Comparative analysis 98 sections of cos act 2013

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Companies Act, 2013
Detailed analysis of 98 sections
effective 12.09.2013
CS Mamta Binani
Past Chairperson (Year 2010), EIRC of ICSI
Presentation made to:
Accountant’s Library Study Circle (EIRC of ICAI)

Companies Act, 1956 Companies Act, 2013
• It was introduced on 1st
April, 1956.
• It has 658 Sections and 15
Schedules.
• It extends to the whole
of India (Sikkim has its
own Companies Act).
Companies Bill passed
by the Lok-Sabha on 18th
December, 2012.
Rajya Sabha passed it on
8th August, 2013 by voice
vote
29th
August-President’s
Assent; 30th
August-
Gazette Notification
The Bill has 470 Clauses
(309 pages), 29 Chapters,
7 Schedules and 29 Rules
It applies to the whole of
India.

FINALLY……WE SEE THE MUCH AWAITED
ACT FLUNGING INTO ACTION
•Ministry of Corporate Affairs issues
Notification for Commencement of 98
Sections (out of 470 sections) of the
New Act on 12th September, 2013

In PHASES
• It seems that it has been decided to enforce the
provisions of the new legislation in phases.
• The provisions of the new Act which
require statutory/regulatory consultation or
functioning of new bodies or prescription of
relevant rules/forms will be brought in force
after the preparatory action is completed.

Probably, sections which do not require
rules
•In the first instance it has
been decided to notify those
provisions of the Act which do not
require such preparations.

Verbatim
•The exact language of Notification is:
In exercise of the powers conferred by sub-
section (3) of section 1 of the Companies
Act 2013, the Central Government hereby
appoints the 12th
day of September, 2013 as
the date on which the following provisions
of the said Act shall come into force

Section 1 (3)
• This section shall come into force at once and the
remaining provisions of this Act shall come into
force on such date as the Central Government
may, by notification in the Official Gazette,
appoint and different dates may be appointed for
different provisions of this Act and any reference
in any provision to the commencement of this Act
shall be construed as a reference to the coming
into force of that provision

Circular dated 12.09.2013 by
way of a Notification
•http://www.mca.gov.in/Ministry/pdf/Com
mencementNotificationOfCA2013.pdf
•The notification has been signed by Renuka
Kumar, Joint Secretary to the Government
of India

Clarification on the notification
dated 12.09.2013
• The clarification has been made by way of a
General Circular no.15/2013 dated 13.09.2013
• The clarifications were:
• 1. Sub-section (58) of section 2: ROC may register
those Memorandum and Articles of Association
received till 11.09.2013 as per the definition clause
of the .private company, under the Companies
Act, 1956 without referring to the definition of
private company under the new Act

dated 12.09.2013….contd
• 2. Section 102: All companies which have issued
notices of general meeting on or after 12.9.2o13, the
statement to be annexed to the notice shall comply
with additional requirements as prescribed in section
102 of the new Act
• 3. Section 133: Till the Standards of Accounting or any
addendum thereto are prescribed by Central
Government in consultation and recommendation of
the National Financial Reporting Authority, the
existing Accounting Standards notified under the
Companies Act, 1956 shall continue to apply

dated 12.09.2013….contd
• 4. section 180: In respect of requirements of special
resolution under Section 180 of the said Act, as
against ordinary resolution required by the
Companies Act 1956, if notice for any such general
meeting was issued prior to 12.9.2013, then such
resolution may be passed in accordance with the
requirement of the Companies Act 1956

Another circular on 18.09.2013
• Ministry of Corporate Affairs had issued a general
circular dated 18.09.2013.
• Background:
Ministry had issued a notification on 12.09.2013
bringing into force 98 sections or part thereof of
the Companies Act, 2013. Ministry received requests
for clarification as to whether the provisions of
the Companies Act, 1956 corresponding to such 98
sections would continue to apply or not and hence as
a clarification, it issued this circular dated 18.09.2013.

Continued….
•This Circular clarified that with effect from
12.09.2013, the relevant provisions of
the Companies Act 1956, which corresponds
to the provisions of 98 sections of
the Companies Act, 2013 brought into force
on 12.09.2013, cease to have effect from that
date.

In this Power Point Presentation
•The objective is provide a chapter-wise
comparative summary of the 98 Sections
made effective in the Companies Act 2013
vis a vis the Companies Act, 1956

Chapter – I
Preliminary
• Sections ranging from 1 to 2
• Total 2 sections
• On 30th
August 2013, Ministry of Law and Justice
issued a notification regarding the Companies Act,
2013 immediately after it received assent of President
of India. Only section 1 of the Act of 2013 came into
effect from that day. Section 1 as usual deals with
short title, extent, commencement and application
• The 2nd
section deals with the definition clauses
• Out of 95 definitions, 83 definitions (in which 26 are
new definitions) have been notified w.e.f. 12.09.2013

Definitions-Section 2
• The following definitions given against each clause,
becomes applicable:
1: abridged prospectus
3: alteration
4: appellate tribunal
5: articles
6: associate company
8: authorised capital (new)
9: banking company
10: board of directors or board
11: body corporate or corporation
12: book and paper and book or paper

Definition Continued……
14: branch office
15: called-up capital (new)
16: charge (new)
17: chartered accountant (new)
18: chief executive officer (new)
19: chief financial officer (new)
20: company
21: company limited by guarantee
22: company limited by shares

Definition Continued….
24: company secretary
25: company secretary in practice
26: contributory
27: control (new)
28: cost accountant (new)
29: Court (except sub clause iv which talks
about special courts)
30: debenture
32: depository
33: derivative

34: director
35: dividend
36: document
37: employees’ stock option
38: expert (new)
39: financial institution (new)
40: financial statement (new)
43: free reserves
44: global depository receipt (new)
45: government company

46: holding company
49: interested director
50: issued capital (new)
51: key managerial personnel (new)
52: listed company
53: manager
54: managing director
55: member
56: memorandum
57: networth

58: notification (new)
59: officer
60: officer who is in default
61: official liquidator
63: ordinary or special resolution (new)
64: paid up share capital (new)
65: postal ballot (new)
66: prescribed
67: previous company law (except sub clause
ix relating to Registration of Companies (Sikkim) Act,
1961

