The document summarizes key highlights of the Companies Bill 2013 that was passed by the Rajya Sabha in August 2013. Some of the key changes introduced include a uniform financial year for all companies from April to March, allowing private companies to have up to 200 members, introducing one person companies, simplifying the object clause, and expanding the types of securities governed by the bill. The bill also eases rules around buybacks, deposits, auditing and rotations, and introduces concepts like women directors and corporate social responsibility.

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2. The much awaited Companies Bill, 2013 (approved
by Lok Sabha as on 18th December, 2012) was
approved by the Rajya Sabha as on 08th August, 2013.
The Bill so approved shall be presented before the
President for his assent and approval.
Introduction
President for his assent and approval.
The Bill has 29 Chapters, 470 clauses as against
658 Sections in the existing Companies Act, 1956 and
7 Schedules.
Mukesh Raj & Co. (www.mukeshraj.com)

3. Key Highlights of Companies Bill, 2013
Uniform Financial Year for all the Companies i.e from April to March.
(Exception where in approval from the National Company Law
Tribunal have been granted).
A Private Company can now have maximum of 200 members.
Concept of One person Company have been introduced. (But the
Company can only be incorporated as a Private Company).
Object Clause of Memorandum of Association need not be dividedObject Clause of Memorandum of Association need not be divided
into Main, Ancillary and Other Objects Clause.
All types of securities are governed by Bill.
The money raised by the Company through prospectus, cannot be
used for any other purpose other than the purpose for which it was
raised unless a special resolution have been passed and the said
proposal is published by way of an advertisement. Otherwise an exit
opportunity shall be provided to the existing shareholders of the
Company.
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4. The prospectus has to be more detailed.
If a Company, listed or unlisted, makes an offer to allot or
invites subscription, or allots, or enters into an agreement to
allot, securities to 50 or such higher number as may be
prescribed, whether the payment for the securities has been
received or not or whether the Company intends to list its
securities or not on any recognized stock exchange in or
outside India, the same shall be deemed to be an offer to theoutside India, the same shall be deemed to be an offer to the
public and shall accordingly be governed by the provisions
provided in this regard by the Securities And Exchange Board
of India(SEBI).
There is no provision for issue of shares at a discount (other
than issue of Sweat Equity Shares).
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5. The provisions of clause related to further issue of capital
will now be applicable to all type of companies.
Apart from existing shareholders, if the Company having
share capital at any time proposes to increase its subscribed
capital by issue of further shares, such shares may also be
offered to employees by way of ESOP, subject to the
approval of shareholders by way of Special Resolution.approval of shareholders by way of Special Resolution.
Buyback provisions eased. Companies can buy back its shares
even if it has defaulted in repayment of deposit or interest
payable thereon, redemption of debentures or preference
shares or payment of dividend to any shareholder or
repayment of any term loan or interest payable thereon to any
financial institution or bank, provided that such default has
been remedied and three years have lapsed after such default
ceased to subsist.
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6. NBFCs not to be covered by the provisions relating to
acceptance of deposits. They will be governed by the
Reserve Bank of India rules on acceptance of deposits.
Companies can accept deposits only from its members
after seeking permission of its shareholders at a general
meeting.
Certain public companies, as prescribed, can accept
deposits from persons other than its members, subject todeposits from persons other than its members, subject to
conditions such as credit rating.
Bill provides for registering of all types of charges.
Certification of Annual Return by practicing company
secretary mandatory in case of companies with prescribed
paid up capital and turnover.
First annual general meeting of a company shall be held
within nine months from the closure of its first financial
year . Mukesh Raj & Co. (www.mukeshraj.com)

