companies act, 1956 and companies bill, 2012

COMPANIES ACT,

1956

AND

COMPANIES BILL,

2012 (BILL NO. 121-C OF 2O11)

-... A Comparative

By Team Manupatra

-December 2012

- THE HISTORY

- TOPICAL COMPARATIVE

-December 2012

- December 2012

... THE HISTORY

December 2012

2008 Bill

•Introduced in Lok Sabha on 23.10.08

•To replace the Companies Act, 1956

• Lapsed due to dissolution of Parliament

2009 Bill

•2008 bill modified

•Re-introduced in 2009 on 3.8.09

Bill referred to Standing Committee for review

Report tabled in Lok Sabha on August 31, 2010

2011 Bill

•Introduced in Lok Sabha on December 14, 2011

Was shelved for taking up the same in winter session of Parliament on December 22, 2011

2011 Bill

• Passed by Lok Sabha on December 18, 2012 as the Companies Bill 2012

THE ACT OF 1956 & THE ACT AS

PROPOSED TO BE....

Details Companies Act, 1956 Companies Bill, 2012

Parts/ Chapter 13 29

Sections 658 470

Schedules 15 7

No. of clauses in

Section 2

(Definitions)

67 95

- December 2012

... TOPICAL

COMPARATIVE

DEFINITIONS

Details Companies Bill, 2012

New Definitions – as

introduced

(Clause 2)

Some of the new definitions as introduced are of Accounting

Standards, Auditing Standards, Associate Company, Chief

Executive Officer, Chief Financial Officer, Control, Deposit,

Employee Stock Option, Financial Statement, Global

Depository Receipt, Indian Depository Receipt, Independent

Director, Interested Director, Key Managerial Personnel,

Promoter, One Person Company, Small Company, Turnover,

Voting Right etc..

Details Companies Act, 1956 vis-à-vis Companies Bill, 2012

Definitions –

Modified/ other

important terms

• Incase of Private Limited Company [Section 3 & Cl. 2(68) –

Maximum number of members proposed to be increased

from 50 to 200

• Private company which is a subsidiary of a public company

shall be deemed to be a public company.

• Key Managerial Person (KMP) – Cl. 2(51) states that KMP

includes the Chief Executive Officer or the managing

director or the manager; the company secretary; the Chief

Financial Officer if the Board of Directors appoints him; and

such other officer as may be prescribed;

DEFINITIONS


Definitions –

Modified/ other

important terms

• Scope of the term “officer who is in default” enlarged – The term was

defined in Section 5 of the Act. Its scope has now been enlarged. It

now states includes as under:

(i) whole-time director; (ii) key managerial personnel; (iii) where there

is no key managerial personnel, such director or directors as specified

by the Board in this behalf and who has or have given his or their

consent in writing to the Board to such specification, or all the

directors, if no director is so specified; (iv) any person who, under the

immediate authority of the Board or any key managerial personnel, is

charged with any responsibility including maintenance, filing or

distribution of accounts or records, authorises, actively participates

in, knowingly permits, or knowingly fails to take active steps to

prevent, any default; (v) any person in accordance with whose advice,

directions or instructions the Board of Directors of the company is

accustomed to act, other than a person who gives advice to the Board

in a professional capacity; (vi) every director, in respect of a

contravention of any of the provisions of this Act, who is aware of

such contravention by virtue of the receipt by him of any proceedings

of the Board or participation in such proceedings without objecting to

the same, or where such contravention had taken place with his

consent or connivance; (vii) in respect of the issue or transfer of any

shares of a company, the share transfer agents, registrars and

merchant bankers to the issue or transfer.

DEFINITIONS


Definitions –

Modified/ other

important terms

• Definition of the term “Subsidiary Company” modified – The term is

defined in Section 4 of the Act. Its scope has now been modified to

mean a Company in which the holding Company –

(i) Controls the composition of the Board of Directors; or (ii) Exercises

or controls more than one half of the total share capital (instead of

equity share capital as prescribed under the 1956 Act) either at its

own or together with one or more of its subsidiary companies.

