1

Prepared by RSoni
Contents
THE COMPANIES ACT, 2013
An overview of Companies Act 2013 !"0 Sections, " sc#e$%&es ' 2(
c#apters)
Comparative st%$* on some of t#e provisions of Companies Act 1(+, an$
Companies Act 2013
Sr-
N
o
Partic%&ars Pa.e No-
I. Signifcant changes in Defnitions and new inclusions 2-9
II. Incorporation 9-13
III. Directors 13-1
I!. Share capital 1-19
!. "cceptance o# deposits by $o%panies 19
!I. In&est%ents 2'
!II. (oo)s o# "ccounts and *inancial +ear 2'-22
!III. Reports 22
I,. Prospectus- Raising o# #unds . "llot%ent 22-23
,. /tili0ing Securities Pre%iu% "ccount 23
,I. "nnual returns and related issues 23-21
,II. 2otices- 3eetings- 4uoru%s- !oting- Resolutions- 3inutes 21-3'
,III. Internal "udit 3'-31
,I!. $ost "udit 31-32
,!. Statutory co%pliance 32
,!I. 5rans#er to reser&es 32
,!II. Di&idends 32-33
,!III."uditors 33-36
,I,. 2o%ination . Re%uneration co%%ittee 36
,,. Prohibitions . Restrictions 36-39
,,I. $o%pany Secretary 39
,,II. In&estigations 39-7'
,,III.$orporate Restructuring 71-72
,,I!.$lass action Suits 72
,,!. !aluations 73
,,!I.8inding up 73-77
,,!II. 9therlegal pro&isions 77-7:
,,!III. 2ational *inancial reporting "uthority 7:-7
2
Prepared by RSoni
,,I,.Schedules 7
Sr. Particulars Companies Act , 1956 Companies Act, 2013
New
c&a%s
es-
I- Si.ni/cant c#an.es in 0e/nitions an$ New Inc&%sions-
1 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.
Eplanation.!"or the
purposes of this clause,
#Significant influence$
%eans control of at least
twenty per cent of total
share capital, or of
business decisions under
an agreement.

2;<
& Control "or the purposes of this Act , company
shall, subject to the provisions of sub'
section ()*,be deemed to be a subsidiary
of another if, but only if,
a* +hat other controls the composition
of its ,oard of directors -or
b* +hat other'
#control$, shall include the
right to appoint majority of
the directors or to control
the management or policy
decisions eercisable by a
person or persons acting
individually or in concert,
2;21<
3
Prepared by RSoni
i*where the first'mentioned company is
an eisting company in respect of which
the holders of preference shares issued
before the commencement of this Act
have the same voting rights in all
respects as the holders of e.uity shares,
eercises or controls more than half of
the total voting power of such
company -
ii* /here the first'mentioned company
is any other company, holds more than
half in nominal value of its e.uity share
capital- or0c*+he first'mentioned
company is a subsidiary of any
company which is that other1s
subsidiary.
directly or indirectly,
including by virtue of their
shareholding or
management rights or
shareholders agreements or
voting agreements or in
any other manner
) 2irector Includes any person occupying the
position as director.
%eans director appointed
to the board of Company.
2;37<
3 "inancial
Statements.
i. ,alance sheet as at the year'end of
financial statement.
ii. A profit and loss account or in case
of company carrying on any
activity not for profit, an income
and Ependiture account for the
financial year.
In relation to a company
includes4
i. a balance sheet as
at the end of the
financial year
ii. a profit and loss
account, or in the
case of accompany
carrying on any
activity not for
profit, an income
and ependiture
account for the
2;7'<
7
Prepared by RSoni
financial year-
iii. cash flow statement
for the financial
year,
iv. a statement of
changes ine.uity-
and. any
eplanatory note
attached to or
forming part of any
document referred
to in sub'clause (i*
to sub'clause
(iv*-provided that
the financial
statement with
respect to 5ne
6erson Company,
small company and
dormant company
may not include the
cash flow
statement.
Issue of cash flow
statement becomes
mandatory.
7 "inancial 8ear In relation to anybody corporate, the
period in respect of which any profit
and loss account of the body corporate
laid before it in annual general meeting
is made up, whether that period is a year
or not 6rovided that, in relation to an
+he "inancial can
mandatorily end on)1st
%archEception'
a*Entities which are
holdingcompanies or
subsidiarycompanies
2;71<
:
Prepared by RSoni
insurance company, 9financial year9
shall mean the calendar year referred to
in subsection (1* of section 11of the
Insurance Act, 1:); (3 of 1:);*
offoreign
companiesre.uiring
consolidation outsideIndia
with the approval
of+ribunal.
b* Eisting companies to
alignwithin & years.
< "ree =eserve >?"ree reserves9 means all reserves
created out of the profits and share
premium account but does not include
reserves created out of revaluation of
assets, write bac@ of depreciation
provisions
Share premium account
does not form part.
Credit balance in
statement of profit and
loss not free reserve.
2;73<
A Bey %anagement
personnel
Co provision eist Chief Eecutive
officer, %anaging
director or the
%anager.
+he Company
secretary.
+he Chief "inancial
officer is the board of
directors appoints him
and
Such other officer as
may be prescribed.
2;:1<
; Cet /orth %eans the sum total of thepaid'up
capital andfreereserves after
deductingthe provisions or epenses
asmay be prescribed. Eplanation.'
"orthepurposes of this clause,9free
It says that only 6aid
up share capital, share
premium and reserve
created out of profit
will be treated as net
2;:1<

Prepared by RSoni
reserves9 means allreserves created out
of theprofits and share premiumaccount
but does not includereservescreated out
ofrevaluation of assets,
writebac@ofdepreciationprovisions
andamalgamation.
worth.
Credit balance in
statement of profit and
loss account has been
left out.
: 5fficer Includes any 2irector, %anager or
secretary or any person in accordance
with whose directions or instructions
board of directors or any one or more of
the directors is or are accustomed to act.
+o include CE5DC"5 or
any other officer as may be
prescribed.
2;:9<
1E 5fficer in 2efault In relation to any provisions referred to
in section 7, has the meaning specified
in that section.
Scope broad ended.
2irectors aware of the
default.
C"5
B%6?s if @nowingly
commits default.
2;'<
11 =elative A person shall be deemed to be a
relative of another, if, and only if,
a* +hey are members of a Findu
undivided family- or
b* +hey are husband and wife-
c* +he one is related to the other in the
manner indicated in Schedule IA.
/ith reference to any
person, means anyone who
is a related to another, if!
they are members of a
Findu Gndivided
"amily-
they are husband and
wife- or
one person is related to
the other in such
manner as may be
prescribed
2;11<
1& =elated 6arty
transactions.
Section &:A covered only sale and
purchase of goods, rendering of
services, underwriting the
Also covers
' Heasing of property
' Appointment of
1
Prepared by RSoni
Subscription of any shares or
debentures. /here paid up share capital
of the company eceeds
=s. 1crore, prior approval of the Central
Iovt. re.uired. Cot applicable to
contracts between two public
companies.
agent for the sale or
purchase,
' =elated party?s
appointment to any
office or place of
profit in the
company, its
subsidiary or
associate company.
6rior CI approval
done away it and only
%embers approval
re.uired by way of a
special resolution.
Applicable to contracts
between two public
limited companies as
well.
1) Small Company Co provision eists. %eans a company other
than public company4'
6aid up share capital of
which does not eceeds
"ifty Ha@hs =upees or
such higher amount as
may be prescribed
which shall not be
more than 7 Crores
=upees.
