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BROAD COMPARATIVE STUDY Companies Act, 1956 vis--vis Companies Bill, 2012

Background

2003

(bill 2003 introduced by MCA in Rajya Sabha on 07.05.2003. For want of large no. of changes comprehensive review required)

2004
(concept Paper on new company law was placed on ministrys website. Govt. constituted JJ Irani Committee which gave report on 31.05.2005. Comprehensive review required)

2008
(Companies bill2008 introduced but lapse due to Lok Sabha Dissolution)

2009
Bill was introduced in Lok Sabha and referred to Parliamentary Standing Committee. In view of numerous amendments Govt. withdrew this bill and introduced Cos. Bill 2011. This is the bill was introduced in Dec2011 and passed in 2012.

Structure of Companies Act, 1956 & the companies Bill, 2012


Act
13 Parts 750+ Sections 15 Schedules

Bill
29 Chapters 470 Clauses (i.e. Sections) 7 Schedules

Arrangement of clauses
Chapter Title Clauses as Corresponding sections per 2012 Bill of Companies Act, 1956

I II III

Preliminary Incorporation of companies

1, 2 3 to 22

1 to 10 11 to 54 55 to 81

Prospectus and allotment of securities 23 to 42

IV V

Share capital and debentures

43 to 72

82 to 123 58A to 58B

Acceptance of deposits by companies 73 to 76

VI VII

Registration of charges Management and administration

77 to 87 88 to 122

124 to 145 146 to 197

Arrangement of clauses
VIII IX X XI Declaration and payment of dividend Accounts of companies Audit and auditors Appointment and qualification of directors Meeting of Board and its powers Appointment and remuneration of managerial personnel

123 to 127 128 to 138 139 to 148 149 to 172

205 to 207 209 to 223 224 to 233B 252 to 284

XII XIII

173 to 195 196 to 205

285 to 308 309 to 311

Chapter

Arrangement of clauses
Title

Clauses as per 2012 Corresponding sections of Bill Companies Act, 1956

XIV XV XVI XVII XVIII

Inspection, Inquiry and Investigation Compromise, Arrangements and Amalgamations Prevention of oppression and mismanagement Registered valuers Removal of names of companies from the Register

206 to 229 230 to 240 241 to 246 247 248 to 252

234 to 251 390 to 396A 397 to 409

560

XIX XX XXI

Revival and rehabilitation of sick companies Winding up Companies authorised to register under this act & Winding up of unregistered companies Companies incorporated outside India Government companies Registration offices and fees

253 to 269 270 to 365 366 to 378

424A to 424L 425 to 559 565 to 581 & 582 to 590 591 to 608 617 to 620 609 to 614A

XXII XXIII XXIV

379 to 393 394, 395 396 to 404

Arrangement of clauses
XV Companies to furnish information and statistics 405 615

XVI
XVII XVIII XIX

Nidhis
NCLT and NCLAT Special Courts Miscellaneous

406
407 to 434 435 to 446 447 to 470

620A
10FB to 10GF

621 to 658

Memorandum of Association Object Clause


Companies Act 1956
The MOA must have objects

Companies Bill 2012


The MOA will be required to

to be pursued divided in three parts i.e. between main, incidental or ancillary and other objects. (Section 13(1) (c & d)

state only the object for which the company is registered & any other matter considered necessary in furtherance thereof. Clause 4(1)(c) ( position before 1965)

Financial Year
Companies Act 1956
Companies are allowed to choose freely an accounting year. Though for tax purposes, the financial year runs from the April 1st to March 31st [Section 2(17)]

Companies Bill 2012


Financial year for companies will be set from April 1st to March 31st. However: A two year period is allowed to existing companies to adjust their accounting years, Special provisions have been provided for newly incorporated companies.

Financial Year
Companies Act 1956
It can not be fifteen months

Companies Bill 2012


For companies having

but may be shorter than a year. (Sec. 210)

subsidiaries in India and Indian companies having subsidiaries outside India (special approval process)special provisions have been provided.

[Clause 2(41)]

Private Company
Companies Act 1956
50 Members Prohibits any invitation and

Companies Bill 2012


200 Members Nothing is mentioned for

acceptance of deposits other than from directors, members and directors relatives [Section 3(1)(iii)]

acceptance of deposits [Clause 2(68)(ii)] Private company will be also governed by clause 73 for acceptance of deposits.

OPC
Companies Act 1956
No provision

Companies Bill 2012 The Bill introduced the


concept of One Person Company for the first time. [Clause 3(1)(c)] Clause 2(62) defines a OPC as a company which has only one person as a member. A One Person Company is required to be registered as a Private Limited Company.