68: private company
69: promoter (new)
70: prospectus
71: public company
72: public financial institution
73: recognised stock exchange
74: register of companies (new)
75: registrar
76: related party
77: relative (My Comment: the list of
relatives as per sub clause iii is yet to be prescribed)

78: remuneration
79: schedule
80: scheduled bank
81: securities
82: securities and exchange board
84: share
86: subscribed capital (new)
87: subsidiary company or subsidiary (except
the proviso and explanation (d)

88: sweat equity shares
89: total voting power
90: tribunal (new)
91: turnover (new)
92: unlimited company (new)
93: voting right (new)
94: whole time director (new)
95: words & expression borrowed from SCRA,
SEBI and Depositories Act…

Chapter – II
Incorporation
• Out of which 3 sections has been made applicable
from 12.09.13
• The notified sections are 19,21,22

Subsidiary Co. not to hold
shares in its holding Company
New Act (section 19) Old Act (corresponding 42)
Subsidiary company shall not
hold shares in its holding
company (exceptions
provided in 19(1)(a),(b),(c)
and
No holding company shall
allot or transfer its shares to
any of its subsidiary
companies
Membership of holding
company

Authentication of documents,
proceedings and contracts
New Act (section 21) Old Act (corresponding 54)
 A document or proceeding
or contracts may be signed
by any KMP or an officer
duly authorised by the Board
in this behalf
Authentication of documents
and proceedings
A document or proceeding
requiring authentication by
the company may be signed
by a director, manager,
secretary or other authorised
officer of the company

Execution of bills of exchange etc.
New Act (section 22)
Old Act (corresponding 47
& 48)
A bill of exchange, hundi or
promissory note shall be
deemed to be proper if
signed by any person acting
under its authority, express
or implied
New: Execution of other
deeds – POA
Deeds signed by such an
POA holder shall bind the
company
Bills of Exchange &
Promissory Notes

Chapter – III
Prospectus & Allotment of Sec
• This chapter is divided into 2 parts
• Part I – Public Offer and Part II – Private Placement
• Sections ranging from 23 to 42, i.e. (23 to 41) and 42
from 12.09.13, all in Part I
• The notified sections are 23, 24, 25, 29, 30, 31, 32, 33,
34, 35, 36, 37, 38, 39 and 40

Public offer and pvt. placement
New Act (section 23) Old Act (NEW provision)
It provides the ways in
which:
Public company or a
Private company
may issue securities.
It is to be noted here that
23(1)(b) and 23(2) has yet not
been notified
23(1)(b): Private placement of
shares by public companies
23(2): Issue of shares by
private companies
This is a new provision and
no corresponding section
could be found

Power of SEBI to regulate issue
& transfer of securities etcNew Act (section 24) O. Act(corresponding 55A)
It provides the provisions for
the administration of issue
and transfer of securities by
SEBI, in relation to:
*Issue and transfer of
securities; and
*Non-payment of dividend
By *listed companies or
*those companies which
intends to get there
securities listed
 Scope widened
Powers of Securities and
Exchange Board of India

Doc containing offer of sec. for
sale to be deemed prospectusNew Act (section 25) Old Act(corresponding 64)
Any document by which the
offer for sale of securities is
made to the public, it shall
be deemed to be a
prospectus and all sections
for the same, shall be
applicable to it.
It is to be noted that section
25(3) has not been notified.
This sub section brings out
additional information
required to be mentioned in
the prospectus
Document containing offer
of shares or debentures for
sale to be deemed prospectus

Public Offer of Sec to be in Demat
Old Act(corresponding
68B)
Applicable to every company
making public offer and such
other class of public
companies as may be
prescribed
Other companies may issue
securities in physical or
demat form
Applicable to every listed
company making an initial
public offer of any security
for a sum of Rs 10 Crores or
more

Advertisement of Prospectus
New Act (section 30) Old Act(corresponding 66)
Ad of Prospectus published
in any manner shall specify
the contents of its MOA:
Objects
Liability of Members
Share Capital
Subscriber Details
Capital Structure
Where any prospectus is
published as a newspaper ad,
it can do away with
specification of the contents
of the memorandum or
signatories thereto or the
number of shares subscribed
by them

Shelf Prospectus (SP)
60A)
Any class of companies
prescribed by SEBI may file SP
with ROC
At the stage of 1st
offer of
securities
Period of Validity 1 year
Date of Opening becomes
Commencing Date
Prior to any subsequent offer
under the same SP, Co. to file
with ROC Information
Memorandum on new charges
created or of any change in
financial position
Option to Refund Money
Only Public Financial
Institutions, Public Sector or
Scheduled Banks whose main
object is financing allowed to
issue SP

Red Herring Prospectus (RHP)
60B)
IM now RHP
Co. proposing to make an offer
of securities
RHP may be issued prior to
issue of Prospectus
RHP to be filed with ROC at
least 3 days prior to opening of
subscription list and the offer
Upon closing of the offer, the
details of information to be filed
with ROC and SEBI
Information Memorandum
(IM)

Issue of Application Forms for Securities
New Act (section 33) Old Act(Corresponding 56)
Every form of Application
Issued for purchase of any
Securities shall be accompanied
by an abridged Prospectus
Talks about abridged
prospectus
33(3) has not been notified.
This sub section brings out the
penalty provisions in case of
default
Matters to be stated and
reports to be set out in
Prospectus
New Section Corresponds to
Sec 56(3)
Form was required to be
accompanied by a
Memorandum containing
such salient features of a
prospectus as was prescribed

Criminal Liability for Mis-statements in
Prospectus
Any statement which is Untrue
or Misleading in form or context or
Inclusion or omission likely to
mislead
Section 447 (Punishment for
Fraud) invoked
Persons who have authorized
the issue of such prospectus
shall also be criminally liable
Escape mechanism if the person
can prove that such statement
or omission was
 Immaterial
 Had reasonable grounds to
believe etc
Earlier penal provision was
for untrue statements only