5=
+urnover of which as
per last profit and loss
2;6:<
6
Prepared by RSoni
account does not
eceeds & crores rupees
or such higher amount
as may be prescribed
which shall not be
more that &E crores
rupees.
6rovided that nothing in
this clauseshall apply to4
a. a holding company
or as subsidiary
company-
b. a company
registered
undersection ;
c. a company or
bodycorporategove
rned by any special
act.Subjected to a
lesser stringent
regulatory
"ramewor@.
13 Sic@ Industrial
Companies
+reatment meted out under SICA, 1:;7
coverage limited only to Industrial
companies. SICA determines sic@ness
based on negative net worth criteria
+reatment meted out under
chapter JIJ of the ,ill4
Covers revival and
rehabilitation of all
companies irrespective of
the industry they are in
.Sic@ness of company to be
determined on the basis of
whether co is able to pay
9
Prepared by RSoni
its debt or not.
17 2ormant
Company
Cot 2efined. Clause 377 defines
inactive company as a
company which4
Fas not been carrying on
any business or operation
or has not made any
significant accounting
transaction during the last
two financial years, or
Fas not filed financial
statements and annual
returns during the last &
financial years.
7::
1< Cidhi Companies Section <&1A K Cecessary for central
government to notify a company as
Cidhi for it to .ualify as such.
Co such notification
re.uired, Cidhi defined in
this clause.
7'
1A 6ublic Company Consider a private company which is a
subsidiary of a public company as
public company.
"urther enhanced to
provide that a private
subsidiary of public
company deemed to be a
public company even
though the subsidiary
continues to be a private
company in the article.
1; 6rivate Company =estricts the maimum number of
members to 7E.
=estricts the maimum
number of members to
&EE.
1: 5ne 6erson
Company.
Co 6rovision Eist. $oncept o# 9ne Person
$o%pany hasbeen
3
1'
Prepared by RSoni
introduced and the 9P$
can be#or%ed as
pri&ate li%ited
co%panyPri&ileges
Pro&idedto 9P$s
5he fnancial
state%ent %ay not
include the cash
=ow state%ent
>Pro&iso to $lause
2;7'<?.
5he annual return to
be signed by the
co%pany secretary-
or where there is no
co%pany secretary-
by the director o#
the co%pany.
2o re@uire%ent o#
holding an "A3
>$lause 9;1<?
Inapplicability o# the
pro&isions o#
Section 96 and
Sections 1'' to111
;both inclusi&e<
>$lause122 ;1<?
3ini%u% nu%ber o#
directorsB 1>$lause
179;1<?
(oard 3eetings-
3ini%u%
1ineachhal# o# a
calendar year and
11
Prepared by RSoni
the Aap between
the two %eetings
shall not be
lessthan9' days.
2ot applicable
where there is only
one Director. $lause
113 ;:<
4uoru% #or (oard
3eetings not
applicable where
there is only
1director in 9P$.
;$lause 117<.
II- Incorporation
Incorporation o#
$o%pany
$ertifcate o# incorporation to be
conclusi&e e&idence.
"ction can be ta)en e&en
a#ter incorporation- i#
incorporation is on the basis
o# #alse or incorrect
in#or%ation. 5hus the
certifcate is not treated as
conclusi&e e&idence.
1
$o%panies that can
be #or%ed.
Public li%ited- pri&ate li%ited
co%panies- section 2: co%panies-
Ao&ern%ent co%panies.
Cist includes 92D PDRS92
$93P"2+ as Pri&ate co%pany.
3
Reser&ation o# new
na%e E procedural
aspects.
Procedural aspects not co&ered. 9n pay%ent o# prescribed
#ees to R9$ and by an
application the new na%eF
change o# na%e can be
reser&ed.
7;7<-
7;:<
3e%orandu% o#
association
39" should ha&e clauses such as
2a%e- state- 3ain obGects- other
obGects- subscription clause.
39" 295 to ha&e 95HDR
9(ID$5S- other things
re%ains the sa%e.
7;1<
12
Prepared by RSoni
*or%ats o# "9"
5ableE(E$o%pany li%ited by
shares
5ableE$E$o%pany li%ited by
guarantee and not ha&ing
share capital
5ableED-co%pany li%ited by
guarantee and ha&ing share
capital.
5able D E /nli%ited $o%pany.
5ableE*-co%pany li%ited
by shares
5ableEA-co%pany li%ited
by guarantee and ha&ing
share capital
5ableEH-$o%pany li%ited
by guarantee and not
ha&ing share capital
5ableEI - /nli%ited
$o%pany ha&ing share
capital.
5able I E unli%ited
$o%pany not ha&ing share
capital.
*or%ation o#
co%panies with
$haritable obGects.
Section &7 Company did not
specifically provide for sports,
education, research, social welfare and
environment protection. Could be only
by wayof a publicorprivate
company.%a. action that can be
ta@enbyCentral Iovernment
(CI*wasrevocation of license
andthattoo only for violation
ofanyterms of the license.
Specifically provides for all
thesewords.Could be as a 56C or
anAssociation of6ersons
(A56*.Actionbesidesrevocation
can be directionfor windingup of
the Company oramalgamationwith
another companyregistered
withsame objects.6rovides for
additional groundsforrevocation
li@e affairsbeingconducted
fraudulently orprejudicialto public
interest
6
$o%%ence%ent o#
business
Applicable only to public companies. If
not complied no power to =5C to
initiate action for the removal of the
name of companies from the register of
companies.
Applicable to both 6ublic and
6rivateK=5C is empowered to
remove the nameof the company
from the register ofcompanies if
declaration is not filedwithin
1;Edays from the date
11
13
Prepared by RSoni
ofincorporation of the company
and =5Chas reasonable cause to
believe that thecompany is not
carrying on anybusiness.
Entrenchmentprovision
in articles
Co such provisions eisted. Articles may provide for more
stringentor restrictive procedure
than passing ofspecial resolution
for altering the certain provisions
of AoA (a provision can be altered
only if agreed by all the members
of the company in writing*
:
Came change during the
last two years
Co such provision eisted. Every company should have its
former name printed or affied
outside its office, in its letter head,
etc. during last two years It is not
necessary to have aregisteredoffice
at the time of incorporation, but it
shall have at all times a registered
office from the 17thday of
incorporation
12
Cew restrictions on
alteration of objects
clause where company
has anyunutiliLed
proceeds from public
issue
5bjectsclausealterationre.uired
onlyspecialresolution of
membersandfiling of "orm &)
withthe=5C.
It cannot alter its clause unless it
passesa special resolution and the
details as may be prescribed , of
the notice, shall be published in
two newspapers andshall also be
placed on the company?swebsite of
the company-2issenting
shareholder shall be giveneit
opportunity in accordance
withSE,I regulations.
13
17
Prepared by RSoni
Change of promoters Co such provision eisted. Company has to file a return with
the=5C in case ofchanges in
promoters ortop ten shareholders
of the companywithin 17 days of
such change
93
Applicability of certain
provisions to 56C
clause.
Cot Applicable. 6ower to call meeting of
members
Calling for E5I%.
Cotice of meeting.
Statement to be anneed to
notice.
Muorum for meetings.
Chairman for meetings.
6roies.
=estrictions for voting rights.
Noting by show of hands.
Noting through electronic
means.
2emand for poll.
6ostal battot.
Circulation of member?s
resolution.
