companies act - 2013 vs 1956
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Post on 19-Aug-2014
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DESCRIPTIONBrief Comparison between Companies Act 1956 VS Companies Act 2013.
- THE COMPANIES ACT, 2013 Presented by JAYESH ALWANI New rules of the game
- This Presentation is prepared keeping the provisions of the 2013 Act and does not capture provisions of the Rules as the same are in Draft stage and are subject to change once the feedback of the stakeholders is received by MCA and incorporated in the final Rules. "Prescribed" or "as prescribed" or "as may be prescribed" used in this Presentation means the Rules as may be finalized by the CG.
- TODAYS OVERVIEW
- SALIENT FEATURES COMPANIES ACT 1956 COMPANIES ACT 2013 13 Parts 29 Chapters 658 Sections 470 Sections 15 Schedules 7 Schedules The entire act has been divided into 29 chapters.
- Passed in Lok Sabha on 18th December, 2012 (Bill no. 121 of 2011) Passed in Rajya Sabha on 8th August, 2013 (Bill no. 121 of 2011) Received Ascent of President 29th August, 2013 HIGHLIGHTS OF THE COMPANIES ACT, 2013
- NEW CHAPTERS INCLUDED IN COMPANIES ACT 2013 Chapter Description Chapter Number Registered Valuers Chapter 17 Government Companies Chapter 23 Companies to Furnish Information or Statistics Chapter 25 Nidhis Chapter 26 National Company Law Tribunal & Appellate Tribunal Chapter 27 Special Courts Chapter 28
- CHANGES REGARDING INCORPORATION RELATING MATTERS Sr no Particular Provisions under Companies Act 1956 Provisions under Companies Act 2013 1 Types of Companies Public company Private company Public company Private company One Person company 2 Maximum no of members for private companies A private company can have maximum of 50 members A private company can have maximum of 200 members 3 One person company No provision for OPC New Concept Introduced 4 Commencement of business Provisions applicable to public limited company only Now applicable to all companies having share capital
- The concept of One Person Company has been introduced and the said company will be formed as a private limited company. This will be called as OPC Limited [Section 2(62)]. A Company may be an OPC having a sole member. The memorandum of such OPC is required to indicate the name of the person who shall become member in the event of death or incapacity of the sole member. OPC is required to specifically mention the word one person company below the name wherever it is used. INCORPORATION OF COMPANIES Continued.
- Continued. 2013 Act provides additional flexibility to OPC. Some of the relaxations provided to OPC are as under: Cash flow statement is not required. Annual Return can be signed by CS or one director if there is no CS. Provisions of board meeting, quorum and interested director shall not apply to OPC. OPC should have minimum 1 director. OPC need not hold an AGM. Financial Statements can be signed by only one director.
- OBJECT CLAUSE OF MOA Provisions under Companies Act 1956 Provisions under Companies Act 2013 Object Clause is bifurcated into Main Objects, Incidental or Ancillary Objects and Other Objects. MOA to contain the objects for which the company is proposed to be incorporated and any matter considered necessary in furtherance thereof.
- FINANCIAL YEAR Financial Year in relation to any company or body corporate, means the period ending on the 31st day of March every year in order to align with the provisions of the income tax act. (Section 2(41))
- KEY MANAGERIAL PERSON (KMP) Companies Act 1956 Companies Act 2013 No provision except in AS 18 Related Party Disclosures Includes: CEO or MD or Manager; Company Secretary; WTD; CFO; and Such other officer as may be prescribed [Section 51]
- APPOINTMENT OF WHOLE TIME KMP Companies Act, 1956 Companies Act, 2013 Public Company having paid-up capital of Rs.5 Crore or more to have WTD or MD And Company Secretary Every Company belonging to class or classes of companies as may be prescribed shall have KMPs MD or CEO or Manager and in absence of a WTD Company Secretary Chief Financial Officer (Sec. 269) (Section 203)
- DIVIDEND TRANSFER TO RESERVES Companies Act 1956 Companies Act 2013 No Dividend can be declared more than 10% for any F.Y out of the profits of the company for that F.Y, except after the transfer of profit to the reserves such portion of profits of the company for that F.Y, not exceeding 10% of its profits. A company to transfer voluntarily a portion of its profits to the reserves as consider appropriate, before declaration of any dividend. Mandatory transfer to reserve done away. [section 205A(3)] [Section 123 (1)]
- REGISTERED VALUER Companies Act 1956 Companies Act 2013 No provision provided for registered valuer. When valuation is required to be made under the Act, in respect of any property, stocks, shares, debentures, securities or goodwill or other assets or net worth of company or its liabilities, such valuation shall be done by a registered valuer. [Section 247] The Central Government shall maintain a register of valuers.
- CHANGES REGARDING ISSUE OF SHARES CAPITAL Sr No Particular Provisions under Companies Act 1956 Provisions under Companies Act 2013 1 Issue of Shares at a discount Section 79 permits issue of shares at discount subject to compliance with conditions. Shares, other than sweat equity shares, cannot be issued at a discount. 2 Issue of preference shares for more than 20 years Section 80 prohibits issueof irredeemable preference shares and preference shares Redeemable after 20 years. Preference shares have to be redeemed within 20 years of issue except for the shares issued for prescribed infrastructure projects, provided a certain percentage of shares are redeemed annually at the option of shareholders Continued..
- CONTINUED Sr No Particular Provisions under Companies Act 1956 Provisions under Companies Act 2013 4 Notice of alteration of share capital Notice of redemption of preference shares is not required to be filed with ROC. Company shall file a notice in the prescribed form with the Registrar within a period of thirty days of redemption of redeemable preference shares. 5 Consolidation and division of shares Company permitted to consolidated or sub divide its shares by passing resolution in general meeting Consolidation and division which results in changes in the voting percentage of shareholders shall require approval of the Tribunal to be effective.
- AUDIT AND AUDITORS
- SCOPE OF AUDIT Scope of auditor enhanced to report on additional matters such as : the existence and operating effectiveness of internal financial controls any qualification, reservation and adverse remark relating to the maintenance of accounts any fraud by officers or employees on the Company (immediate reporting to CG): is being or has been committed Does not provide for audit qualifications to be in thick/bold or italics
- AUDITORS Every company is required at its first annual general meeting (AGM) to appoint an individual or a firm as an auditor. The auditor shall hold office from the conclusion of that meeting till the conclusion of its 6th AGM and thereafter till the conclusion of every 6th meeting The appointment of auditor is to be ratified at every AGM. Individual Auditors are to be compulsorily rotated every 5 years and audit firm every 10 years in listed companies & certain other classes of companies, as may be prescribed. Transition period of 3 years provided to the companies to comply with the mandatory rotation of auditor requirement. Continued
- Continued Internal audit may be made mandatory for prescribed companies. Auditors are restricted from rendering other services like bookkeeping, accounting etc. directly or indirectly to the company or its holding company or subsidiary company. The Act provides for new disqualifications of Auditor . Auditors can audit maximum 20 Companies including Private companies .
- Appointment of Auditor in unlisted companies Appointment Period of appointment At first AGM to hold office till conclusion of 6th AGM subject to ratification by members at every AGM Subsequent to hold office till conclusion of 6th meeting, subject to ratification by members at every AGM Appointment of Auditor in listed and specified class of companies Appointment Maximum period of appointment Of an individual as an auditor 1 term of 5 consecutive years Of an audit firm as an auditor 2 terms of 5 consecutive years Cooling off period of 5 years before next appointment
- Every listed company shall form an Audit Committee. The Audit Committee shall consist of minimum of three direct
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