The document summarizes the key changes between the Indian Companies Act of 1956 and the new Companies Act of 2013. Some of the major amendments introduced in the new act include the addition of sections related to corporate social responsibility, cost auditing, one person companies, women directors on boards, and independent directors. The new act aims to improve corporate governance, address flaws in the old law, and align with changes in the liberalized Indian economy.

1. Analysing Companies Act: A move
towards better Governance
Presented by – Jeevan Upreti, Naidu Bhargavaramudu & Shuvra Behera
M Tech FPOM 2014-16
Date – 17th Oct 2014

2. Introduction
Journey of India wrt development of corporate laws over time from 1956 to 2013 lies with
major amendment's and revamp of Indian company act.
The following journey describes the major events in the history of Indian Companies Act:
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2 1857’s Joint Stock Companies Act
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1850’s Joint Stock Companies Act
1913’s Indian Companies Act
4 1956’s Companies Act
5 2013’s Companies Act
Events that led formation of
Indian Companies Act 2013
• Liberalization of Indian economy – This
led to the major changes in the
functioning of organization.
• Corporate Governance – The
relationship between share holder,
investors and board of directors in the
country.
• Flaws in Traditional Companies Act –
To revamp or restructure the old 1956
Companies Act.
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In order to ensure that good governance prevails, the laws & regulations need to be
amended from time to time & this is what Indian government has done, post the collapse
of Satyam to have a relook of existing Companies Act, 1956.

3. Important Amendments
One Person Company
• Earlier this concept was not available in companies act 1956.
• As per section 2 (62) company act 2013 ,OPC means a company
which has only one person as a member.
• This in turn will increase the number of future companies and
entrepreneurs.
Prohibition on Issue of Shares at Discount
• As per section 79 earlier companies have a power to issue
shares at discount as per companies act 1956.
• As per section 53 company act 2013 ,OPC means a company
which has only one person as a member.
• If company contravenes the provision shall be punishable with a
fine not less than one lakh rupees which may extend to five lakh
rupees.
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4. Important Amendments
Women Director
• No women director was mandatory earlier as per 1956
companies act.
• As per section 149 (1), now at least one women director is
compulsory in every board.
• Increase the role of women in corporate.
• Ex – Godfrey Phillips India has additional director as “Bina
Modi”
Prohibition on Acceptance of Deposits from Public
• Deposits not to be invited without issuing an advertisement as
per section 58 (A) companies act 1956.
• As per section 73 companies act 2013, prohibition on
acceptance of deposits from public is regulated.
• With regard to “unsecured deposits” company should quote this
in every advertisement relate to invitation or acceptance of
deposits. 4

5. Important Amendments
Holding First Annual General Meeting (AGM)
• As per old act, maximum time limit for holding of first AGM is 18
months from incorporation or 9 months from closure of
accounts whichever is earlier. .
• As per new act section 96 (1) companies act 2013, the maximum
time limit is 9 months from closure of accounts.
• The earlier provision of 18 months has been omitted now.
Maximum number of directors
• As per this act the limit is 12. More can be appointed by the
approval of central government.
• As per section 2(68) companies act 2013, Now the limit is 15,
more can be appointed by passing special resolution in meeting.
• Now the approval of central government is not required.
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6. Important Amendments
Associate Company
• No specific provisions as per companies’ act 1956.
.
• Now as per new companies act section 2 (6), the concept of
associate company is introduced.
• Its not a subsidiary company.
Special Courts
• No specific provisions as per companies’ act 1956.
• As per section 435 companies act 2013, For speedy results for
offences the concept of special courts has been introduced in
new act.
• Timely and efficient judicial proceedings.
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7. Important Amendments
Key Managerial Personnel (KMP)
• Earlier KMP does not include Company Secretary. .
• As per section 2 (51) new companies act 2013, now the KMP
includes the Company Secretary also.
• The role of Company Secretary has broadened.
Independent Directors
• Earlier companies act does not include the concept of
independent directors.
• As per section 149 (6) companies act 2013 A person –
(a) who is a promoter or holding, subsidiary or associate company;
(b) who is related to promoters of the company or
(c) who has or had any pecuniary relationship with the
promoters during the current financial year; or
(d) relatives of Chief executive or director of a non
profit organisation which receives 25% or more of its
receipts from a promoter of the company cannot be an
independent director of that company.
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Ex – Infosys’s “Kiran
Mazumdar Shaw”

8. Important Amendments
Corporate Social Responsibility
• Earlier this section was not there as per 1956 companies act.
• As per section 135 every company having net worth of rupees 5 hundred crore
or more, or turnover of rupees one thousand crore or more or a net profit of
rupees five crore or more during any financial year shall constitute a Corporate
social responsibility committee of board consisting of three or more directors,
out of which at least one director shall be an independent director.
.
• Now, this section is mandatory for all the companies who come under the ambit
of the provision of said section.
• Ex - Mahindra & Mahindra – “Nanhi Kali”
BPCL’s – “Boond”
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9. Important Amendments
Cost Audit
• Cost Audit was allowed in certain cases as per section 233 (B)
1956 companies act.
• As per section 245, Central government after consultation with
regulatory authority may direct certain class of companies for
cost audit.
• Earlier Cost Auditing Standards were not mandatory, but
according to new act these standards are mandatory.
Serious Fraud Investigation Office
• This concept was not there in companies’ act 1956.
• As per section 211 companies act 2013, central government by
notification established an office to investigate the frauds
relating to a company.
• It provides transparent and efficient proceedings against frauds.
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10. Important Amendments
Financial Year.
• Earlier companies were allowed to choose freely its financial
year, however it cannot exceed 15 months. .
• As per section 2(41) companies act 2013, now the financial year
shall be from April 1st to March 31st for all companies. .
• This will bring uniformity.
.
Resignation of Director
• No specific provisions as per companies’ act 1956.
• As per section 168 (1) companies act 2013, director shall send a
copy of resignation within 30 days to ROC.
• It provides transparent and efficient proceedings against frauds.
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11. Conclusion
•On a conclusion note we can say that as time passes & corporate
sector becomes more & more integrated with the society there is
need to incorporate necessary changes in corporate laws governing
this sector & the companies.
QuestionHour!!
Thank You
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