96
1''
1'1
1'2
1'3
1'7
1':
1'
1'1
1'6
1'9
11'
111
Contract by 56C Co 56C contract eisted. /here56C limited by shares or by
guarantee enters into a contract
with its sole member, who is also a
2irector- the company should
preferably enter into a written
contract .If not the above, the 56C
will have to record the contract in
the board minutes boo@ and file a
return with the =5C within 17
days of the date of approval by the
,52, with prescribed fees
193
1:
Prepared by RSoni
Conversion of HH6?s into
Company.
Cot permitted under present regime. 6rovides for conversion of HH6?s
into Companies.
311
Companies incorporated
outside India.
Service of documents on
foreign company now can be
served through an electronic
mode.
+he foreign offices are also
re.uired to comply with the
provisions of winding up.
363
391
E' governance Co such 6rovisions %aintenance and allowing
inspection of documents by
companies in electronic forms
12'
Nigil %echanism Co provision eists. 1AA(:*'Every listed company or
such class or classes of companies,
as may be prescribed, shall
establish a vigil mechanism for
directors and employees to report
genuine concerns in such manner
as may be prescribed.1AA(1E*'+he
vigil mechanism under sub'section
(:* shall provide for ade.uate
safeguards against victim is action
of persons who use such
mechanism and ma@e provision
for direct access to the chairperson
of the Audit Committee
inappropriate or eceptional cases
1AA(1E*
III- 0irectors
/omen 2irector Co such provision eisted. In prescribed class or classes of
companies there should be 1
/omen director.
179;1<
1
Prepared by RSoni
=esident 2irector Co such provision eisted. Every company shall have at least
one2irector who has stayed in
India for atotal period of not less
than 1;& days inthe previous
calendar year.6anel of I2?s to be
maintained by abodyOinstitute
notified by theCIfacilitating
appointment ofIndependent
2irectors.13: (1*17E Histed
companies may have one
directorby small shareholder.
1:1
Independent 2irector Co such provision eisted. +enure of such directors'not
eceeding two consecutive
terms of 7years
Can be reappointed after a gap
of )years- however he should
not be associated with the
company directly or indirectly
in this gap
Cot liable to retire by rotation
Ecluded for the purpose of
computing >1O)rd of the
retiring directors
13:
%aimum Co of
2irectors
Sec &7: 6rovides %aimum 1& and
beyond 1& prior central government?s
approval is re.uired.
6rovides for maimum 17 and
beyond 17 by passing a special
resolution. 13:(1*
=ight of the personother
than retiringdirectors to
stand fordirectorship
Section &7A provides thatsuch a person
has todeposit =s. 7EE whichwould be
refunded in casehe is appointed as
2irector
Clause 1<E has increased this
amountto =s. 1EE,EEE which is
refundablewhen he is appointed
oreven whenhe gets more than
&7P of the totalvalid votes cast
1<E
11
Prepared by RSoni
either on show ofhands or on poll
on such resolution
Alternate director Section )1)'Absence for )months from
the >state wherethe ,oard %eetings
areordinarily held? is thecriteria
Clause 1<1'has been modified
toinclude >India?, instead of the
>statewhere the board meetings
areordinarily held?, to be the
criteria
1<1
2uties of 2irector Cot specifically provided 6rovides for the following duties4
' +o act in accordance with
co.?s AoA-
' Act in good faith-
' Eercise his duties with
due care and diligence.
' A director shall not
involve in any conflicting
interest with the company
' Achieve or attempt to
achieve any undue
advantage-
' Assign his office
1<<
=esignation of directors Co suchprovisionspecifically eisted 6rovision for director to resign
bytendering his resignation letter4
whichthe ,oard has to note and
place beforethe members in the
net generalmeeting.
2ate of resignation will be
datementioned in the letter or
thedate ofreceipt of the resignation
by thecompany, whichever is
1<;
16
Prepared by RSoni
later.2irector who has resigned
shall be liableeven after his
resignation for offenceswhich
occurred during his tenure.
Hoan to director Sec K &:7 C.A. to 6rivate companies
and 6rior approval of CI re.uired.
CI approval done away with and
applicable to private companies as
well.
1;7
Re%uneration
o#%anagerial
personnel incase o#
no profts
orinade@uate profts.
Ao&erned by Schedule ,III 5o be go&erned by schedule !.
IDsnotto get stoc) option but
%ay get pay%ento# #ees and
proft lin)ed
co%%issionsubGect to li%its.
$A %ay prescribea%ount o#
#ees under the rules
"ppoint%ent o#
8hole5i%e Director
Section 29-e&ery publicco%pany
ha&ing capital o#%ore than Rs :
cr.-to ha&e a3anaging directorF
85DF3anager
D&ery co%pany belonging to
suchclassor description o#
co%panies as %aybe
prescribed shall ha&e 3D or
$D9 or3anager and in their
absence- a 85Dand a
$o%pany Secretaryindi&idual
not to be the $hair%an o#
the$o.as well as the 3D or
$D9 o# the $o.at the sa%e
ti%e ;"o" can pro&ide #or
this<JD&ery whole ti%e K3P to
be appointed by a resolution
at (9D %eetingJ " 85K3P not
to hold oLce in %ore than
one co%pany at the sa%e
ti%e. "ny &acancy in the
oLce o# any 3P to be flled up
by the (9D within %onths
&E)
19
Prepared by RSoni
pro&isions relating to
separation o# oLce o#
$hair%an and 3anaging
Director ;3D< %odifed to
allow- in certain cases- a class
o# co%panies ha&ing %ultiple
business and separate
di&isional 3Ds to appoint
sa%e personas Mchair%an as
well as 3DN
2u%ber o#
directorship
2'- out o# which not %ore
than 1' can bea public
co%panies and includes
alternate directorship also
1<7
IV. Share Capital
Increase in
subscribed capital
Apart from eisting shareholders,
if thecompany having share
capitalatanytime proposes to
increase itssubscribedcapital by
the issue offurthershares, such
shares may also beoffered
toemployees by way
ofES56subject to approval
ofshareholders by way of
specialresolution. (Clause<&*
<&
Issue o# (onus shares 2o such pro&ision eOisted-
howe&er rules #ra%ed #or public
unlisted co%pany.
6rivate limited companies are not
permitted to issue bonus shares.
<) Q &)
(uybac) o# shares ,uy bac@ of sharesRAA,.
6=5FI,I+I5C "5=,G8',ACB IC
A company can ma@e a buy bac@
even ifit had at any time defaulted
2'
Prepared by RSoni
CE=+AICCI=CG%S+ACCES1.Co
company shalldirectly or
indirectlypurchase its own shares
orother specified securitiesKa*through
anysubsidiary companyincluding its
ownsubsidiary companies - or
b*+hrough anyinvestment company
orgroup of investmentcompanies- or
c*if a default,by thecompany, in
repayment ofdeposit or interest
payablethereon, redemption
ofdebentures orpreferenceshares or
payment ofdividend to anyshareholder
or repaymentof any term loan or
interestpayablethereon to anyfinancial
institution orban@ is, subsisting.&.Co
company shalldirectly or
indirectlypurchase its ownshares
orother specified securities incase, such
company hasnot complied with
theprovisions of sections 17:,&EAand
&11
' in repayment of deposit or
interest thereon,
redemption of debentures
or preference shares or
payment of dividend to
any shareholder
' =epayment of term loan
or interest there on
6rovided that default must have
been remedied and a period of )
years must have elapsed after such
default ceased to subsist
<<(<*
Eit option ofshareholder Co provision Shareholders have eit option if
themoney raised has not been
utiliLed
&A
6ermissible mode of
issuance of securities
Companies couldissuesecurities by
wayofpublicissue, privateplacement,and
rights issues orbonus issue
6rivate companies can issue
securitiesonly through private
placements aftercomplying with
6art II of Chapter II .+hus 6rivate
companies cannot rightsshares or
bonus shares
&),<&,<)
21
Prepared by RSoni
Noting rights
onpreference shares
Section ;A'
2ifferentcriteriaforcumulativeandnon'
cumulativepreferencesharesfortrigger
ofvotingrights.
