An easy way to find the new Companies Act, 2013 with its new and important changes.. Tried to made it maximum simple to understand.. The new legislation will create new avenues for Business and Professionals relating to this field..especially corporate law experts..

1. AN ANALYSYS ON
THE COMPANIES ACT , 2013

2. Companies Act,2013
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Passed by Lok Sabha on 18.12.2012
Passed by Rajya Sabha on 08.08.2013
Assent given by the President on 29.08.2013
Notified in official Gazette on 30.08.2013
Largest legislation in India.
Central Government can make Rules through
delegated legislation.

3. Structural Comparison
Companies
Act 1956
Companies
Act 2013
13 Parts
29
Chapters
658
Sections
470
Sections
15
Schedules
7
Schedules

4. One Person Company (OPC)
• A Private Company subscribed by One Person.
• Name shall affix OPC or One Person Company.
• The Memorandum of OPC shall indicate the
name of the other person as nominee, with his
prior written consent.
• A Structure providing more flexibility and less
Compliance.
• May formed for Charitable objects (Sec.8 Co.
previously Sec.25 Co.)

5. Private Limited Company
“The company is a “Private Company” within the meaning of Section
2(68) of the Companies Act, 2013 with a minimum paid-up share capital of
one lakh rupees or such higher paid-up share capital as may be
prescribed, and which by its articles.(i) restricts the right to transfer its shares:
(ii) Except in case of OPC, limits the number if its members to two hundred:
Provided that where two or more persons hold one or more shares in a
company jointly, they shall, for the purposes of this clause, be treated as a
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 while in that
employment and have continued to be members 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”.

6. Associate Company
• Associate Company in relation to another
Company, means a Company in which that other
Company has a significant influence, but which is
not a subsidiary Company of the Company
having such influence and includes a Joint
Venture Company.
• “Significant influence” means control of at least
twenty per cent of total share capital, or of
business decisions under an agreement.

7. Dormant Company
• Where a Company is formed and registered under
the new law for a future project or to hold an asset
or intellectual property and has no significant
accounting transaction, such a Company or an
‘inactive Commpany’ may now make an application
to the RoC for obtaining the status of a “Dormant
Company”.
• ‘Inactive Company’ is one which has not been
carrying on any business or operation, or has not
made any significant accounting transaction, or has
not filed financial statements and annual returns
during for the last two financial years.

8. Corporate Social Responsibility (CSR)
 Every company having net worth of Rs.500 crore or
more, or turnover of Rs.1000 crore or more or a
net profit of Rs.5 crore or more during any
financial year is required to constitute a Corporate
Social Responsibility Committee.
 2% of the average net profits of 3 preceding
financial years to be spent towards CSR.
 Disclosure of CSR Policy on Company’s website.

9. Rotation of Auditors
• Mandatory Rotation of Auditors for Listed and other
specified class of Companies.
• Individual Auditor to be rotated after a term of 5
consecutive years.
• Audit firm to be rotated after two terms of 5
consecutive years.
• The Company shall place the matter relating to such
appointment for ratification by members at every
Annual General Meeting.

10. Secretarial Audit
Mandatory Secretarial Audit for specific class
of Companies.
Secretarial Audit Report (SAR) to be the part
of Annual Board’s Report.
Disclaimer of every reservation or adverse
remarks (SAR) in the Board’s Report.
Stringent Penalty in case of default.

11. CEO/MD/Manager
Company
Secretary
KMP
Whole-Time
Director
Chief Financial
Officer

12. National Financial Reporting Authority
(NFRA)
• Previously National Advisory Committee on Accounting
Standards (NACAS)
• Composition: One Chairperson and members not
exceeding 15 to be appointed by CG.
• Function: Recommendation to CG on Accounting and
Auditing Standards.
• Enforcement for the compliances of Accounting and
Auditing Standards.
• Overseeing the quality compliances of Accounting and
Auditing Standards and the quality of services of the
professionals associated with.
• Special Powers have been vested with NFRA.

13. Changes Regarding MoA
 Objects clause in the Memorandum of
Association of a company not required to be
divided into main, ancillary and other objects.
 Only the objects for which the company is
incorporated along with matters considered
necessary for its furtherance to be mentioned.
 The company cannot provide for other object
clause.

14. Changes Regarding AoA
• Articles of Association of the Company may
contain
provisions
with
respect
to
entrenchment.
• Entrenchment provisions provide a more
restrictive procedure than passing a special
resolution for altering certain provisions in the
Articles of Association.