Civil Liability for Mis-statements in
Prospectus
Civil Liability in case of
prospectus issued for all type of
securities.
Where prospectus issued with
an intention to defraud every
person liable under this section
shall be personally liable
without any limitation for the
losses incurred by any person
who has subscribed
35(1)(e) which deals with
inclusion of experts in the
gamut has not been notified.
The option to withdraw on
becoming aware of any
untrue statement after issue
of prospectus and before
allotment has been
dispensed with-Sec 62(3)(b)

Punishment for Fraudulently inducing
persons to Invest money
Persons who fraudulently
induces persons to invest
money shall be liable for action
under Sec 447 (Punishment for
Fraud)
This includes any agreement
with a view to obtaining credit
facilities from bank or financial
institutions.
A non compoundable offence
Bank and Financial
Institutions were not covered
It was a compoundable
offence

Action by Affected Persons (Sec 37)
• New Section
• A suit may be filed or
• Any other action may be taken
• U/s 34, 35 or 36
• By any person, group of persons or any association of
persons
• Affected by any misleading statements, inclusion,
omission
• of any matter in the prospectus

Punishment for Personation for
Acquisition etc of Securities
New Act (section 38) Old Act(Corresponding 68A)
Punishment u/s 447 (Fraud) for
persons who apply in fictitious
names, multiple applications
Court may order disgorgement
of gains, if any and seizure and
disposal of the securities
The amount so received by the
court to be credited to the IAP
fund.
Disgorgement provisions was
not there earlier
Multiple applications in
different name or in different
combination was not
included earlier

Allotment of Securities by Companies
New Act (section 39) Old Act(Corresponding 69 & 75)
Where no minimum amount
has been subscribed and money
received the amount needs to
be refunded to all applicants
within 30 days from date of
issue of prospectus
Co. having a share capital on
allotment of securities (earlier
only shares) file a return of
allotment with ROC
Rs 1000/- penalty for each day of
continuing default
39(4) relating to Return of
Allotment has not been
notified.
Prohibition of Allotment
unless Minimum
Subscription Recd (Sec 69)
Return as to Allotments (Sec
75)
Only pertaining to Shares

Securities to be dealt with in SE
New Act (section 40) Old Act(Corresponding 73 & 76)
Prospectus to mention name of
SE where the securities will be
dealt with
Application money recd from
the public to be kept in separate
bank account.
Co. may commission to any
person in connection with
subscription of securities
40(6) relating to commission
payment has not been notified.
Scope widened from shares and
debentures to securities
Allotment of shares and
debentures to be dealt in on
SE (Sec 73)
Power to pay certain
commission and prohibition
of payment of all other
commission, discount etc
(Sec 76)

Chapter – IV
Share Capital & Debentures
from 12.09.13
• The notified sections are 44, 45, 49, 50, 51, 57, 58, 59,
60, 65, 69 & 70

Nature of Shares or Debentures
Shares or Debentures or other
interest of any member in the
company shall be moveable
property transferable in the
manner provided in AOA
No Change
Provisions retained

Numbering of Shares
Company having a share capital
Shares of such a company to be
distinguished by its distinctive
number
Save and except Shares held by
a person as beneficial owner in a
depository account
No Major change
Numbering of Shares
(provisions retained)

Calls on Shares of Same Class to be
made on uniform basis
No change
When calls are made for further
capital on shares of a particular
class, the calls shall be made
uniformly.

Company to accept unpaid share capital
although not called up
No change
Allows a Company if authorized
by its AOA to accept amounts
from members which are
unpaid on the shares even
though no call has been made.
The acceptance of such amount
shall not confer any voting
rights against the amount paid
till the call has been made.

Payment of Dividend in proportion to
amount paid up
No Change
Company if authorized by AOA
may pay dividend in proportion
to the amount paid up on each
share

Punishment for Personation of
Shareholder
It provides penalty for a person
who deceitfully personates the
owner of any share or interest

Refusal of Registration & Appeal against
Refusal
New Act (section 58) Old Act(Corresponding 111, 111A)
58(1)-Refusal by Private Ltd Co-
to send intimation within 30
days from the date on which
instrument of
transfer/transmission is
delivered to the Co.
Notice to be sent to transferor
and transferee giving reasons
for refusal
58(2)-Securities in a public
company is freely transferable.
However, the act recognizes
contract or arrangement in
respect of transfer of securities
Contract or arrangement in
respect of securities was not
there earlier

Refusal of Registration & Appeal against
Refusal….contd
58(3)-Transferee may appeal to
tribunal against refusal. Either
within 30 days from the date of
refusal notice or in case no
notice recd, 60 days from the
lodgment date
58(4)-In case of pub co-
transferee may appeal within a
period of 60 days from such
refusal or 90 days from the
lodgment date
Timelines changed as
compared to earlier
provisions

Rectification of Registration of Members
 Scope widened to Securities
 If a person’s name is omitted from
the Register of Members without
sufficient cause the aggrieved can
appeal to the Tribunal for
reinstatement of his name.
 Foreign members or debenture
holders to prefer an appeal with a
competent court to be set up
outside India for restoration of their
names.
Earlier only applicable to
shares and debentures
Foreign Members or
debenture holders’ appeal
provision was not there
earlier

Publication of Authorized, Subscribed &
Paid Up Capital
 if a Co publishes a notice,
advertisement or other official
publications or business letter
which states the amount of
Authorized Share Capital the
Company should state in the said
document the details of the
subscribed and paid up capital.
 Penalty for non-compliance laid
down
Provisions Retained

Unlimited Company to Provide for Reserve Share
Capital on Conversion into Limited Company
 Unlimited Company may be
allowed to increase its Nominal
Capital provided that the same shall
not be called up except at the time
of winding up.
Provisions Retained-No
Change

Transfer of Certain Sums to CRR Account
New Act (section 69) Old Act(Corresponding 77AA)
 Where there is a buy back out of
Free Reserves or Share premium
Account the amount equal to
nominal value of shares bought
back should be transferred to
CRR(Capital Redemption Reserve)
 The said Reserve can be used for a
bonus issue.
Usage for Bonus Issue earlier
not specified