Co difference between cumulative
ornonKcumulative, voting rights
arise ifdividends payable are in
arrears for aperiod of two years or
more.
3A
6rohibition of issue
ofshares at discount
Section A:'Issue of sharesatdiscount
permissiblesubjectto conditions
andCentralIovernmentapproval
Issue of shares at discount is void
andnot permissible ecept for
Sweat e.uityshares 73
6reference sharesbeyond
&E years
Section ;E'Issue
ofirredeemablepreferencesharesorredee
mablebeyond &E yearsis prohibited
5nly infrastructure companies can
issuepreference shares beyond &E
yearssubject to annual redemption
of suchpercentage of preference
shares as maybe prescribed on
annual basis at theoption of such
preferential shareholders
77
=edemption
ofunredeemed preference
shares by issue of further
shares
Cosuch provision Company may redeem '
unredeemed preference shares
byissuing further redeemable
preferenceshares e.ual to the
amount due, alongwith the
dividend thereon, with theconsent
of A7P of shareholders (invalue*
and approval from tribunal on a
petition made.
Such issue or redemption shall not
be deemed to be an increase or
asthe case may be reduction of
share capital of company.
77()*
22
Prepared by RSoni
V. Acceptance of eposits !" Companies.
Acceptance of deposits
by companies
6rivate companies are prohibited from
investing or accepting deposits from
persons other than its members
directors or their relatives.
C,"Cs are notcovered by
theprovisions relating to
acceptance ofdepositsand they will
be governed under rules issued by
=eserve ,an@ of India.(Clause A)*
Company may accept depositfrom
persons other than its
membershaving net worth and
turnover ofcertain amount as
prescribed subjectto complying
with necessaryconditions and after
consultation with=,I.(Clause A<*
A)
A<
VI. In#estments
Investments restriction Co such provision eist in section )A&
A of the companies Act, 1:7<, which
deals with inter corporate loans Q
investments.
' 6rovided that investments
not to be made through
more than two layers of
investments companies.
' +he rate of interest on
inter corporate loans will
be prevailing rate of
interest on dated
government securities.
1;<
VII. $oo% of accounts an& 'inancial (ear.
"inancial 8ear In relation to anybody corporate, the
periodin respect of which any profit and
loss account of the body corporate laid
before it in annual general meeting is
"inancial year can only be from
April'%arch, eisting companies
has to align within & years of the
commencement of the act
&(31*
23
Prepared by RSoni
made up, whether that period is a year
or not 6rovided that, in relation toan
insurance company, #financial year9
shall mean the calendar year referred
toin subsection (1* of section 11of the
Insurance Act, 1:); (3of 1:);*
%aintenance of boo@s of
account in electronic
mode
Cot permitted 6rovides for electronic
maintenance of the same
1&;(1*
6reservation period of
boo@s of account
Section &E:'boo@s and vouchers for ;
yrs. period
/here investigation is ordered,
CImay direct boo@s to be
preserved for longer period
1&;(7*
Corporate
socialresponsibility
2id not eist. %andatory for companies4
Faving Cet/orthof =s.7EEcrore
or more-or
+urnover of =s.1EEE crore ormore
or
A net profitof =s.7 crore ormore
during the any financialyear
Every financial year atleast &P of
theaverage net profits of last )
years to bespent on CS= activities,
otherwise reason for not spending
to be given in,oard1s =eport.
1)7
=e'opening of
accountsin certain cases
Co such provision eisted If an order is passed by the court
or tribunal to the effect the
relevant earlier accounts were
prepared in fraudulent manner, re' 1)E
27
Prepared by RSoni
opening of accounts can be done.
Noluntary revision of
financial statement or
board report with
tribunal?s consent
Co such provision eisted If the ,oard feels that the
financials or the =eport do not
comply with the applicable
provisions of clause 1&: or1)3,
they may revise the aforesaid in
respect of any of the three
preceding financial years after
obtaining approval of the
+ribunal.. Cannot berevised for
more than once in onefinancial
year. CI may ma@eseparate rules
for this.
1)1
Consolidation ofaccounts Section &1& providedforattachment of
accountsofsubsidiaries along
withtheholding companyaccounts. Co
provision forconsolidation
Compulsory consolidation of
accountsof holding and
subsidiaries including its
associates and joint ventures
1&:
VIII. )eports
Secretarial Audit =eport Section );)A provided only for
secretarial audit by Companies having
paid up capital between =s. 1E Ha@hs to
=s. 7 crores. 2id not specifically
provide for attachment of such report to
the directors report.
Every listed company and other
prescribed companies shall anne
with its ,oard?s =eport, a
secretarial audit report. 2irectors
shall eplain in full in their
2irectors responsibility statement,
.ualificationsO observationsO
remar@s in the secretarial audit
report.
&E3
I,. Prospectus raisin* of fun&s + Allotment.
=aising capital through Co such provision eisted. 5nly public companies can issue
2:
Prepared by RSoni
public offer securities by ma@ing public offer
and that too by complying part I of
chapter III.
&;
%isleading statement in
prospectus.
Co such provision eisted. Any group of persons or A56
affected by this misleading
prospectus may ta@e action against
guilty persons.
)A
6unishment
forfraudulently inducing
aperson to invest money
Section <;'Any person who,either by
@nowingly orrec@lessly ma@ing
anystatement, promise orforecast which
is false,deceptive or misleading, orby
any dishonestconcealment of
materialfacts, induces or attempts
toinduce another person toenter into, or
to offer to enterintoK
any agreement for, or with a view to,
ac.uiring, disposing of, subscribing for,
or underwriting shares or debentures -
or
any agreement the purpose or pretended
purpose of which is to secure a profit to
any of the parties from the yield
ofsharesor debentures, or byreference to
fluctuationsin the value of shares
ordebentures- shall be punishable
withimprisonment for a termwhich may
etend to fiveyears, or with fine
whichmayetendto onela@h rupees, or
with both.
Co change, but in addition to
which itincludes punishment for
falselyinducing a person to enter
into anyagreement with ban@ or
financialinstitution, with a view to
obtainingcredit facilities )<
Allotment of Securities Section <:' %inimum subscription
applicable only to shares.
%inimum subscription etended to
all securities. ):
2
Prepared by RSoni
Issue of Ilobal
2epository =eceipts
(I2=*
Co such provision eisted. Company may after passing
special resolution in tis general
meeting, issue I2=?s subject to
conditions.
31
,. -tili.in* Securities premium Account
GtiliLation of securities
premium account. (S6A*
Section A;' S6A can be utiliLed for
writing off preliminary epenses or for
providing premium payable on
redemption of preference shares or
debentures.
6rescribed class of companies
whose financial statements comply
with accounting standards
prescribed for such class cannot
utiliLe S6A for writing off
preliminary epenses and premium
on redemption of preference
shares and debentures.
7&()*
,I. Annual return an& relate& issues.
Annual return(A=* 2etails to be furnished inAnnual return.