Provided that such class or classes of holding companies as may be

prescribed shall not have layers of subsidiaries beyond such numbers

as may be prescribed.

NEW CONCEPTS/ TERMS


Concept of One

Person Company

(OPC) – Cl. 2(62)

It means a Company which has only one person as a

member;

Concept of Small

Companies – Cl. 2(85)

means a company, other than a public company — with paid-up

share capital not exceeding fifty lakh rupees or such amount as

may be prescribed, not to be more than five crore rupees; or

turnover of which as per its last profit and loss account does not

exceed two crore rupees or such higher amount as may be

prescribed which shall not be more than twenty crore rupees.

This will include a holding company or a subsidiary company; a

company formed with charitable objects; or a company or body

corporate governed by any special Act;

Term ‘Promoter’

defined – Cl. 2(69)

(i) Promoter is one who has been named as such in a prospectus

or is identified by the company in the annual return, or (ii) who

has control over the affairs of the company, directly or indirectly

whether as a shareholder, director or otherwise; or (iii) in

accordance with whose advice, directions or instructions the

Board of Directors is accustomed to act. Provided that nothing in

sub-clause (c) shall apply to a person who is acting merely in a

professional capacity.

NEW CONCEPTS/ TERMS


Directors • Duties of the directors towards a company prescribed (not provided

in the Companies Act, 1956).

• Maximum there can be15 directors. This number can go up on the

passing of special resolution.

• In certain prescribed companies atleast one woman director should

be appointed

• Every company to have one resident director, i.e. a director who has

stayed in India for minimum 182 days in the previous calendar year.

• Every company belonging to such class or description of companies

as may be prescribed shall have Managing Director (MD) or Chief

Executive

• Director (CEO) or Manager and in their absence, a Whole time

Director (WTD) TD and a Company Secretary.

• Individual not to be the Chairman of the company as well as the MD

or CEO of the company at the same time (AoA can provide for this);

• Every whole time KMP to be appointed by a resolution at BOD

meeting;

• A WTKMP not to hold office in more than one company at the same

time.

• Any vacancy in the office of any KMP to be filled up by the BOD

within 6 months.

• Provisions relating to separation of office of Chairman and

Managing Director (MD) modified to allow, in certain cases, a class of

•companies having multiple business and separate divisional MDs to

appoint same person as ‘Chairman as well as MD’

NEW CONCEPTS/ TERMS


Concept of

Independent

Directors – Cl. 149(5)

All listed companies shall have at least one-third of the Board as

independent directors.

• Such other class or classes of public companies as may be

prescribed by the Central Government shall also be required to

appoint independent directors.

• The independent director has been clearly defined in the Bill.

• Nominee director nominated by any financial institution, or in

pursuance of any agreement, or appointed by any government to

represent its shareholding shall not be deemed to be an

independent director.

• An independent director shall not be entitled to any

remuneration other than sitting fee, reimbursement of expenses

for participation in the Board and other meetings and profit

related commission as may be approved by the members.

• An Independent director shall not be entitled to any stock

option.

•Only an independent director can be appointed as alternate

director to an independent director. [clause 161(2)].

NEW CONCEPTS/ TERMS


Duties of Directors –

Cl. 166

• To act in accordance with the articles of the company.

• To act in good faith in order to promote the objects of the company

for the benefit of its members as a whole, and in the best interests of

the company, its employees, the shareholders, the community and for

the protection of environment.

• To exercise his duties with due and reasonable care, skill and

diligence and shall exercise independent judgment.

• Not to involve in a situation in which he may have a direct or

indirect interest that conflicts, or possibly may conflict, with the

interest of the company.

• Not to achieve or attempt to achieve any undue gain or advantage

either to himself or to his relatives, partners, or associates and if such

director is found guilty of making any undue gain, he shall be liable

to pay an amount equal to that gain to the company.