Prohibition for Buyback in Certain
Circumstances
New Act (section 70) Old Act(Corresponding 77B)
 A Co. cannot buy back its own
shares directly or indirectly through
any Subsidiary or Investment
Company.
 In case a co. defaults as prescribed,
prohibition of buy back has an
exception: if default is remedied
and a period of 3 years has lapsed
after such default ceased to subsist.
 It is to be noted that section 70(2)
relating to prohibition of buy back
of its own shares or securities under
certain situations has not been
notified

Chapter – V
Acceptance of Deposits by Co.’s
• Sections ranging from 73-76
• Out of which ‘NO’ sections has been notified as yet

Chapter – VI
Registration of Charges
• Sections ranging from 77-87
• Out of which only 1 section has been made applicable
from 12.09.2013
• The notified section is 86

Punishment for Contravention
 If the Company fails to comply with
the provisions relating to Chapter
VI, penalty will be imprisonment
which may extend to six months or
fine of minimum Rs.25,000 and
maximum of Rs. 1 lac or with both.
 Penal provisions have been made
stringent

Chapter – VII
Management & Administration
• Out of which 13 sections has been notified from
12.09.13
• The notified sections are 91, 100, 102, 103, 104, 105, 106,
107, 111, 112, 113, 114 and 116

Power to Close Register of Members or Debenture
Holders or other Security Holders
Manner for closure will be as
specified by SEBI
Applicable only to Listed or
those intending to get their
securities listed
Power to close Register of
Members or Debenture
Holders
Not applicable to other
Security Holders
As per plain reading was
applicable to all companies

Calling of Extra-ordinary General Meeting
100(6) relating to
reimbursement of expenses
incurred by requisitionists from
the fee or other remuneration
under Sec 197 payable to
directors who were in default in
calling the meeting, has not
been notified
The explanation which was
given in the erstwhile 169(7)
(b) has now been removed
This means that
adjournment to a date after
the expiry of three months
no more holds good
Other provisions broadly
retained

Statement to be Annexed to Notice
To specify the nature of concern
or interest, financial or
otherwise, if any in respect of
each of the following persons:
1. Every Director and the
Manager, if any
2. Every other KMP and
3. Relatives of the persons
mentioned above and
4. Also as per 102(1)(b) to give any
other information and facts that
may enable members to
understand the meaning , scope
and implications.
Disclosure for KMP was not
required
Not applicable from
11.09.2013

Statement to be Annexed to Notice….contd
102(2)(b)-Disclosure of %age of
shareholding in any other co.
under consideration to be made
if the %age of shares held in
that co is not less than 2%
102(4)-In case of any benefit or
profit by the concerned
Promoter, Directors, KMP etc
which accrues due to
insufficient/non-disclosure, the
said person will be liable to
compensate the company as
specified
Earlier for such disclosure
%age was 20

Quorum for Meetings
Requirement of Quorum in
public co. changed
1000 <= 5 members
< 1000 or >= 5000-15 members
<5000- 30 Members
103(1)(b)- for private limited
company 2 members personally
present
103(2)-Where GM adjourned for
lack of quorum, the co. to give
not less than notice to members
individually by an
advertisement in newspaper
5 members personally
present in case of public co
2 members personally
present for private co.

Chairman of Meetings
The members personally
present shall elect one amongst
themselves to be the Chairman
of meeting on a show of hands
unless the AOA otherwise
provides
On a poll being demanded for
this, to be taken forthwith and
such other elected person to be
the Chairman for the rest of the
meeting

Proxies
Central Government given the
power to prescribe class of
companies whose members
shall not be entitled to appoint
another member as proxy
One person cannot represent as
proxy for more than 50
members
Proxy will no more be able to
vote by show of hands
It is to be noted that the 3rd
and
4th
proviso to Sec 105(1) which
relates to first 2 points
mentioned herein above has not
been notified. Also 105(7) not
notified
The provision of 48 hours has
been retained as it is

Restriction on voting rights
New Act (section 106) Old Act(Corresponding 181,182 &
183)
All the 3 sections merged into 1
Broadly the provisions have
been retained
This section basically mentions
that a person can only be
prohibited from exercising the
voting rights if the call money
or other sums payable by him
has not been paid or in cases
where the company has
exercised any right to lien
Previously, private limited
companies could prescribe
other restrictions, which now
no more allowed
Section 181: Restriction on
exercise of voting right of
members who have not paid
calls etc.
Section 182: Restrictions on
exercise of voting right in
other cases to be void
Section 183: Right of member
to use his votes differently

Voting by show of hands
New Act (section 107) Old Act(Corresponding 177 &
178)
2 sections merged into 1
The provisions have been
retained
Section 107(1): At any general
meeting, a resolution put to the
vote of the meeting shall, unless
a poll is demanded under
section 109 or the vote is carried
out electronically, be decided
on a show of hands.
The underlined words above,
has been added in the new law
Section 177: Voting to be by
show of hands in first
instance
Section 178: Chairman’s
declaration of result of voting
by show of hands to be
conclusive

Circulation of member’s resolution
This section mentions that the
eligibility criteria for members
of companies with or without
share capital will be as
mentioned in section 100
Eligibility reduced to 1/10
(company having share capital)
And it lays down the process as
to how and where the
requisitionists need to deposit
the notice etc.
And the penalty provisions
Section 188: Mentioned
eligibility as 1/20th
of voting
power
The provision of restriction
of circulating statement of
not more than 1000 words by
the members has been
dispensed with in the new
law

Representation of President & Governors in
meetings
Provides that the President of
India or the Governor of a State, if
he is a member of company
May appoint any person to act his
representative at any meeting of a
company
That member will be deemed to be
the member of the company and
shall exercise the same rights and
powers as the President or the
Governor could have exercised
Including the right to vote by
proxy
Complete provisions retained

Representation of Corporations at meetings
of companies and of creditors
Provides that if a body corporate is a
member of company, it can
authorise any person to act as its
representative at any meeting of a
company
Such authorisation to be given by
way of board meeting resolution
The authorised person to exercise
the same rights and powers,
including the right to vote by proxy
and by postal ballot
The underlined words have been
added in the section
Sec 113(1)(b) not notified
Complete provisions
retained