' Its registered office,
' +he register of its members,
' +he register of its debenture
holders,
' Its shares and debentures,
' Its indebtedness,
' Its members and debenture
holders, past and present, and
' Its directors, managing
director?s managers and
secretaries, past and present
"ollowing additional details to
bementioned
' 2etails of principal
business activities,
particulars of holding and
subsidiary and associate
companies
' 6romoters, directors, @ey
management personnel
along with changes since
last year
' %eetings of members or
class thereof, board and its
various committees along
with the attendance details
' =emuneration of directors
and Bey management
:&
21
Prepared by RSoni
personnel (B%6*
' 6enalties and punishments
imposed on the company,
its directors, or officers
and appeals made against
penalties or punishments
' %atters related to
certification of
compliances, disclosures
as may be prescribed
' 2etails of shares held on
behalf of "II?s
' Such other matters as may
be prescribed
Certification of Annual
=eturn (A=*
+he copy of theannualreturn filed with
the=egistrar under section 17:or 1<E,
as the case may be,shall be signedboth
by adirector and by themanageror
secretary of the company,or where there
is nomanageror secretary, by two
directorsof the company, one
ofwhomshall be the managingdirector
where there is one
In case of an 56C and small
company, A= to be signed by a
Company secretary (CS*, where
there is no CS, by a practicing
company secretary for listed
companies, having turnoverand
paid up capital as may be
prescribed',y a 2irector and CS,
wherethere is no CS then by
6CS.In addition to this the 6CS
shall alsocertify that the A=
discloses the factscorrectly and
ade.uately and thatcompany has
complied with all the provisions of
the act.5ther CompaniesKby a
director and aCS, where there is no
CS then by a 6CS
:&
+ime limit for filling A= Every company shall within <E days
from the day on which each of annual
/here AI% is held then ' within
)E days from the date of AI%.
26
Prepared by RSoni
general meetings referred to in section
1<< is held, prepare and file with the
registrar a return containing the
particulars specified in part I of
schedule N as they stood on that day.
/here AI% is not held K /ithin
)E days of the due date of the
AI% along with reasons for not
holding the AI%.
:&()*
Conse.uences for default
in filling Annual =eturn.
If a company fails to comply with any
of the provisions contained in section
17:, 1<Eor 1<1.+he company, and
every officer of the company who is in
default, shall be punishable with fine
which may etend toRfive
hundred0rupees for every day during
which the default continues.&."or the
purposes of this section and sections
17:,1<E and 1<1, the epressions
9officer9 and9 director9 shall include
any person in accordance with whose
directions or instructions the ,oard of
directors of the company is accustomed
to act.
"iled between)E daysK)EE days 4
additional fees as per clause
3E)"ails to file beyond the above
date 4the company shall be
punishable with fine not less
than=s.7EEEE but which may
etend up to =s.7EEEEE and every
officer of the company who is in
default shall be punishable not less
than=s.7EEEE but which may
etend upto=s.7EEEEE or with
both
Additional disclosures in
the board report.
Section &1A' 2isclosures in the board
report.
Cumber of meetings of board.
Statement of declarations by
independent directors.
Company?s policy on
director?s appointmentO
remuneration policy.
Eplanation of every
.ualification made by 6CS in
his report.
6articulars of loans, guarantee,
investment.
=elated party contracts.
1)3
29
Prepared by RSoni
Implementation of ris@
management policy.
6olicy developed on Corporate
social responsibility.
Statement of formal evaluation
of performance of the board
and its committees in case of
listed and public companies, as
may be prescribed.
2irectors =esponsibility
Statement.
&1A(&AA*-2isclosures re.uired on
fourfronts4
Applicable accountingstandards
followed-
+rue and fair view of thefinancials-
2etecting and preventingfraud-
Accounts on a goingconcern basis
6rovides for additional
disclosures4In case of a listed
company4a*2irectors have laid
down internalfinancial controls
and they have been complied
with-b*2irectors have devised
proper systems to ensure
compliance with the provisions of
this Act, rules, and that such
systems were ade.uate and
operating effectively
1)3(7*
=eport on AI% re.uired
to be submitted by Histed
Company.
Co provision eisted. 6rovide that every listed company
shall prepare a report in each
AI% and file a copy of the same
with =5C within )E days from the
AI%.
1&1
,II. /otices, 0eetin*s, 1uorums, Votin*, )esolutions, 0inutes.
Co. of meetings In the case of every company, a meeting
of its ,oard of directors shall be held at
least once in every three months and at
least four such meetings shall be held in
every year
At least 3 meeting should be held
each year. +here is no re.uirement
of holding the meeting every
.uarter- the only re.uirement is
that not more than 1&Edays shall
elapse between two consecutive
1A)(1*
3'
Prepared by RSoni
meetings.
Folding of "irst AI% Company may hold its first annual
general meeting within a period of
not more than eighteen months from
the date of its incorporation- and if
such general meeting is held within
that period, it shall not be necessary
for the company to hold any annual
general meeting in the year of its
incorporation or in the following
year
+hat the =egistrar may, for any
special reason, etend the time
within which any annual general
meeting (not being the first annual
general meeting* shall be held, by a
period not eceeding three months
+o do away with 1; months?
timeline in case of the 1stAI%
:<
+iming of AI% 1<<(&*'Every annual general meeting
shall be called for a time during
business hours, on a day that is not a
public holiday, and shall beheld either
at the registered office of the company
or at some other place within the city,
town or village in which the registered
office of the company is situate.
2uring the business hours between
:.EEto <.EEKdefined
Eplanatory statements
in respect of material
facts.
1A)(&*'/here any items ofbusiness to
be transacted atthe meeting are deemed
to bespecial as aforesaid, thereshall be
anneed to the noticeof the meeting a
statementsetting out all material
factsconcerning each such
2efines material facts to be set out
in theeplanatory
statement,namely, the nature of the
concern or interest, financial or
otherwise, if any, in respect of
each item of every director and 1E&
31
Prepared by RSoni
itemofbusiness,including inparticular
the nature of theconcern or interest, if
any,therein, of every director,and the
manager, ifany.
manager, every other B%6 and
relatives of all the above and such
other information and facts that
may enable members to
understand the meaning, scope and
implications of the items of
business and to ta@e decision
thereon
Muorum Section 1A3 K Muorum was 7 members
personally present unless AoA provides
for higher Muorum.
If members on date of meeting is K
S 1EEE K 7 %embers personally
present.
1EEE K 7EEE K 17 members
personally present.
T7EEE K )E members personally
present.
1E)
Noting through electronic
means
Co such provision eisted. Central Iovt may provide for class
of companies which can provide
for voting through electronic
means.
1E;
=esolutions re.uiring
special notice
Sec 1:E' Co criteria for voting power
or shares.
Such a notice can be given by such
number of members holding not
less than 1P of total voting power
or holding shares on which
aggregate sum of not less than =s.
1,EE,EEE has been paid up.
117
Iap between two board
meetings.
Section &;7 provided for onemeeting to
be held in everycalendar .uarter. So
oneboard meeting could be held in the
first month of the.uarter and the net
could beheld in the last month of the
net .uarter, thereby a gap of almost <
6rovides that the gap between any
two board meetings should not
eceed 1&Edays."or 56C4 If 56C
has more than one director, then at
least one meeting in each half of
the calendar year and gap should
1A)(1*
32
Prepared by RSoni
months not be less than :E days between
such meetings. If 56C has only
5CE director, no need to hold any
board meetings
2irectors? participation
by audio'visual means or
videoconferencing
Co such provision specifically eisted.
Companies used to resort to such
mechanism for administrative
convenience however the director
participating through audioOvideo
conferencing could not be counted for
.uorum
Specifically provides for directors
attending the meetings even by
way of video conferencingOaudio'
visual conferencing. Such director
to be counted for the purpose of
.uorum. Central Iovt. may notify
such matters which shall not be
dealt with in a meeting through
videoconferencing or other audio'
visual means
1A)(&*
1A3(1*
Cotice for ,oard
%eetings.