• Not to assign his office and any assignment so made shall be void.

Resignation of

Director [Cl. 168]

• A Director may resign from his office by giving a notice in writing

and the Board shall, on receipt of such notice take note of the same

and the company shall intimate the Registrar and place such

resignation in the subsequent general meeting of the company. The

director shall also forward copy of resignation with reasons to

Registrar. The clause further provides for the date on which the

notice of resignation shall take effect. The director shall be liable for

the offences occurred during his tenure.

NEW CONCEPTS/ TERMS


Cross Border Mergers • The Bill provides for Cross Border Mergers which means that a

foreign Company may with due prior approval of the Reserve

Bank of India, merge or amalgamate in to a Company registered

under this Act or vice-versa.

• Payment of consideration to the shareholders of the merged

Company in cash, or in Depository Receipts (DRs) or partly by

cash and DRs.

Account Books/ Audit/

Auditors

• Company can maintain Books of Account in electronic mode

• The Bill provides for conduct of internal audit of prescribed

class or classes of companies.

• 5 Year Tenure for Auditors:

- Audit firm or an individual including an LLP to be appointed

for 5 yrs, i.e. to hold office upto the date of the sixth AGM.

- Appointment of auditors for five years shall be subject to

ratification by members at every Annual General Meeting.

Uniform Financial

Year

Company or body corporate to adopt uniform financial year i.e.

1st April to 31st March every year except in certain exceptional

cases.

Existing Companies not adopting 1st April to 31st March as

financial year for the purposes of Companies Act to align

themselves with this within two years of commencement of the

Companies Act, 2012.

NEW CONCEPTS/ TERMS


Serious Fraud

Investigating Office

(SFIO)

[Cl. 211]

• This is a new clause and seeks to provide that the Central

Government shall constitute Serious Fraud Investigation Office

(SFIO).

• The SFIO will be headed by a director and will consist of

experts from various disciplines.

• The Central Government shall also appoint a Director in the

SFIO not below the rank of Joint Secretary and may also appoint

such experts and other officers as it considers necessary for

efficient discharge of functions.

Corporate Social

Responsibility

[Cl. 135]

• Every company having specified net worth or turnover or net

profit during any FY shall constitute the Corporate Social

Responsibility Committee of the Board. The composition of the

committee shall be included in the Board's Report.

• The Board shall disclose the content of policy in its report and

place on website, if any of the Company.

• The Board shall endeavour to ensure that atleast two per cent

of average net profits of the Company made during three

immediately preceding financial years shall be spent on such

policy every year. If the company fails to spend such amount the

Board shall give in its report the reasons for not spending.

NEW CONCEPTS/ TERMS


E-governance • Maintenance and allowing inspection of documents by

companies in electronic form being allowed for the first time

Auditor’s

Accountability/ NFRA

• Rotation of auditors and audit firms being provided for.

• Stricter and more accountable role for auditor being retained.

Provisions relating to prohibiting auditor from performing non-

audit services revised to ensure independence and accountability

of auditor.

• Subject to the maximum prescribed number of companies, the

members of a company may resolve that the auditor or audit

firm of such company shall not become auditor in companies

beyond the number as may be specified in such resolution.

• National Advisory Committee on Accounting and Auditing

Standards (NACAAS) proposed to be renamed as National

Financial Reporting Authority (NFRA) with a mandate to ensure

monitoring and compliance of accounting and auditing standards

and to oversee quality of service of professionals associated with

compliance.

• Authority to consider the International Financial Reporting

Standards and other internationally accepted accounting and

auditing policies and standards.

Contd...

NEW CONCEPTS/ TERMS


… contd.

• The Authority is also proposed to be empowered with quasi

judicial powers to ensure independent oversight over

professionals.

• Cost Audit: Cost records to be mandated for companies engaged

in production of such goods or rendering of such services as may

be prescribed. The concept of "cost auditing standards" being

mandated.

