, including industry-specific risks and general economic risks.
• Securities being offered: The prospectus describes the securities being offered for sale,
including the number of shares, the price per share, and any restrictions on the sale or
transfer of the securities.
• Legal and regulatory matters: The prospectus discloses any legal or regulatory matters that
may impact the company's business operations or financial performance.
20. www.sanjivanimba.org.in
Amendments of 2020
• The Companies (Amendment) Act, 2020, which came into effect in September 2020, brought
about several significant changes to the Companies Act, 2013. The significant amendments
made in 2020 include:
• Decriminalization of several minor offenses, reducing the burden on courts and reducing the
compliance burden on companies.
• The introduction of a new chapter on Producer Companies, which allows farmers, artisans,
and other producers to form companies for better marketing and distribution of their
products.
21. www.sanjivanimba.org.in
• The introduction of a new concept of the 'small company' for companies with a lower
threshold of turnover and paid-up capital.
• The introduction of a new requirement for Indian companies to report details of their
subsidiaries, associates, and joint ventures.
• The simplification of the process for private placement of securities by companies.
The amendments of 2013 and 2020 have brought significant changes to the legal
framework governing companies in India, making it more modern, transparent, and conducive
to business growth.