7. Postal Ballot to be applicable on all Companies, whether listed
or not.
Every company has to follow the Secretarial Standards
while preparing the minutes of board and general meeting.
Listed companies required to file a return in a prescribed
form with the Registrar regarding any change in the
number of shares held by promoters and top 10
shareholders of such company, within 15 days of suchshareholders of such company, within 15 days of such
change.
Listed public companies to prepare a report, in the manner
as may be prescribed, on each annual general meeting
including the confirmation that meeting was convened,
held and conducted as per the Act and the Rules made
thereunder.
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8. Interim dividend declared by a Company in a current
financial cannot exceed the average rate of dividend of
the preceding three years if a company has incurred
loss up to the end of the quarter immediately
preceding the declaration of such dividend.
Transferring of a fixed percentage of profits to reserve
before declaration of dividend is not mandatory in thebefore declaration of dividend is not mandatory in the
Bill.
Financial Statements shall include Balance Sheet,
Profit & Loss Account and Cash Flow Statement
collectively.
Provisions for re-opening or re-casting of the books of
accounts of a company provided.
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9. The National Advisory Committee on Accounting
Standards renamed as The National Financial
Reporting Authority.
The authority to advise on Auditing Standards and
Accounting Standards.
Every company is required at its first annual general
meeting (AGM) to appoint an individual or a firm asmeeting (AGM) to appoint an individual or a firm as
an auditor. The auditor shall hold office from the
conclusion of that meeting till the conclusion of its
sixth AGM and thereafter till the conclusion of every
sixth meeting. The appointment of the auditor is to be
ratified at every AGM.
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10. Individual auditors are to be compulsorily rotated
every 5 years and audit firm every 10 years in listed
companies & certain other classes of companies, as
may be prescribed.
Prescribed class or classes of companies to have
atleast one woman director.
At least one director should be a person who hasAt least one director should be a person who has
stayed in India for a total period of not less than 182
days in the previous calendar year.
At least one-third of the total number of directors of a
listed public company should be independent
directors. Existing companies to get a transition period
of one year to comply.
Companies can have maximum of 15 directors.
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11. A person can hold directorship of up to 20 companies, of
which not more than 10 can be public companies. The
number 20 to include Private Companies aswell.
A director can participate in a board meeting through
video conferencing or other audio visual mode as may be
prescribed.
A notice of not less than 7 days in writing is required to call
a board meeting. The notice of meeting to be given to all
directors, whether he is in India or outside India by handdirectors, whether he is in India or outside India by hand
delivery post or electronic means.
Every company with more than 1,000 shareholders,
debenture-holders, deposit-holders and any other security
holders at any time during a financial year shall constitute a
Stakeholders Relationship Committee consisting of a
chairperson who is a non-executive director and such other
members as may be decided by the board.
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12. In a private company, an interested director cannot vote or
take part in the discussion relating to any matter in which
he is interested.
The provisions related to inter-corporate loans and
investments (section 372A of Companies Act, 1956) has
been extended to include loans and investments to any
person.
Loans can be given to a Director without seeking
permission of the Central Government.permission of the Central Government.
No central government approval required for entering into
any related party transactions.
No approval of the central government required for
appointment of any director or any other person to any
office or place of profit in the company or its subsidiary.
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13. The Bill prohibits insider trading in the company.
The Bill provides provisions related to Corporate Social
Responsibility (CSR).
Provisions relating to the appointment of managing
director/whole time director/manger to apply to a private
company.
The Bill provides for provision related to secretarial audit
in certain prescribed class or classes of companies.in certain prescribed class or classes of companies.
The Bill prescribes the functions of a company secretary.
The conditions under which the Registrar can remove the
name of a company from his record have been changed.
The Registrar of Companies has been empowered to file an
application with the Tribunal for restoration of the name of
a company where the company was struck off inadvertently
or on the basis of the incorrect information.
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14. The manner of declaring a company sick and process of its
revival and rehabilitation has been completely rationalized.
Any document or returns required to be filed under this
Bill, if not filed within prescribed time, have to be filed
within a period of 270 days on payment of such additional
fees as may be prescribed.
New definition of Nidhi Company prescribed.
The person to be appointed as President of the TribunalThe person to be appointed as President of the Tribunal
shall be the judge of the High Court for atleast 5 years, as
opposed to the Companies Act 1956, where no term has
been prescribed for High Court Judge to be appointed as
President; the only condition was that the person should be
qualified for being a judge of high court.
The National Company Law Appellate Tribunal shall now consist
of a combination of technical and judicial members not
exceeding 11, instead of 2 as provided in the Companies Act 1956.
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15. The Bill makes provision for cross border amalgamations
between Indian companies and companies incorporated in
the jurisdictions of such countries as may be notified from
time to time by the central government.
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