• Secretariat Audit: Prescribed class of companies would need to

attach with the Board's Report, a Secretarial Audit Report given

by a company secretary in practice.

NEW CONCEPTS/ TERMS


Managerial

Remuneration

• Provisions relating to limits on remuneration provided in the

existing Act (11% of net profits) included.

• For companies with no profits or inadequate profits

remuneration shall be payable in accordance with new Schedule

of Remuneration annexed to the Bill and in case a company is

not able to comply with such Schedule, approval of Central

Government would be necessary.

• Individual limits for remuneration enhanced in the Bill vis-a-

vis the existing limits.

• Concept of payment of periodic fees which shall include sitting

fees to directors being included in the Bill.

• Independent Directors (IDs) not to get stock option: IDs not to

get stock option but may get payment of fees and profit linked

commission subject to limits specified in the Bill/rules.

• Central Government may prescribe amount of fees under the

rules.

Mediation and

Conciliation Panel

• It is proposed to create and maintain as "Mediation and

Conciliation Panel" for facilitating mediation and conciliation

between parties during any proceeding under the proposed

Legislation before the Central Government or Tribunal.

NEW CONCEPTS/ TERMS


Protection for

Minority

Shareholders

• Exit option to shareholders in case of dissent to change in

object for which public issue was made.

• Specific disclosure regarding effect of merger on creditors, key

managerial personnel, promoters and non-promoter shareholders

is being provided. The Tribunal is being empowered to provide

for exit offer to dissenting shareholders in case of compromise or

arrangement.

• The Board may have a director representing small shareholders

who may be elected in such manner as may be prescribed by

rules.

Investor Protection • Acceptance of deposits from public subject to a more stringent

regime.

• Central Government to have power to prescribe class or classes

of companies which shall not be permitted to allow use of

proxies. The Bill also to have provisions to provide that a person

shall have proxies for such number of members /such shares as

may be prescribed.

• Provisions for Class Action Suits revised to provide minimum

number of persons who may apply for such suits. Safeguards

against misuse of these provisions also being included.

NEW CONCEPTS/ TERMS


Insider Trading

[Cl. 195]

• This is a new clause and seeks to prohibit directors or key

managerial person of the company 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.

• This clause further provided for penal provision in case of

contravention.

Investor Protection • Acceptance of deposits from public subject to a more stringent

regime.

• Central Government to have power to prescribe class or classes

of companies which shall not be permitted to allow use of

proxies. The Bill also to have provisions to provide that a person

shall have proxies for such number of members /such shares as

may be prescribed.

• Provisions for Class Action Suits revised to provide minimum

number of persons who may apply for such suits. Safeguards

against misuse of these provisions also being included.

HOLDING COMPANY AND SUBSIDIARY


Meaning/

Restrictions in

regard to Subsidiary

No restriction Class or classes of holding

Companies as may be

prescribed shall not have

layers of subsidiaries

beyond such numbers as

may be prescribed [Cl.

2(87)]

SHARES - TRANSFER [S. 111 OF THE 1956 ACT AND CL. 58 OF THE BILL]


Transfer of Shares –

Public Company

Securities or other interest of

any member freely transferable.

[sub-sections (1) and (2) of

section 111]

Freely transferable,

however there needs to be

a contract/agreement with

regard to the transfer of

securities which can be

made enforceable as a

contract. [Cl. 58]

SECURITIES – BUY-BACK


Restriction – further

offer of Buy-back

Where buyback is by Board (10

per cent of the total paid up

equity capital and free

reserves), no further offer of

buyback is permissible within

one year from the date of last

offer of buyback. [S. 77A]

No offer of buy-back shall

be made within

a period of one year

reckoned from the date of

the closure of the

preceding offer of

buy-back, if any. [Cl. 68]

ACCEPTANCE OF DEPOSITS BY COMPANIES


[Cl. 73]

Eligibility – for

acceptance from

public and

shareholders

Public Companies are

permitted to accept deposits

from public and shareholders

in accordance to Companies

(Acceptance of Deposit)

Rules.