Section &;< merely provided for notice
of board meetings to be given to
directors in writing but did not specify
the length of such notice.
6rovides for A days? notice for
board meetings (can be electronic
also*. Shorter consent possible if at
least 1 independent director
present at such meeting.
1A)()*
/ithdrawal of resolution
by circulation.
Section &;: provided forpassing of
board resolutionsby circulation with
noprovision of withdrawal
Clause 1A7 provides that if a
demand is made by not less than
1O)rd of ,oard of 2irectors (,52*
that resolution under circulation be
decided at a ,% the chairman
shall circulation and have the
.uestion decided at a ,%
1A7
+empering with %inutes Co such provision eists. Any person found guilty of
tempering any minutes of
proceedings of any meeting shall
be punishable with imprisonment
which may etent up to & years
and with fine which shall not be
less than =s. &7,EEE but which
may etent to =s. 1,EE,EEE.
11;
,III. Internal Au&it
Compulsory Internal Co such provision eisted. Compulsory for K
33
Prepared by RSoni
Audit. 1. 2#er" 3iste& compan".
2. 2#er" unliste& Pu!lic
compan" ha#in*
' 6aid up share capital of
=s. 7E Crores or more
during the preceding
financial year
4)
' +urnover of &EE Crores
rupees or more during the
preceding "inancial year
4)
' 5utstanding loans or
borrowings from ,an@?s
or 6"I?s 1EE Crores rupees
or more at any point of
time during the preceding
financial year.
4)
' 5utstanding deposits &7
crores rupees or more at
any point of time during
the preceding financial
year.
3. 2#er" pri#ate compan"
ha#in*
' +urnover of &EE Crores
rupees or more during the
preceding "inancial year
4)
' 5utstanding loans or
borrowings from ,an@?s
or 6"I?s 1EE Crores rupees
or more at any point of
time during the preceding
1);
37
Prepared by RSoni
financial year.
,IV. Cost Au&it
Cost Audit /here in the opinion of theCentral
Iovernment it is necessary so to do in
relation to any company re.uiredunder
clause (d* of sub'section (1* of section
&E: to include in its boo@s of account
the particulars referred to therein, the
Central Iovernment may, byorder,
direct that an audit of cost accounts of
the company shall be conducted
insuchmanner as may be specified in
the order by an auditor who shall be a
cost accountant within the meaning of
the Cost and /or@s Accountants Act,
1:7:(&) of 1:7:*
Instead of company pertaining
toany class of companies
engagedinproduction, processing,
manufacturing or mining
activities, thecentral government
can only direct cost audit to be
conducted in such classof
companies engaged in the
production of such goods or
providing suchservices, which
have the prescribed
networthorturnover and who has
been directed to include the
particulars relating to theutiliLation
of materialor labour or toother
items of cost as may be prescribed
in their boo@s ofaccount .Co
approval is re.uired ofcentral
government for the appointment of
cost auditor to conduct the cost
audit
,V. Statutor" Compliances
Statutory recognition to
secretarial standards.
(SS*
SS were recommendatory. It provides that every company
shall follow SS with respect to
Ieneral and board meeting and
approved by central government.
11;
,VI. 5ransfer to )eser#es
+ransfer of specified P
of profit not eceeding
1EP to =eserves.
Section &E7' Company could not
transfer more than 1EP profits ecept
in accordance with the rules.
Company to use its wisdom to
decide P of profit to be transferred
to reserves. 1&)
3:
Prepared by RSoni
Its no longer mandatory for
companies to transfer its profit to
reserves.
,VII. i#i&en&s.
=estriction on interim
2ividend introduced
Co such restriction eisted. ,52 to declare interim dividend
out of the surplus in the 6QH aOc
as well as the profits for the
financial year in which the interim
dividend is sought to be declared.
In case of loss, interim dividend
rate not to eceed average
dividends declared during
preceding three financial years
1&)()*
+ransfer of shares to
Investor Education
Q6rotection "und (IE6"*
5nly unclaimed dividend to be
transferred to IE6"
Along with the unclaimed
dividend, the shares on which
dividend is unclaimed, also to be
transferred to the IE6"
1&3
2ividends Co dividend shall be paid by
accompany from its reserves other
thanfree reserves
1&)
Claim from IE6" after
Ayrs
Co claim lied against the "und or the
Company in respect of individual
amounts which were unclaimed or
unpaid for a period of seven years.
Claim of an investor over a
dividend not claimed for more
than a period ofA years not to be
etinguished and shall be entitled
to refund in accordance with the
rules.
,VIII. Au&itors.
=otation of Statutory
Auditor
Co such provision eisted. Histed and other companies not to
appoint or reappoint K
1):(&*
3
Prepared by RSoni
' An individual auditor for
more than one term of 7
years and
' An audit firm for more
than & terms of 7
consecutive years (i.e. 1E
years*
%embers of company may
resolve to rotate the audit
partner every year to resolve to
conduct audit by more than
one auditor.
6rovisions relating to
voluntary rotation of auditing
partner (in case of an audit
firm * modified to provide that
members may rotate the
partner at such intervals may
be resolved by members
instead of every year proposed
in the clause earlier.
+he limit in respect of
maimum no of companies in
which a person may be
appointed as an auditor is
20companies.
=eappointment of
statutory auditors
,oardrecommended there'appointment
of retiring auditors and retiring auditors
could be re'appointed at the AI%.
After the epiry of term mentioned
in previous point, there has to be
agap of 7 yrs. for reappointment
after every cessation. "urther in
case of an Audit firm, no other
firm which has a common partner
31
Prepared by RSoni
to the other audit firm can be
appointed as Statutory Auditors.
%embers can approve rotation of
audit partners and also
appointment of joint auditors
7 8ears tenure for
auditors.
Sec &&3' Auditor should be appointed
to hold office only up to the date of the
net AI% and could be reappointed
their at.
Audit firm or an individual
including an HH6 to be
appointed for7 yrs. i.e. to hold
office up to the date of the
sith AI%.
Appointment of auditors for
five years shall be subject to
ratification by members at
every Annual Ieneral
%eeting.
Automatic
reappointment of
eisting Auditors, when
not
appointedOreappointed at
the AI%
Section &&3()*'provided that if no
Auditor was appointedOreappointed at
the AI%, the Central Iovernment
could fill up the vacancy
Eisting auditors continue to be
the auditors of the company in
such a scenario
1):(1E*
+ime bound filling up of
Casual vacancy in the
office of Auditors
Section &&3(<*'Casual vacancy to be
filled up by the ,oard. If due to
resignation, then by the members in
their meeting.
Casual vacancy to be filled up by
the ,oard within )E days. If due to
resignation, then by the Company
in its meeting within ) months
from the date of recommendation
of the ,oard and such auditor to
hold office onlyup to the date of
the net AI%
1):(;*
"ormation
=ecommendations of
Co such provision Eisted Every Histed Company and
such other company as may
36
Prepared by RSoni
Audit Committee for
appointment of auditors
be prescribed shall form Audit
Committee comprised of
minimum ) directors with
majority of the Independent
2irectors and majority of
members of committee shall
be person with ability to read
and understand financial
statement.
All the appointment of
statutory auditors including in
case of casual vacancy shall
be made after considering the
recommendations of the Audit
Committee, where there is
one.