Ordinary & Special Resolutions
Provides that a resolution shall be
an ordinary resolution if the votes
cast in favour exceeds the votes
cast against the resolution,
including the casting vote, if any
A resolution shall be a special
resolution when it is specified to
be considered that way in the
notice and the votes cast in favour
is 3 times the votes cast against
The word ‘electronically’ has been
introduced in section 114(1) and (2)

Resolutions passed at adjourned meeting
A resolution passed at an
adjourned meeting of:
a. Company or
b. The holders of any class of
shares
c. BOD
Shall for all purposes be treated as
passed on the date on which it is
passed and is not supposed to be
deemed to be passed at any earlier
date

Chapter – VIII
Declaration & Payment of Div
• Out of which 1 section has been made applicable from
12.09.13

Punishment for failure to distribute
dividends
Dividend to be paid within 30 days
from declaration date
This section prescribes penalty
provisions for the directors, who
knowingly is party to the default
The punishment is imprisonment
which may extend to 2 years and
with fine not less than Rs.1000 for
every day of continuing default
5 points have been mentioned
when no offence will be deemed to
have been committed
The heading read as ‘Penalty
for failure to distribute
dividends within 30 days
Provisions has been retained
In the heading of the section,
the word ‘punishment’ has
replaced the word ‘penalty’
It is to be noted that in the
new law, imprisonment has
been reduced from 3 to 2
years

Chapter – IX
Accounts of Companies
12.09.13

Central Government to prescribe accounting
standards
New Act (section 133) Old Act(Corresponding 211(3C))
The CG* may prescribe the
standards of accounting or any
addendum thereto
As recommended by the Institute
of Chartered Accountants of India
The CG would consult with NFRA*
and examine the
recommendations made by NFRA
CG means Central Government
NFRA means National Financial
Reporting Authority
There was a mention of the
National Advisory
Committee on Accounting
Standards

Chapter – X
Audit & Auditors
• Out of which ‘NO’ section has been made applicable
from 12.09.13

Chapter – XI
Appointment & Qualificatn of Dirs
from 12.09.13
• The notified sections are 161, 162 and 163

Appointment of additional director,
alternate director & nominee director
New Act (section 161) Old Act(Corresponding
260,262,313)All the 3 sections merged into 1
Section 161(1) deals with addl dir
(AD): BOD can appoint AD’s.
Person who fails to get appointed in
a general meeting will not be
eligible to be appointed as AD
Section 161(2) deals with alternate
dir: BOD may appoint any person to
act as alternate director for any
director during his absence for a
period not less than 3 months form
India
This person should not be holding
any alternate directorship for any
other director in the company
Section 260: Additional
Directors
Section 262: Filling of casual
vacancies among directors
Section 313: Appointment
and term of office of
alternate directors

alternate director & nominee
director…..contd
260,262,313)To get appointed as alternate
director to any independent
director, the incumbent also have to
satisfy the conditions laid down for
independent directors
The period upto which alternate
director remains in office has been
specified
Section 161(3) deals with nominee
dir: BOD may appoint any person as
a director nominated by any:
a. institution
b. any agreement
c. CG or the State Government
Directors
alternate directors

alternate director & nominee
director…..contd
260,262,313)Section 161(4) deals with filing up of
casual vacancies: In case of public
companies whose office of directors
are vacated before expiry of his
term, the resulting vacancy can be
filled by the BOD
It is to be noted that provisions of
section 161(2) relating to alternate
directors has not been notified yet
Directors
alternate directors

Appointment of directors to be voted
individually
A single resolution cannot be passed
for appointment of more than 1
director
Unless an approval for en-bloc
appointment has been resolved at a
meeting without a single vote cast
against it
In the new law, this section has
been made applicable to private
limited companies also
In 1956 Act, it was applicable to
public company and a private
company which is a subsidiary of a
public company
Broadly, the provisions has
been retained

Option to adopt principle of proportional
representation for appointment of directors
Provides that the AOA of a company
may provide for appointment of not
less than 2/3rd
of the total number of
the directors in accordance with the
principle of proportional
representation
In the new law, this section has
been made applicable to private
In 1956 Act, it was applicable to
public company and a private
company which is a subsidiary of a
public company
Broadly, the provisions has
been retained

Chapter – XII
Meeting of Board & its Powers
from 12.09.13
• The notified sections are 176, 180, 181, 182, 183, 185, 192,
194 and 195

Defects in appointment of directors not to
invalidate actions taken
Any act done by a person as a
director shall not be invalid if it is
subsequently noticed that his
appointment was invalid
By reason of any:
a. Defect or
b. Disqualification
c.Termination by virtue of any
provision in the Act or in AOA
The further acts of directors will be
considered as invalid after his
appointment have been so noticed
by the company
Provisions have been
retained
The word ‘discovered’ in the
old act has been replaced
with ‘noticed’ in the new act

Restrictions on powers of Board
Certain powers which can be
exercised by the BOD with the
approval of general meeting, are
now applicable to private limited
companies also
The word, ‘undertaking’ and the
expression, ‘substantially the whole
of the undertaking’ has been defined
Some powers now can be exercised
by the BOD after passing special
resolution vis-à-vis ordinary
resolution in the old law
Contribution to charitable funds as
mentioned in old section 293(1)(e)
has been removed and shifted to a
new section
Quite a number of
changes has been made

Company to contribute to bonafide and
charitable funds etc.
New Act (section 181) Old Act(Corresponding 293(1)
(e))
The BOD may contribute to
bonafide charitable and other
funds
Provided that, prior permission
by way of resolution at a general
meeting is obtained
This permission only required if
the amount, the aggregate of
which, in any financial year,
exceeds 5% of its average net
profits for the 3 immediately
preceding financial years
Few changes

Prohibitions & restrictions regarding political
contributions
Manner and limits pertaining to
political contributions has been laid
in the section
What will be considered as a political
contribution has been mentioned
The way the said contribution needs
to be disclosed in the profit & loss
account of the company has been
mentioned too
Punishment for contravention has
been increased.
‘Political party’ means a political
party registered u/s 29A of the
Representation of the People’s Act,
1951
Few changes
293A(1)(b)(ii) & 293A(2)(b)
had a mention of
contribution to any person
for any political purpose.
That is no more allowed in
the new law
Proviso to 293A(2) laid the
limit of 5% which has been
increased to 7.5% in the
new law