[Section 58A)

No Company except Banking

Company and such other

Company as may be specified

in this behalf shall invite,

accept or renew deposits

from the subject to

fulfillment of certain

conditions. A Company may,

subject to the passing of a

resolution in general meeting

and prescribed rules accept

deposits from its members on

such terms and conditions as

may be agreed upon between

the Company and its

members, subject to the

conditions prescribed:



Eligibility – for

acceptance

from public and

shareholders

- … contd.

The conditions are:

- statement showing the financial

position of the company, the credit

rating obtained, the total number of

depositors and the amount due

towards deposits in respect of any

previous deposits accepted by the

company

- depositing such sum which shall

not be less than 15 per cent of the

amount of its deposits maturing

during a FY and the FY next

following, and kept in a separate

bank account in a scheduled bank

to be called as deposit repayment

reserve account;


Details Companies Act,

1956

Companies Bill, 2012

Eligibility – for

acceptance

from public

and

shareholders

- … contd.

- providing deposit insurance in the

manner and extent prescribed

- certifying that the Company has not

defaulted in the repayment of deposits

or payment of interest

- providing security, if any for the due

repayment of the amount of deposit or

the interest thereon including the

creation of such charge on the property

or assets of the company. However,

where a Company does not secure the

deposits or secures such deposits

partially, then, the deposits shall be

termed as 'unsecured deposits' and

shall be so quoted in every circular,

form, advertisement or in any

document related to invitation or

acceptance of deposits.

ACCEPTANCE OF DEPOSITS


1956


Eligibility – for

acceptance from

public and

shareholders

- … contd.

The deposit repayment reserve account

referred to in clause (c) of sub-section (2) shall

not be used by the company for any purpose

other than repayment of deposits.

No Company except Banking Company and

such other Company as may be specified in

this behalf shall invite, accept or renew

deposits from the public except in the manner

provided.

A Company may, subject to the passing of a

resolution in general meeting and prescribed

rules accept deposits from its members on

such terms and conditions as may be agreed

upon between the Company and its members,

subject to the conditions prescribed:

DIVIDEND – DECLARATION & PAYMENT

Details Companies Act, 1956 [Section 205]


Declaration of

Dividend -

Transfer of

Reserves

No dividend to be declared or paid

by a Company for any FY out of the

profits of the Company for that year

arrived at after providing for

depreciation except after the

transfer to the reserves of the

Company of such percentage of its

profits for that year, not exceeding

ten per cent.

A voluntary transfer by Company to be

made, as considered appropriate before

declaration of any dividend. [Cl. 123]

Declaration in the

event of

inadequate profits

Dividend to be declared in

accordance to Companies

(Declaration of dividend out of

Reserves) Rules, 1975 with a

maximum rate prescribed as 10 per

cent

Dividend to be declared out of the

accumulated profits transferred to reserves

in accordance to applicable rules

Declaration of

interim dividend

– Any restrictions

No restrictions Interim declaration may be declared out of

the surplus in P&L Account as well as

profits of the FY in which dividend is

sought to be declared. Failure in

compliance will bar the Company to

declare dividend during the period of non

compliance

BOOKS OF ACCOUNT

Details Companies Act, 1956 Companies Bill, 2012 [Cl. 129]

Consolidated

Statements

No Provisions

The financial statement shall be laid in

the AGM of that FY. In case of

subsidiary companies, the company

shall prepare a consolidated financial

statement of the Company and all

subsidiaries and lay before the AGM.

The Central Government shall have

the power to exempt a class or classes

of companies from any of the

requirement of this section. The clause

also provide the penalty where

company contravenes the provision of

this section.