15. Independent Directors
 Every Listed Public Company to have at least one-third of
the total number of Directors as Independent Directors
 Drastic increase in the eligibility criteria, where the
relationship, not only with the company but also with its
holding, subsidiary and associate Companies has to be
checked.
 Not entitled for any stock option.
 Independent Director only alternate for an Independent
Director.
 Specific Meeting of Independent Directors.
 Proviso for limiting the liability of Independent Director.

16. Holding-Subsidiary Merger
 Fast Track procedure for Merger & Amalgamation of
Holding & Wholly owned Subsidiaries.
 Fast Track procedure for Merger & Amalgamation of
Small Companies with the approval of super majority
(90% approval of each class of share holders and
creditors+Declaration of Solvency to RoC).
 “Small Company” is a Company other than a Public
Company having paid-up share capital not exceeding
Rs.50 lakhs or Turnover not exceeding Rs.2 crore or
such higher sums as may be prescribed by the Central
Government.
 No application to be filed with NCLT/High Court under
fast track procedure.

17. Registered Valuer
• Appointed by the audit committee or in its absence
by the Board of Directors of that Company.
• Functions:
Valuation
of
Shares,
net
worth, assets, liabilities, goodwill etc. required under
law.
• Person should be the one who got registered as
Valuer under the provisions of the law.
• Valuer on committing default shall be liable to refund
the remuneration received by him to the Company
and pay for damages caused by such Company or
person due to the misleading statements in his
report.

18. Class Action Suits
 Endeavor to protect the rights of deposit holders
and members.
 Only Specific number or % of members/depositors
can file class action suit.
 Right of Claiming damages or compensation by
members in case of wrongful conduct of
Company, directors, auditors, experts and advisors.
 Banking Companies are out of the preview of class
action suit.

19. Registered Office
o From the 15th day of incorporation
o Furnish verification with RoC within 30 days of
incorporation
o Change in Reg.office should intimate with in 15
days
o Change from one state to other, new Certificate
of Incorporation

20. Commencement of Business
• Private companies also follow commencement
procedure.
• No certificate for commencement of business.
• Docs filed with RoC with in 180 days of incorporation:
 a declaration by the Directors
 a confirmation regarding the filing of verification of
Reg. office with RoC
• If not filed declaration within 180 days and RoC have
sufficient reason to believe that it is not carrying any
business, will take action to remove the name from its
register.

21. Share Capital and Debentures
 A Company can not issue shares at a discount except
in the case of Sweat Equity shares.
 A Company limited by shares cannot issue any
preference shares which are irredeemable. If
authorized by its articles then can issue within a
period not exceeding 20 years.
 Company may issue preference shares for a period
exceeding 20 years for infrastructural projects.
 Every company shall deliver debenture certificate
within 6 months of allotment.

22. Serious Fraud Investigation Office (SFIO)
 CG shall constitute SFIO
 Headed by director and will consist experts from
various fields.
 For the investigation of frauds related to the
Companies.
 no other investigation agency or Central or State
Government proceed with investigation if it is
assigned to SFIO.
 submit the investigation report to the CG

23. National Company Law Tribunal (NCLT)
 CG shall by notification constitute NCLT
 Consists of president and such number of
Judicial and Technical members
 President shall be the judge of the High Court for
at least 5 years.
 CA,CMA,CS in practice for at least 15 years are
eligible to appoint as technical member of NCLT.
 All cases pending on CLB will be transferred to
NCLT after its constitution.

24. Board Meeting
• Not less than 7 days prior notice for board meeting.
• 4 board meetings to be held every year (Small, Dormant
and OPC may comply this provision by having 1 meeting in
each half of calendar year with a gap not less than 90
days)
• Not more than 120 days to elapse between two
consecutive meeting.
• A director can participate in a board meeting through
video conferencing or other audio visual mode as may be
prescribed.
• Minutes should made in accordance with Secretarial
Standard issued by ICSI.
• Adj.meeting shall not conduct in a national holiday, then
next succeeding day

25. General Meeting
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OPC is not required to hold AGM
May conduct on Sunday….(except national holiday)
First AGM with in 9 months of the closure of first accounts
Subsequent AGMs, with in 6 months from the date of closing of financial
year
15 months shall not elapse between two subsequent Annual General
Meetings
During business hours (9 a.m-6 p.m)
Lack of quorum with in half an hour will be a reason for adjournment
and members present on adjourned meeting will be quorum.
Lack of quorum will be a reason for the cancellation EGM called by
requesitionist.
Postal ballot for unlisted Companies.
Members may exercise their vote at meetings by electronic means
Report after AGM should filed within 30 days by all listed Companies.

26. Quorum of GM
• Quorum for general meeting in case of Public
Company:
• 5 members personally present where total
members upto 1000,
• 15, where members 1000-5000 and,
• 30, where members are more than 5000.