Power of Board and other persons to make
contributions to National Defence Fund etc.
New Act (section 183) Old Act(Corresponding 293B
Company can contribute such
amount as it thinks fit to the
National Defence Fund
Or to any other Fund approved
by the CG for the purpose of
national defence
The company to disclose in its
profit and loss account, the total
amount of contribution during
the financial year to which it
relates

Loan to Directors etc.
New Act (section 185) Old Act(Corresponding 295, 296)
2 sections combined into 1
185(1): Circumstances and
manner in which a company
shall advance any loan to any of
its directors
Or to any other person, in whom
the director is interested
The expression ‘to any other
person in whom director is
interested’ has been defined
The section not only mentions
loan but also guarantee or any
security in connection with loan
295: Loans to directors etc.
296: Application of section
295 to book debts in
certain cases
Most important change:
The new act makes section
185 applicable to private

Restriction on non-cash transactions
involving directors
New Act (section 192) Old Act(Corresponding NIL)
This section regulates the
arrangements where the:
a. Director of the company or
b. Director of its holding
company
c. Director of its subsidiary
company
d. Director of its associate
company
acquires assets for consideration
other than cash, from the
company
New Provision

Prohibition on forward dealings in securities
of company by director or KMP
It seeks to prohibit whole
time director or any of its
KMP
From buying certain kinds
of future contracts
In relation to the securities
of the company
New Provision

Prohibition on insider trading of securities
It seeks to prohibit
directors or any of its KMP
To deal in securities of a
company, or counsel,
procure or communicate
Directly or indirectly
About any non-public price
sensitive information to any
person
New Provision

Chapter – XIII
Appointment & Remuneration of
Managerial Personnel
12.09.13

Compensation for loss of office of managing
or whole-time director or manager
Manner and circumstances in which
any managing director or whole-time
director or manager, shall be entitled
to receive payment by way of
compensation:
- for loss of office or
- as consideration for retirement
from office or
- in connection with such loss or
retirement
202(2) lays down the cases when the
payment by way of compensation will
not be allowed
202(3) specifies the quantification of
such compensation

Chapter – XIV
Inspection, Inquiry & Investigation
• Out of which ‘NO’ section has been made
applicable from 12.09.13

Chapter – XV
Compromise, Arrangement &
Amalgamation

Chapter – XVI
Prevention of Oppression &
Mismanagement

Chapter – XVII
Registered Valuer
• Section 247
• Total 1 section
• This section has NOT been made applicable from
12.09.13

Chapter – XVIII
Removal of name of companies
from the Register of Companies
• Out of which ‘NO’ sections has been made

Chapter – XIX
Revival & Rehabilitation of sick
companies

Chapter – XX
Winding Up
• This chapter has been divided into 3 parts
• Part I – Winding up by the Tribunal
• Part II – Voluntary winding up
• Part III – Provisions applicable to every winding
up

Chapter – XXI
Companies authorised to register
under this Act
• This chapter has been divided into 2 parts
• Part I – Companies authorised to register under
this Act
• Part II – Winding up of unregistered companies

Chapter – XXII
Companies incorporated outside
India
from 12.09.13
• The notified sections are 379, 382, 383 and 386

Application of Act to foreign companies
If not less than 50% of the paid-up
capital of a foreign company
Is held by citizen(s) of India,
companies or bodies corporate
registered in India
Then such a foreign company will
have to comply with Chapter XXII
And comply with other provisions as
if it was a company incorporated in
India
Interestingly, the words
used in section 591(2),
‘having an established
place of business in India’
has been discontinued in
the new law

Display with name etc. of foreign company
Every foreign company:
383(a): conspicuously exhibit, name,
country in which incorporated in
english and also in local use
language, outside of its every office
383(b): same in all business letters,
bill heads etc.
383(c)(i): If its liability is limited,
cause notice of the same to be stated
in every prospectus issued and official
publications in legible english
characters
383(c)(ii): And also of its limited
liability outside its every office
Broad provisions retained
595(1)(a) mentioned that
every foreign company
shall in every prospectus
inviting subscriptions in
India for its shares or
debentures, state the
country in which the
company is incorporated…
this doesnot find place in
the new law

Service on foreign company
Any process, notice or other
document
Required to be served on a foreign
company
Shall be deemed to be sufficiently
served
If addressed to any person whose
name and address have been
delivered to the ROC u/s 380
And left at, or sent by post
To that address
Or sent by electronic mode
The matter in provisos, ‘a’
and ‘b’ to section 596 has
not been retained
The word ‘by electronic
mode’ has been added to
section 383 in the new law

Interpretation
For the purposes of Chapter XXII:
- ‘certified’ means certified in the
prescribed manner to be a true copy
or a correct translation
- ‘director’ includes any person in
accordance to whose directions or
instructions the BOD is accustomed
to act
- ‘place of business’ includes a share
transfer or registration office
It is to be noted that sub-clause (a),
i.e. the meaning of ‘certified’ has yet
not been notified
The interpretation of the
words ‘Prospectus’ and
‘Secretary’ has been
dropped in the new law

Chapter – XXIII
Government Companies
12.09.13

Annual reports on Government
Companies
394(1): Where the CG is a member of
a government company
The CG shall cause to prepare the
annual report on the working and
affairs of the company
Along with the auditor’s report and
comments of the Comptroller and
Auditor General of India
And the same be laid before both the
Houses of Parliament
If State Government is a member,
same provisions, just that the reports
etc. be placed before both the Houses
of the State Legislature
The language in the new
law has been made simpler

Chapter – XXIV
Registration offices & fees
• Out of which ‘NO’ section has been made applicable
from 12.09.13

Chapter – XXV
Companies to furnish
information or statistics
• Section 405
• Total 1 section
• This section has been made applicable from 12.09.13