For the purpose of above, "subsidiary"

shall include 'associate company' and

'joint venture'

LOAN AND INVESTMENT BY COMPANY


Exemptions [Section 372A]

Any loan made, any guarantee given or

any security provided or any investment

made by -

Banking company, or an insurance

company, or a housing finance company in

the ordinary course of its business, or a

company established with the object of

financing industrial enterprises, or of

providing infrastructural facilities;

Company whose principal business is the

acquisition of shares, stock, debentures or

other securities;

A private company, unless it is a

subsidiary of a public company;

To investment made in shares allotted in

pursuance of clause (a) of sub-section (1) of

section 81;

To any loan made by a holding company to

its wholly owned subsidiary;

To any guarantee given or any security

provided by a holding company in respect

of loan made to its wholly owned

subsidiary; or

To acquisition by a holding company, by

way of subscription, purchases or

otherwise, the securities of its wholly

owned subsidiary.

[Cl. 186]

- Loan made, guarantee given or

security provided by a banking

company or an insurance

company or a housing finance

Company in the ordinary course

of its business or a company

engaged in the business of

financing of companies or of

providing infrastructural

facilities;

- To any acquisition (i) made by a

non-banking financial company

whose principal business is

acquisition of securities.

- Exemption to NBFC shall be in

respect of its investment and

lending activities;

- Acquisition made by a company

whose principal business is the

acquisition of securities;

- Acquisition of shares allotted in

pursuance to further issue of

capital

RELATED PARTY TRANSACTIONS


Provisions/ scope thereof [Section 297]

A company is debarred from entering

into:

- Contracts relating to sale, purchase or

supply of any goods or materials and

services;

-Contracts relating to underwriting

subscriptions of shares, debentures of a

company.

Contracts cover the following specified

persons:-- Director/Relative of Director

of a Company; Firm where such

Director/Relative is a partner; Any

other partner of such firm as above;

Private company where such Director is

Director or member

Such transactions are subject to prior

approval by resolution passed by the

Board of Directors in a Board Meeting.

In case of paid up capital of Company

exceeds one crore, prior approval of the

Regional Director is required.

[Cl. 188]

A Company is debarred from

entering into:

-Contracts relating to: sale,

purchase or supply of any goods

or materials; buying/selling

/disposing otherwise any

property; leasing of any

property; availing/ rendering of

any services; appointment of

any agents for purchase or sale

of goods, materials, services or

property; such related party's

appointment to any office or

place of profit in the company,

its subsidiary or associate

company; underwriting

subscription of any securities/

derivatives of the company.

Contracts cover specified

persons under Section 2 clause

76 of the Bill defining the term

Related Party.

RELATED PARTY TRANSACTIONS … CONTD.


Exemptions are provided in the

case of:

1.Purchase/ Sale of goods and

materials:

(a) for cash at current Market

price

(b) Also services, the cost of

which does not exceed Rs. 5000

in any year during tenure of

Contract

2.Transactions by Banking /

Insurance Companies in the

ordinary course of Business.

Such transactions are

subject to prior approval

by resolution passed by

the Board of Directors in

a Board Meeting. In case

the paid up capital of the

Company/transaction

exceeds prescribed limit,

prior approval of the

shareholders is required.

Exemptions are provided

in the case of transactions

in ordinary course of

business, other than those

which are not an arms

length basis

COMPROMISES, ARRANGEMENTS AND

AMALGAMATIONS


How this can be

approved

To be approved by Majority

representing 3/4th in value of

the creditors or members or

class thereof present and voting

or by proxy.

Approval of High Court (NCLT)

Voting by Postal Ballot

added

Approval of High Court

(NCLT)

[Clause 230]

About the Valuation

Report

Valuation report not to be given

to shareholders/ creditors

alongwith notice convening

meeting

It now needs to be given

Objections against

the purpose

Objection can be made by any

shareholder or creditor. Such

objection can be made

irrespective of their

shareholding/ debt outstanding

Objection to be made only

by:

• persons holding more

than 10% shareholding; or

• having outstanding debt

of more than 5% of total

outstanding debt as per

the last audited balance

sheet

COMPROMISE, ARRANGEMENT AND

AMALGAMATION


Buy back of

Securities

The scheme can include

any buyback of securities

It can form part of it as per

the provisions of buyback.