27. Annual Return
 The Annual Return shall carry information upto the
date of closure of financial year (Concept of AGM to
AGM basis AR preparation dispensed).
 Certification of Annual Return by Practicing
Company Secretary mandatory in case of companies
with prescribed paid up capital and turnover.
 Signed by a director and the Company Secretary or
where there is no CS by a PCS (except for OPC and
Small Companies)

28. Boards Report
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Extract of Annual Return
Company’s policy on directors appointment and remuneration.
declaration by independent directors
Explanations
or
comments
by
the
Board
on
every
qualification, reservation or adverse remark or disclaimer made by the
auditor and by the company secretary in practice in his secretarial audit.
Particulars of loans, guarantees or investments.
Particulars of contracts or arrangements entered into.
Conservation of energy, technology absorption, foreign exchange
earnings and outgo
Statement indicating development and implementation of a risk
management policy for the company
Details about the policy developed and implemented by the company
on corporate social responsibility initiatives taken during the year.
Directors’ Responsibility Statement
Signed by the chairperson authorized by the Board, if no authorization
is given, then at least 2 directors , one of whom shall be MD

29. Preference Shares
• If the dividend arrear for more than 2 years
they can vote on all resolutions.
• Preference shares should be redeemed with in
20 years.
• Exception is made to infrastructure projects.

30. Number of Directorships
• Not more than 20 Companies
• Max. no. of Public Companies in which a
person can be appointed as a Director shall
not exceed 10

31. Service of Documents
• Service of documents to the members by:
 registered post
speed post or
courier service or
Leave at registered office
electronic mode.

32. Re-opening/re-casting of accounts
 Mandatorily by authorities OR Voluntarily by Board.
 The Act provides for provisions relating to re-opening
or re-casting of the books of accounts of a Company
 In case an application made by Central Government, IT
authorities, SEBI or other statutory authorities and an
order of Court or Tribunal in this regard.
 Voluntarily by the Board if thinks that Statements or
Boards Report not Comply with Sec.129 or Sec.134
Voluntary re casting made after obtaining order
from NCLT and filing the same with RoC.

33. Deposits
o Company may accept deposits from its members
subject to passing of a general resolution.
o A public company having a prescribed net worth
or turnover may accept deposits from persons
other than its members subject to compliance of
rules as may be prescribed by the CG in
consultation with RBI.
o Stringent punishment for failure to distribute
interest within 30 days.

34. Special rights of auditors
Auditors during the course of performance
of its duties, are required to immediately
report to the Central Government, any
offence involving fraud that is being or has
been committed against the company by its
officers or employees.

35. Resident director
• At least 1 director on the board to be a
person who has stayed in India for not
less than 182 days in the previous
calendar year

36. Dividend
• Payable on cash, cheque or warrant or in any electronic mode to
the shareholder.
• Company can use only its Free Reserves for paying Dividend.
• Amount transferred to unpaid dividend account can be claimed
by the person from the company
• Within 90 days of such transfer, it require to prepare a statement
and show it on the website of the Company.
• All shares in respect of which unpaid or unclaimed dividend has
been transferred to IEPF, shall be transferred by the Co. in the
name of IEPF along with a statement containing details of them.
• Claimant of shares can claim it from IEPF by following certain
procedure and submitting certain docs.

37. Charge registration
• The additional period for registration of
charge has been increased to 300 days
from the existing provision of 30 days .
• Ie; 30+270 in effect

38. Illegal association
• The maximum number of persons who can
carry on businesses for profitable purposes
through an association or partnership will
be prescribed by rules, but the number will
not exceed 100.

39. Types of resolution
• Simple majority
• Special resolution
• Resolution required a super majority (90%)
(only required for Holding – Subsidiary
merger without the approval of court.)

40. Application of e-Mode
 Recognition of keeping Books of accounts
in electronic form.
 Sending of AGM or BM notices through
electronic form (e-mails).
 Participation of directors in BM through
electronic mode.
 Electronic mode of voting for certain CG
specified companies.

41. One women director
• Inclusion of One Women Director in the
Board for certain Companies

42. Number of members
 Minimum number of members for private
company is 2
 Minimum number of members for public
company is 7
 maximum number of members for private
company is increased to 200 from 50

43. Financial year
Uniform
financial
year
for
all
Companies, i.e. April to March [Companies
formed on or after 1st Jan. of a year, the
period ending on 31st day of March of the
following year.]

44. Capital reduction
• Reduction of Share Capital
subject to Confirmation by
Tribunal.

45. GDR
 Issue of GDR simplified, only after passing
a special resolution and subject to such
conditions as may be prescribed.

46. Discount on issue
• Share issue on discount discontinued.
• Shares, other than sweat equity, cannot
be issued at discount.