Power of CG to direct co. to furnish
information or statisticsNew Act (section 405) Old Act(Corresponding 615)
405(1): CG may require companies to
furnish such information within such
time as specified in its order
405(2): Every such order shall be
published in the Official Gazette and
may be addressed to companies in
such manner as the CG may think fit
405(3): The CG for the purpose of
satisfying itself, may seek for
production of such records etc.
405(4): Penal provisions
405(5): Applicable to foreign
companies in relation to business
carried on in India
Broad provisions retained
The provisions in section
615(5) relating to the
power to order inquiry
where the said information
is not provided has been
done away with

Chapter – XXVI
Nidhi
• Section 406
• Total 1 section
• This section has NOT been made applicable from
12.09.13

Chapter – XXVII
National Company Law Tribunal
and Appellate Tribunal
from 12.09.13
• The notified sections are 407, 408, 409, 410, 411, 412,
413 and 414

Definitions
New Act (section 407) Old Act(Corresponding 10FD
& 10FR)
It seeks to provide the
definitions of:
a. Chairperson
b. Judicial Member
c. Member
d. President
e. Technical Member
In the new law, the
definitions of Chairperson,
Member and President has
been introduced

Constitution of NCLT
New Act (section 408) Old Act(Corresponding 10FB
& 10FC)
The CG shall, by notification,
constitute, w.e.f. such date, as
may be specified therein a
Tribunal known as NCLT
NCLT to consist of a President
and such number of Judicial
and Technical members, as the
CG may deem necessary
In the new law, the upper
limit of 62 has been done
away with

Qualification of President & Members of
Tribunal
New Act (section 409) Old Act(Corresponding 10FD)
The eligibility criterias has
been laid out for:
a. President
b. Judicial Member
c. Technical Member
eligibility criteria for
appointment of President,
Judicial member,
Technical member have
changed

Constitution of Appellate Tribunal
New Act (section 410) Old Act(Corresponding 10FR)
The CG shall, by notification,
constitute, w.e.f. such date as
may be specified therein, an
Appellate Tribunal to be
known as the National
Company Law Appellate
Tribunal
Consisting of:
a. a chairperson and
b. such number of Judicial and
Technical members, not
exceeding 11
In the new law, the limit of
members which was 2 has
been increased to 11

Qualification of Chairperson and
members of Appellate Tribunal
New Act (section 411) Old Act(Corresponding 10FR)
Qualifications of:
a. Chairperson
b. Judicial Member
c. Technical Member
has been laid out.
qualifications for the
Chairperson, Judicial
member and the Technical
member for NCALT has
been modified

Selection of members of Tribunal &
Appellate Tribunal
New Act (section 412) Old Act(Corresponding 10FX)
412(1): President of the Tribunal and
the Chairperson & Judicial Members
of the Appellate Tribunal shall be
appointed after consultation with the
Chief Justice of India
412(2): The Members of the Tribunal
and the Technical Members of the
Appellate Tribunal to be appointed
on the recommendation of the
Selection Committee
412(3): The secretary of MCA shall be
the convener of the Selection
Committee
selection process has been
made stringent.
Also the composition of
the selection committee
has been changed
In the old law, the time
period within which the
casual vacancy needs to be
filled in was specified
Which is not no in the
new law

Term of office of President,
Chairperson and other MembersNew Act (section 413) Old Act(Corresponding 10FT
& 10FE) 413(1): President and every other Member of
the Tribunal shall hold office for 5 years + 5
years (on reappointment)
 413(2): Age limit for the Members of the
Tribunal:
President: 67 years
Any other Member: 65 years
Lower benchmark age for selection: 50
 413(3): Chairperson or a Member of NCALT
shall hold office for 5 years + 5 years (on
reappointment)
 413(4): Age limit for the Members of the
Appellate Tribunal:
Chairperson: 70 years
Any other Member: 67 years
Lower benchmark age for selection: 50
changes

and conditions of service of
Members
New Act (section 414) Old Act(Corresponding 10FG
& 10FW)
The:
salary
allowances and
other terms and conditions of
Service of the Members of the
Tribunal and the Appellate Tribunal
shall be
Such sum as may be prescribed
And that such sum or the terms etc.
shall be varied to their disadvantage
after their appointment
No change

Chapter – XXVIII
Special Courts
from 12.09.13
• The notified sections are 439, 443, 444, 445 and 446

Offences to be non-cognizable
439(1): Every offence except the ones
mentioned in 212(6) shall be deemed
to be non-cognizable offence
Section 212 deals with investigation
into affairs of company by Serious
Fraud Investigation Office. 212 is a
new provision
 439(2): Court shall take cognizance
of any offence under this Act only
when the complaint in writing has
been made by the ROC, a shareholder
or by a person authorised by the CG
439(3): Offence relating to issue and
transfer of securities and of non-
payment of dividend, on the
complaint by SEBI
changes

Power of CG to appoint company
prosecutors
The CG may appoint
One or more persons
As Company Prosecutors
For the conduct of prosecutions
arising out of this Act
And the persons so appointed
Shall have the powers and privileges
conferred by the Criminal Procedure
Code
On Public Prosecutors
Appointed under section 24 of the
Code
The change is: where the
CG appoints any Company
Prosecutors, they shall
have the same powers and
privileges conferred on
Public Prosecutors by the
Criminal Procedure Code
under section 24 of the
Code instead of section
492 of the code, as
provided in the old law

Appeal against acquittal
The CG may
In any case arising under this Act
Direct any Company Prosecutor or
authorise any other person
To present an appeal from an Order
of Acquittal
Passed by any Court other than a
High Court
No change

Compensation for accusation
without reasonable cause
The provisions of section 250 of the
Code of Criminal Procedure
Shall apply mutatis-mutandis
To compensation for accusation
without reasonable cause
Before the Special Court or the Court
of Session
Section 625 is quite long
The old law specifically
makes section 250 of the
Criminal Procedure Code,
non applicable

Application of Fines
The Court imposing any fine under
this Act
May direct that the whole or any part
thereof
Shall be applied towards payment of
cost of proceedings or
Towards payment of reward to
person
On whose information the
proceedings were instituted
Just that there was a
power which was also
given to the Tribunal
along with the Court, in
the old law, which has
been removed
The new law only
mentions, Court

Chapter – XXIX
Miscellaneous
from 12.09.13
• The notified sections are 456, 457, 458, 459, 460, 461,
462, 463, 467, 468, 469 and 470