On the Takeover

offer

Scheme cannot include a

Take over offer

As per the manner

prescribed. In the case of

listed Companies such offer

has to be as per SEBI

Regulations

Transfer – Listed

Company with

Unlisted Company

No specific requirement to

serve notice on Income tax

department and other

regulatory body

Notice needs to be served on

IT department, RBI, SEBI,

the Stock Exchanges, CCI,

Sectoral regulators/

authorities


AMALGAMATION


Merger – Indian

Companies with

Foreign Company

No Yes, with prior approval of

RBI

Takeover offer Scheme cannot include a

Take over offer

It may include in a prescribed

manner . In the case of listed

Companies such offer has to

be as per SEBI Regulations

Offer to sell

(Minority

Shareholders to

Majority

shareholder)

No May sell at the price

determined in accordance to

applicable rules


AMALGAMATION


1956


Purchase –

Minority

shareholding by

Majority

shareholder

No specific provision •Acquirer and/ or PAC or person/

group of persons holding 90 per

cent or more of the issued equity

capital of the Company by virtue of

amalgamation, share exchange,

conversion of securities or for any

other reasons, can purchase the

remaining equity shares of the

Company from minority

shareholders at a price determined

by registered valuer

•Minority shareholders may also

offer to the majority shareholders

to purchase their equity

shareholding in the Company at

the price determined by registered

valuer.

LOAN TO DIRECTORS


1956 [S. 295]


[Cl. 185]

Provisions • Provisions are

application only to

Public Companies

subject to the following

exceptions: - Banking

Companies; Holdings to

subsidiary Company ;

Private Company;

• Prior approval of the

CG is mandatory before

any Public Company

directly/indirectly

makes loan, gives

guarantee or provides

security to its Directors

or other specified

persons.

•Provisions are applicable only to both

Public and Private Companies subject

to the following exceptions:

• Managing or whole-time conditions of

service extended by company director,

as part of to all its employees or in

furtherance to any scheme approved by

a special resolution of its members.

• Company which in the ordinary course

of business provides loans ,gives

guarantees or securities for the due

repayment subject to the condition that

rate of interest is not less than the

bank rate declared by the Reserve Bank

of India.

REGISTERED VALUER


[New Provision – Cl.

247]

Provision relating to

Registered Valuer

No provisions prescribed Where valuation is to be

made under the Act, in

respect of any property,

stocks, shares,

debentures, ,securities or

goodwill or other assets or

net worth of a Company

or its liabilities, such

valuation shall be done by

a registered valuer.

REMOVAL OF NAMES OF COMPANIES

FROM THE REGISTER OF COMPANIES


1956


Grounds [Section 560]

A Company may be

struck off by ROC if

it has reasonable

cause to believe that

a Company is not

carrying on business

or operations

[Cl. 248]

Reasons for Strike off:

• subscribers to the memorandum

have not paid the subscription

money with 180 days from the date

of incorporation

• Company has failed to commence

its business within one year of its

incorporation

• Company is not carrying on any

business or operation for two

immediately preceding financial

year and has within such period

applied for status of a dormant

Company

WINDING-UP


1956 [Ss. 433 &

434]


Grounds • By Special

resolution

• If Company is

unable to pay its

debt.

• Business not

commenced within

one year of its

incorporation or

suspends its

business for the

whole year

• Minimum number

of member goes

below than as

prescribed i.e. 2 and

7 incase of Pvt. and

Public limited

Company

[Cl. 271]

• Requirement of minimum

number of member removed

• Following additional grounds

added:

i. Management of company

affairs in fraudulent manner

ii. Formation of Company for

fraudulent and unlawful

purpose

iii. Persons involved/ concerned

in the formation of Company

guilty of fraud, misfeasance or

misconduct in connection

therewith.

companies act, 1956 and companies bill, 2012

Documents