1):(1*
Auditor?s duties
when they resign
Co such provision or re.uirement
eisted
=etiring auditor to file a statement
with the =5C as well as the
Company, within )E days of
resignation, indicating reasons and
other facts that may be relevant
with regard to his resignation.
13E(&*O
()*
+ribunal may direct
company to change its
Auditors
Section &&3(A* provided for removal of
auditors before the epiryof their term,
only with the prior approval of the
Central Iovernment
6rovides that the +ribunal may, by
order, direct the company to
change its auditors on being
satisfied that the auditors has acted
in a fraudulent manner or abetted
or colluded in any fraud
13E(7*
2uties of
auditorOsecretarial
auditorOcost auditor to
Co such provision eisted AuditorsOC/AOCS to inform the
fraud to the CI within prescribed
time and manner and the same
13)(1&*'
(13*
39
Prepared by RSoni
report fraud to the CI shall not be construed as breach of
duty
Himited Hiability
6artnership (HH6*can act
as an Auditor
Section &&<()*KHH6 was not to be
treated as a ,ody Corporate for the
limited purpose of this section and
hence couldbe appointed as an Auditor.
/here a firm including an HH6
isappointedas an auditor of
acompany, only the partners who
areChartered accountants shall be
authoriLed to act and sign on
behalf of the firm.
%ultidisciplinary partnership is
allowed
131
131(1*
Auditor not to render
certain services
Cosuchprovisioneisted Auditor not to render directly or
indirectly the following services to
the company, its holding company
or its subsidiaries, or associate
company4
Accounting and boo@ @eeping
service- internal audit-
2esign and implementation of
any financial information
system-
Actuarial services-
Investment advisory services-
Investment ban@ing services-
=endering of outsourced
financial services-
%anagement services- and
Any other @ind of consultancy
services.
6rovisions relating to restrictions
on non'audit services modified to
provide that such restrictions
133
7'
Prepared by RSoni
shall not apply to associate
companies and further to provide
for transitional period for
complying with such provisions
Auditors >attendance
atAI% proposed to be
madeobligatory
Section&)1' 6rovides for all notices of
and other communication relating to
general meeting ofa company to be
forwarded to the Auditor. +he Auditor
was thus entitled to but not obliged to
attend any generalmeeting
6rovides that auditor shall, unless
otherwise eempted by the
Company, attend any general
meeting, either by himself or
through his AuthoriLed
representative who is .ualified to
be an auditor
13<
Increased accountability
of auditors.
6enalties were provided for violation of
Section &&A (2ealing with powers and
duties of auditors* Q Section &&:
(dealing with signature of audit reports*
penalty of "ine up to =s. 1E,EEE
6enalties significantly
enhanced' fine not less than
=s. &7,EEE but 'etendable to
=s. 7 Ha@hs.
Imprisonment up to 1 year
and fine in case there is an
intention to deceive the
company, its shareholders or
creditors.
6rovisions relating to etent
of criminal liability of
auditors particularly in case of
partners of an audit firm
reviewed to bring clarity.
"urther, to ensure that the
liability in respect of damages
paid by auditor, as per the
order of the Court, (in case of
conviction under Clause 13A*
is promptly used for payment
to affected parties including
13A
71
Prepared by RSoni
ta authorities,
Central Iovernment has been
empowered to specify any
statutory bodyOauthority for
such purpose.
,I,. /omination + )emuneration Committee
Comination Q
=emuneration
CommitteeQsta@eholders
relationship committee.
A mention of remuneration committee
was made only in Schedule JIII.
6rovides for mandatory
constitution of Comination
and remuneration committee
Q sta@e holders relationship
committee for prescribed
companies.
1A;
,,. Prohi!itions + )estrictions.
Himit on political
contribution by anon'
governmentcompany
SectionK&:)A up to 7 P of the average
net profits for preceding three financial
years on authority of a ,oard
=esolution.
Himit enhanced to A.7P from
7P.6olitical party defined as
political party registered under
section &:A of the =epresentation
of the 6eople Act, 1:71
1;&
Cew restrictions onnon'
cash transactions by
directors
Co such provision eisted A company shall C5+, subsidiary
or associate, enter into specified
non cash transactions with its
director or a director of its holding
company or person connected with
him unless approved by the
company in its general meeting.
Such transactions to be treated
voidable
1:&A
6rohibition on forward
dealings in securities of
company by a Bey
%anagerial
6ersonnel(B%6*
Co such provision eisted 6rohibits a 2irector of a Company
or aB%6 to buy a right to call for
delivery ata specified price and
within a specified time, of a
specified number of relevant
1:3
72
Prepared by RSoni
shares or debentures, right to ma@e
delivery at a specified price and
within aspecified time, of a
specified number of relevant
shares or debentures
6rohibition on Insider
+rading of Securities
Co such provision eisted %a@es insider trading by a
2irector or aB%6, a criminal
offence. Communication in the
ordinary course of business,
profession or employment will not
be treated as Insider +rading
1:7
,,I. Compan" Secretar".
"unctions of company
secretary
Co such provision eisted. +o report to the board of
directors.
Compliance with the act, rules
made there under.
+o ensure that the company
complies with the applicable
secretarial standards, to
discharge such other duties as
may be prescribed.
&E7
,,II. In#esti*ations
Serious "raud
Investigating office.
(S"I5*
Co such provision eisted. Statutory status to C"I5. &11
Investigation report. Co such provision eisted. Investigation report filed by
S"I5 with the court for
framing of charges shall be
treated as report filed by a
police officer. S"I5 shall
have power to arrest.
&1&
6enal 6rovisions for In the process of the Investigation,
73
Prepared by RSoni
%isconduct. In.uiry or inspection if any
person4
destroy, mutilates or falsifies
or conceals or tamper or
unauthoriLed removes or is a
party to that or any document
relating to the property,
assets or affairs of the
Company or body corporate
or
%a@es or is a party to the
ma@ing of any false entry in
the document concerning the
company or body corporate or
provides any false
information which he @nows
to be false
+hen he shall be liable to
punishment for imprisonment
for a term from <months to1E
years and shall also be liable to
fine which shall not be less than
the amount involved in fraud but
which may etent up to )
times of the amount of fraud
&&:
"reeLing of assets of
company on in.uiry Q
investigation.
Co such provision eisted. Clause &&1 provides for freeLing
of assets of company on en.uiry
and investigation.
&&1
,,III. Corporate )estructurin*
Certification from
auditor
Co compromise or arrangement
shall besanctioned bythe +ribunal
77
Prepared by RSoni
unless certificate by the company?s
auditor has been filed with the
+ribunal to the effect that the
accounting treatment, if any,
proposed in the scheme
ofcompromiseor arrangement is in
conformity with the accounting
standards prescribed under Clause
1))
Simplified procedure for
compromise between
small companies or
between FoldingO
Subsidiary company.
Co such provision eisted Clause &)) provides simplified
procedure for compromise.
&))
Cross border %ergers Co such provision eisted. 6rovides for cross border
mergers where a foreign
company may with prior
approval of =,I, merge or
amalgamate in to a company
registered under this act or
vice' versa.
6ayment of consideration to
the shareholders of the merger
company in cash or in
depository receipts or partly
by cash or depository receipts.
&)3
S.ueeLeout provisions Co such provision eisted S.ueeLe out provision means
provisions which confer the
ac.uirer with a statutory right to
s.ueeLe out the minority, i.e.
ac.uire minority shareholders on
the same terms when the
&)<
7:
Prepared by RSoni
ac.uirer?s shareholding crosses
ascertain high percentage of the
voting capital of the target
company
=elief for past concluded
acts ofoppression
+his was not possible under section ):A
of the Companies Act, 1:7<, as
thesameprovided only for the current
affairs of the company
Clause &31 uses the
phraseology'#affairs of the
company have been or are being
conductedO??. +hus relief for past
acts ispossible
&31
,,IV. Class action suits.