Protection of Action Taken on Good Faith
No suit, prosecution or other legal
proceedings
shall lie against the Government or
any other person authorised by the
government
For acts done or intended to be done
in good faith

Non Disclosure of Information in Certain Cases
New Act (section 457) Old Act(Corresponding 635AA)
The registrar, any officer of the
government or any other person
Shall not be compelled to disclose to
any court etc
The source from where he got any
information which led the CG to
order an investigation u/s 210 or
Has been material in connection with
such investigation

Delegation by CG of its powers & functions
458(1)-CG may delegate any of its
powers and functions under this act
other than the power to make rules
By way of notification
The delegation could be made to
such authority or officer as prescribed
The powers to enforce the provisions
in Sec 194 and 195 relating to forward
dealing and insider trading to be
delegated to SEBI only
458(2)-Copy of every notification as
soon as it is issued be laid before each
house of parliament
changes
CG can delegate its power
and functions under all
provisions of the Act in the
new law
In the old law no
delegation was allowed in
some specified sections

Powers of CG or Tribunal to accord approval etc
While according approval, sanction,
consent, confirmation or recognition
to any matter the CG or the Tribunal
give any direction or grant any
essentials in relation to any matter
Every application made to the CG or
the Tribunal shall be accompanied by
such fees as may be prescribed

Condonation in delay in certain cases
460(a): If any application required to
be made to the CG under this Act
Has not been made within the
specified time
CG may condone the delay
By citing the reasons to be recorded
in writing
460(b): Where any document
required to be filed with the ROC
under this Act
Has not been filed within the
specified time
CG may condone the delay
By citing the reasons to be recorded
in writing

Annual Report by Central Government
The CG
Shall cause a general annual report
On the working and administration
of this Act
To be prepared and laid before each
House of Parliament
Within 1 year
Of the close of the year to which the
report relates

Power to exempt companies from
provisions of this Act
The CG may in the public interest
Direct that any of the provisions of
this Act shall not apply to such class
or classes of companies or
Shall apply with such exceptions,
modifications etc. as may be specified
in the notification
A copy of the notification to be aid in
both the Houses of the Parliament
In the old law, the power
to exempt could have been
exercised in relation to
Government Companies
only

Power of Court to grant relief in certain
cases
The Court has the power to
grant relief to any officer of a
Company in respect of the
negligence, default, breach of
duty, misfeasance or breach of
trust
Provided that he has acted
honestly and reasonably and
having regard to all the
circumstances of the case

Power of CG to amend schedules
CG may by notification alter any of
the regulations, rules, tables, forms
and other provisions contained in any
of the schedules to this Act
Any such alteration shall come into
force on the date of notification,
unless the notification otherwise
directs
Notification to be laid immediately
before each House of Parliament
The manner of laying the same has
been laid in the Act

Power of CG to make rules relating to
winding up
CG may make rules relating to
matters of winding up of
companies
The rules made by the
Supreme Court shall continue
to be in force till the CG make
rules

Power of CG to make rules
The CG may make rules for carrying
out the provisions of this Act
Any rule may provide that a
contravention to the rules shall be
punishable with fine which may
extend to Rs.5000 and Rs.500 per day
for continuing default
Every rule to be laid before both the
Houses of Parliament
Manner of laying in both the Houses
has been mentioned in the Act
Few changes

Power of remove difficulties
If any difficulty arises in giving effect
to the provisions of this Act
The CG may, by order in the Official
Gazette
Make such provisions for removing
the difficulty
But no such order can be made after
the expiry of 5 years from the date of
commencement of section 1 of this
Act
Every such Order will have to be laid
before both the Houses of Parliament
NEW provision

Out of which:
1. 16 Rules have been placed for public
comments on 09.09.2013. Last date for
receiving comments is 08.10.2013
2. 9 Rules have been placed for public
comments on 20.09.2013. Last date for
receiving comments is 19.10.2013
3. 4 Rules will be placed in 1st
week of Oct

First set of draft rules
• The draft Rules for 16 chapters are for:
1. Chapter I - Preliminary
2. Chapter II - Incorporation of Company and Matters
Incidental Thereto
3. Chapter VI - Registration of Charges
4. Chapter VIII - Declaration and Payment of Dividend

First set of draft rules….contd
5. Chapter IX - Accounts of Companies
6. Chapter X - Audit and Auditors
7. Chapter XI - Appointment and Qualification of Directors
8. Chapter XII - Meeting of Board and its Powers
9. Chapter XVI - Prevention of Oppression & Mismanagement
10. Chapter XVIII - Removal of Name of Companies from the
Register of Companies
11. Chapter XIX - Revival and Rehabilitation of Sick Companies

First set of draft rules….contd
12. Chapter XXII - Companies Incorporated Outside India
13. Chapter XXIV - Registration Offices and Fees
14. Chapter XXVI - Nidhi
15. Chapter XXVII - National Company Law Tribunal and
Appellate Tribunal
16. Chapter XXIX - Miscellaneous

Second set of draft rules
• The draft Rules for 9 chapters are for:
1. Chapter III - Prospectus and Allotment of Securities
2. Chapter IV - Shares Capital and Debentures
3. Chapter VII - Management and Administration
4. Chapter XIII - Appointment and Remuneration of
Managerial Personnel

Second set of draft rules…contd
5. Chapter XV - Compromises, Merger and
Amalgamations
6. Chapter XVII - Registered Valuers
7. Chapter XXI - Companies authorized to register under
this Act
8. Chapter XXVII - National Company Law Tribunal and
Appellate Tribunal
9. Chapter XXVIII - Special Courts (Mediation and
Conciliation Panel)

NEW FORMS
• Many new forms have been included in the Rules
• Now the information required in the forms is
more detailed, in order to ensure clarity and
further transparency
• A note has been inserted at the bottom of the
forms for making the officers of the companies
aware of the punishment for false statement and
certification

Disclaimer
• The contents of this presentation is based on my
understanding and interpretation of the relevant law.
The contents are summarized. Please study the
provisions in detail before taking any decision on the
basis of the information provided in this presentation.

Comparative analysis 98 sections of cos act 2013

Comparative analysis 98 sections of cos act 2013

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