Companies Act 2013

Presented by Prof V.S.Gopal

Objectives of the Act :

To Promote the development of economy by encouraging entrepreneurship and enterprise efficiency & creating flexibility and simplicity & maintenance of the Company.

Encourage transparency, accountability & high Standards of Corporate governance.

To recognize various new concepts, procedures facilitating ease of doing business while the interest of all stake holders are protected.

To enforce strict action against frauds & gross non compliance with the company law provisions.

To set up institutional structure in the form of various authorities, bodies, panels aw well as by including the recognition of various roles for professionals and other experts

To cater to the needs for more effective and time bound approvals & compliance requirements.

To set and follow – Accounting & Auditing Standards compatible to Universal norms.

Important Definitions –

“ Accounting standards” – u/s 2(2) – means standards of accounting as applicable uniformly to all the companies referred to in Section 133.

“ Auditing Standards” – u/s 2(7) – means auditing standards hitherto followed uniformly by all the companies or class of companies referred to sub – section (10) of Section 143.

“Books Of Accounts” – u/s 2(13) includes records maintained in respect of the requirements under the Auditing standards.

“Financial Year” – April 1st to March 31st.

Deposits – Section 2(13) includes receipt of money by way of Deposit or loan in any form as prescribed in consultation with RBI.

Foreign Company – u/s 2(42) means any body corporate Incorporated outside Indis which:a)Has a place in India whether by itself or through agent, physically or through electronic mode; and

b)Conducts any business activity in India in any other manner

Independent Directors – 2(47) means an independent director Referred to sub section (5) of section 149.

Indian Depository Receipts u/s 2(48) – means any instrument in the form of depository receipt created by a domestic depositoryin India and authorized by a company incorporated outside Indiamaking an issue of such depository receipts.

One man company – Section 2(62) means a company which has only one person as a member.

Small Company – Section 2 (85) – means a company, other than a public company :

Paid up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than five crore rupees; or

turnover of which as per the last profit and loss account does not exceed two crore rupees or such higher amount as may be prescribed whch shall not be more than twenty crore rupees.Provided that nothing in this clause shall apply to:

A ) A holding company or a subsidiary companyB)A Company registered under section 8 orC) A company or body corporate governed by a special act.

Chapter – 2 Incorporation of Company :

The 2013 Act introduced new form of entity “ One PersonCompany” and incorporated certain new provisions in respect of memorandum & articles of association.

“ Company Limited by Guarantee” – means a company having the liability of its members limited by the memorandumto such amount as the members may respectively undertake to contribute to the asset of the company in the event of being wound up.

“Company Limited by Shares” – means a company having theliability of its members limited by the memorandum to the amount if any, unpaid on the shares respectively held by them.

“ Company Liquidator : - in so far as it relates to the windingup of a company means a person appointed by :a)Tribunal in case of winding up by the Tribunal.b) The Company or creditors in case of voluntary winding up.

As a company Liquidator from the panel of professionals maintained by the Central Government under sub – section (2)of section 275.

“ Body corporate” includes company incorporated outside ,India, but does not include :i)a co-operative society registered under any law relating to Co – operative societies: andii) Any other body corporate (not being company defined in this act), which the Central Government may by notification,specify in this behalf.

“Private Company” – means a company having minimum paidup share capital of one lakh rupees or such higher paid up Capital as may be prescribed and which by its articles, :i)Restricts the rights to transfer its shares:ii) except in case of One Person Company, limits the number of its members to 200.Provided that where 2 or more persons hold one or more sharesin a company jointly, they shall, for the purpose of this clause, betreated as single member, provided further that :a)persons who are in the employment of the company; andb)Persons, who, having been formerly in the employment of the company, were members of the company 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

Formation of a Company : A company may be formed for any lawful purpose by :

7 or more persons where the company to be formed is to be a public company.

2 or more persons, where the company to be formed is to be a private company.

One person, where the company to be formed is to be One Person Company, that is to say, a private company, by subscribing their names to a memorandum & complying with the requirement of this act in respect of registration. One Person Company shall indicate the name of the other person with his prior consent, in the prescribed form, who shall in the event of the death or incapacity of the subscriber shall become the member of the company and such consent is filed

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Steps for Incorporation of a Company Process of Incorporation of One Person Company (OPC)

Obtain Digital Signature Certificate (DSC) of the Proposed Directors.

Obtain Director Identification Number (DIN) – proposed directors

Select suitable name, and make an application to Ministry of Corporate affairs for the availability of name. Draft MOA & AOA Sign & file various documents including MOA & AOA with ROC electronically. Payment of requisite fee to Ministry of Corporate Affairs and Stamp duty. Scrutiny of documents by ROC Receipt of Certification of Registration / Incorporation from ROC

Section 7 of Companies Act 2013 – sets standard procedures: Documents with ROC – Jurisdiction set – MOA & AOA signed by all the subscribers. Declaration in the prescribed form – CA, Advocate, Company secretary, a person named in Articles as director. Affidavit from each of the subscribers to the MOA named as first directors – not convicted for an offence in connection to the formation of the company, he has not been found guilty of any misfeance, and moral turpitude. On and from the date mentioned in Certificate of Incorporation, ROC shall allot to the company identification number which shall be a distinct identity for the company posted in the certificate. The company shall maintain & preserve at its registered office all documents as originally filed till its dissolution. No person shall furnish any false & suppress material facts, they may be criminally prosecuted, fraudulent actions initiated under section 447.