Class action by
memberOs,
depositorOsorany class of
them
Co such provision eisted 6rovided for, 6rovisions relating to
etent of criminal liability of
auditors particularly in case of
partners of an audit firm reviewed
to bring clarity. "urther, to ensure
that the liability in respect of
damages paid by auditor, as per the
order of the Court, (in case of
conviction under Clause 13A* is
promptly used for payment to
affected parties including ta
authorities, Central Iovernment
has been empowered to specify
any statutory bodyOauthority for
such purpose
&37
6owers of registrar =egistrar has the power to remove
the name of a company from
itsrecord under certain
circumstances
&3;(7*
Approval In case of a company regulated
under a Special Act, approval of
7
Prepared by RSoni
theregulatory body constituted or
established under that Act shall
also be obtained
&3;(&*
,,V. Valuation
=egistered valuers. Co such provision eisted. /herever valuation is to be done
of any property, stoc@s, shares,
debentures, securities or goodwill
or net worth of accompany or of
its assets, such valuation shall be
done by a person who is
aregistered valuer under this
chapter and appointed by the Audit
Committee or in its absence by the
,52
&3A
,,VI. 6in&in* up.
6ower of =egistrar to
remove name of
accompany from
=egister
Section 7<Eprovided for the=5C
t o suomotostri@e of f the company as
a defunct company if it has reasonable
cause to believe that acompany is not
carrying on its business or in operation.
Section 7<E provided for the =5C
to suomotostri@e off the company
as a defunctcompany if it has
reasonable cause tobelieve that a
company is not carrying on its
business or in operation
&3A
,ar on company ma@ing
application to the =5C
for removal of its name
from register.
Co such provision eisted. 6rovides for situations (in previous
) months* where such an
applications cannot be made4'
Came changeOregistered office
change-'2isposal for value of
property-'Engagement in any other
activity-'%ade an application to
the +ribunal
forcompromiseOarrangement-'Is
being wound up
&3;(&*
71
Prepared by RSoni
"raudulent application
by company for removal
of name.
Co such provision eisted. 6rovides for management being
responsible, jointly and severally,
in such a scenario to any personOs
who incurred loss or damage and
shall also be liable to penal action.
=5C may recommend prosecution
of persons responsible for filing of
application for removal of name,
fraudulently
&3;(&*
%odes of winding up ,y court, under supervision of court
and voluntary winding up, voluntary
could be members or creditors.
,y the tribunal and voluntary. Co
such classification eists.
Additional grounds for winding up
by tribunal provided.
&AE')<7
Himits for determining
inability to pay debts.
Section' 3)3 any creditor indebted for
more than =s. 7EEO'
Himit raised to =s. 1,EE,EEEO'
,,VII. 4ther 3e*al Pro#isions.
Special courts Co such provision eisted. +he bill aims at setting up of
special court to try offences under
the bill
3)7'33<
6unishment for fraud "raud not defined. 6unishment for
fraud not .uantified or provided.
"raud has been defined and
penalty provided.
33A
6enalty for obtaining
name by providing
wrong or incorrect
information
Co recourse provided. If company is not incorporated
reserved name shall be cancelled
after imposing a penalty not
eceeding =s.1EE,EEEO'-if the
company is incorporated the
=5Cmay give direction to change
of name within ) months by
passing ordinary resolution or
ma@e an application for winding
up of the company
3(3*, 3(7*
6ower to
removedifficulties
6rovisions in respect of removal
ofdifficulty modified to provide
76
Prepared by RSoni
that thepower to remove
difficulties may beeercised by the
Central Iovernmentupto >five
years? (after enactment of
thelegislation* instead of earlier
upto >threeyears?. +his is
considered necessary toavoid
serious hardship and
dislocationsince many provisions
of the ,ill involvetransition from
pre'eistingarrangementsto new
systems
,,VIII. /ational 'inancial )eportin* Authorit"
CACAAS K constitution. Section'&1EA. Constitution
ofCationalAdvisory Committee on
AccountingStandards.+he Central
Iovernment may, by notification in
the5fficial IaLette, constitute an
Advisory Committee to becalled the
Cational advisory Committee on
Accounting Standards (hereafter in this
section referred to as
the9AdvisoryCommittee9* to advise the
Central Iovernment on the formulation
and laying down of accounting
policiesandaccounting standards for
adoption by companies or class of
companies under this Act.
+he name of CACAAS has been
changed to Cational "inancial
=eporting Authority (C"=A* and
authority is toadvise on matters
related toauditingstandard in
addition toaccounting standards
+he CI may prescribe the
standards ofaccounting or any
addendum thereto, as
recommended by the ICAI in
consultation with and
aftereaminationof the
recommendations made by then
"=A
Po7ers8
%onitor and enforce the
compliance with accounting
and auditing standards
1)&
79
Prepared by RSoni
5versee the .uality of
service of the professions
associated with ensuring
compliance with such
standards
have the power to
investigate into the matters
of professional or other
misconduct commi t t ed by
any member or firm of
chartered accountants and
impose penalties of not less
than =s. 1 la@hs in case of
individuals and =s. 1E Ha@hs
in case of firms and debar
membersOfirms for a period
of < months to 1E years
5ther related issues. +he Advisory Committee shall give its
recommendations to the Central
Iovernment on such matters of
accounting policies and standards and
auditing as may be referred to it for
advice from time to time.
+he members of the Advisory
Committee shall hold office for
such terms as may be determined
by the Central Iovernment at the
time of their appointment and any
vacancy in the membership in the
Committee shall be filled by the
Central Iovernment in the same
manner as the member whose
C"=A had jurisdictions over
CAs, cost accountants,
company secretaries and any
other profession as may be
prescribed.
Cow, this Clause has been
amended, C"=A to have
jurisdiction over only CAs.
i.e., 6rofessional misconduct
of chartered accountants also
comes under C"=A.
/here C"=A initiates an
investigation, no other
institute or body shall initiate
or continue any proceedings
:'
Prepared by RSoni
vacancy occurred was filled.
+he non'official members of the
advisory Committee shall be
entitled to such fees, travelling,
conveyance and other allowances
as are admissible to the office of
central government of the highest
ran@.
in such matters of
misconduct
6enalty increased
Chairperson and members in
"ulltime Employment with
C"=A shall not be associated
with any audit firm including
related consultancy firms
during the course of their
appointment and & years
after ceasing to hold such
appointment.
+he 2irector?s report for
every company ecept for
5ne 6erson Company, shall
provide various types of
additional information li@e
number of meetings of the
,oard, Company?s policy on
directors? appointment and
remuneration- eplanations
or comments by the ,oard
on every .ualification,
reservation or adverse
remar@ or disclaimer made
by the Company Secretary in
his secretarial audit report,
particulars of loans,
guarantees or investments
etc.(Clause 1)3*
,,I,. Sche&ules.
:1
Prepared by RSoni
Schedule K I Section 3 Q 7.
Schedule K II Gseful lives to compute depreciation.
Schedule K III Ieneral instructions for preparation of balance sheet and statement of profit
and loss of company.
Schedule K IN Code of independent directors.
Schedule K N Conditions to be fulfilled for the appointment of managing or /+2 or manager
without the approval of Central Iovernment.
Schedule K NI Section 77 Q 1;< related to Infrastructures 6rojects.
Schedule ' NII Corporate Social =esponsibility.