47. Restructuring and Rehabilitation
 The entire rehabilitation and liquidation process has been
made time bound.
 Winding up is to be resorted to only when revival is not
feasible.
 Tribunal may appoint an interim or company administrator
from the panel of CSs,CAs,CMAs, etc. maintained by the Central
Government.
 Company Administrator shall prepare a scheme of revival and
rehabilitation.
 If revival scheme is not approved by the creditors, the tribunal
shall order for winding up of the company.
 No civil court shall have jurisdiction in respect of any matter on
which Tribunal or Appellate Tribunal is empowered.

48. Committees of Directors
• Audit Committee
• Nomination and Remuneration Committee
• Stakeholder’s Relationship Committee
• CSR Committee

49. New provisions regarding Auditors
Every Company shall at its first annual general
meeting, appoint an individual or a firm as an
auditor who shall hold office from the conclusion
of that meeting till the conclusion of its 6th AGM
and thereafter till the conclusion of every 6th
meeting.
Company resolve that the auditing partner and
his team in the audit firm shall be rotated at such
intervals as may be resolved by members, or the
audit shall be conducted by more than one
Auditor.

50.  Gvt. Companies, the First Auditor shall be appointed by
the C&AG within 60 days from incorporation and
 on failure to do so, the board within next 30 days and
 on failure to do by the board, the members will appoint
the auditor within 60 days.
 For existing Companies C&AG shall appoint auditor within
the period of 180 days from the commencement of the
financial year.
 In case the Company has audit committee, then all
appointment of Auditors including filling of casual
vacancy, shall be made after taking into account the
recommendations of the committee.

51.  All the AGMs shall now be mandatorily attended by
the auditor or through his representative who shall
also be qualified to be the Auditor unless otherwise
exempted by the Company.
 Unqualified Auditor’s Report need not to be read out
in the AGM.
 Along with the approval of CG, the permission of the
shareholders by way of Special Resolution is also
required for the removal of an auditor.
 It has been clarified that in case of a firm, the liability
shall be of the firm and that of every partner or
partners who acted in a fraudulent manner or
abetted or colluded in any fraud by, or in relation to
the Company or its directors or officers.

52.  No special notice required for removing an
Auditor, where the retiring Auditor has completed
a consecutive tenure of 5 (individual)
years or 10 (audit firm) years as the case may be.
 Limit in respect of max. number of companies in
which a person may be appointed as auditor is 20
companies.
 The remuneration of the Auditor of a Company
shall now fixed in its general meeting or in such
manner as may be determined therein. The Board
may fix remuneration of the first auditor
appointed by it.

53.  Specific penalty has been prescribed for
contravention of provisions related to appt. of
auditors.
ie; on default Company shall be punishable with
fine which shall not be less than twenty five
thousand rupees but which may extend to five
lakh rupees and any officer who is in default
shall be punishable with imprisonment for a
term which may extend to one year.

54. Provisions Modified
 First Auditor of the Co. other than a Govt.Co. shall be
appointed by the board within 30 days of its
incorporation and failure to do so, the members shall
appoint the same within 90 days from incorporation.
 Appointment of Auditor other than the retiring
auditor or expressly stating that auditor shall not be
re-appointed, a special resolution will be required.
 In case of appointment of auditor, the company has
to intimate both, the Auditor and the Registrar within
15 days of the appointment…as against the provisions
of Co.Act,1956 wherein the onus of intimation of
appointment was upon the auditor.

55. Auditor Cannot render following services
• Accounting and book-keeping services
• Internal audit
• Design and implementation of any financial
information system
• Actuarial services
• Investment advisory services
• Investment banking services
• Rendering outsourced financial services
• Management services
• Other prescribed services

56. Provisions regarding Company
Secretaries (CS)
 Recognized as KMP
 Adoption of Secretarial Standards (SS-1 & SS-2)
of ICSI.
 Introduction of Secretarial Audit.
 Functions of CS defined.
 Annual Returns certification by a PCS.
 Appearance before NCLT/NCLAT.
 Assistance in Liquidation.

57. Provisions regarding Cost and
Management Accountants (CMAs)
• A Cost Accountant in Practice can incorporate a Company.
• Can act as Internal Auditor.
• The CG can direct particulars relating to utilization of
material or labour or such other item of cost to be included
in books of accounts.
• The Cost Audit shall be conducted in accordance with the
cost accounting standards, which are issued by the Institute
of Cost Accountants of India.
• Cost Accountant shall submit the copy of his audit to the
Board of Directors and who shall forward the same to CG.
• Eligibility to be appointed as administrator of a Company by
the tribunal.

58. Thank you all…