OPC
Companies Act 1956

Companies Bill 2012


However, the Memorandum

of such a company should indicate the name of the person who shall, in the event of the subscribers death, disability or otherwise becomes the member of the company It is also allowed an exemption from holding AGM

Small Companies Companies Act


No such concept

1956

Companies Bill 2012

Having paid-up share capital of not

but SMC is defined in Companies (Accounting Standard) Rules 2006. Private Company concept is in both laws.

more than Rs. 5 million or amount prescribed, however the prescribed amount must not exceed Rs. 50 million (paid-up share capital with maximum of Rs. 50 million); or As per the last profit and loss account, turnover must not exceed Rs. 20 million or amount prescribed, however the prescribed amount must not exceed Rs. 200 million.

[Clause 85]

SMC defined:-

Small Companies
Companies Act 1956

Companies Bill 2012


Numbers of exemptions

Not listed or in process of listing 2. Not bank, FI or Insurance company 3. Turnover not exceeding Rs. 50 crores in preceeding year 4. Borrowing not exceeding Rs. 10 crores 5. Holding or Subsidiary which is not a SMC (Conditions satisfied at the end of year
1.

are provided to small companies with regard to reporting, board meetings, and procedure for mergers/amalgamations.

Transfer of shares of public company


Companies Act 1956
Shares of public companies

Companies Bill 2012


Shares of public companies

are freely transferrable. [Section 111A]

are freely transferrable. However, contract or agreement between 2 or more persons in respect of transfer of securities shall be enforceable as a contract. [Clause 58(2)]

Restriction of further offer of Buy-Back


Companies Act 1956
In case of Buy-Back made by

Companies Bill 2012


No Buy-Back up to period of 1

BOD (10% of the total paid up equity capital and free reserves), no further offer of buy back is permissible with in a period of 365 days reckoned from the date of the preceding offer of Buy-Back. [Section 77A(1)]

year from the date of preceding Buy-Back whether approved by BOD or Shareholders. [Clause 68(2)]

Dividend Transfer to reserves Companies Act 1956


No Dividend can be declared

Companies Bill 2012


A company to transfer

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. As specified in declaration of Dividend(Transfer of Reserves)Rules

voluntarily a portion of its profits to the reserves as consider appropriate, before declaration of any dividend. Mandatory transfer to reserve done away. [Clause 123(1)]

Declaration of dividend in case of in-adequate profits


In case of inadequacy or

Companies Act 1956

Companies Bill 2012


In case of inadequacy or

absence of profits in any F.Y, the company can declare dividend out of the reserves only after complying with the companies (Declaration of Dividend out of Reserves) Rules, 1975, wherein the maximum rate of dividend is prescribed as 10%. [section 205A(3)]

absence of profits in any F.Y, the company can declare dividend out of the accumulated profits transferred to reserve in accordance with the rules to be prescribed. [Clause 123(1)]

Restriction on declaration of dividend/interim dividend.


Companies Act 1956
Interim dividend may be

Companies Bill 2012

declared Subject to provision of Section 205 and rules frame there under. Section 205A, 205C, 206, 206A and 207 also applies to interim dividend. Section 2(14A): Dividend includes interim dividend.

Interim dividend may be declared out of the surplus in the Profit & Loss Account as well as profits of the financial year in which dividend is sought to be declared. In case company has incurred loss up to the preceding quarter of the current financial year then interim dividend shall not be declared at a rate higher than the average dividend declared by the company during the immediately preceding three financial years.

Holding-Subsidiary Company
Companies Act 1956
No Restriction.

Companies Bill 2012


Class or classes of holding

company as may be prescribed shall not have layers of subsidiary companies beyond prescribed numbers. (Clause 2(87) Subsidiary company not to hold shares of holding company. However it can have shares as trustee of other beneficiary or as legal representative. (Clause 19)

CSR
Companies Act 1956
No provision

Companies Bill 2012


By virtue of Clause 135, the

concept of CSR has been introduced. Company having net worth of Rs. 500 crores or more or turnover of Rs 1000 crores or more or net profit of Rs 5 crores or more during any financial year shall have to constitute CSR comiittee and implement CSR policies.

Auditors
Companies Act 1956
One year tenure

Companies Bill 2012


The Bill provides for mandatory

for auditors appointed at the AGM. [Section 224]

rotation of auditors every five years. Clause 139(2) prescribed that no listed company shall: a) Appoint an individual as auditor for more than one term of five consecutive years and b) An audit firm as auditor for more than two terms of five consecutive years.

Auditors
Companies Bill 2012 Companies Act 1956
Clause 139(3) empowers members of

the company to decide by resolution that the auditing partner and his team (of an audit firm appointed by the company) shall be rotated every year or that audit shall be conducted by more than one auditor.

Consolidation of Financial Statements Companies Bill


Companies Act 1956
By virtue of clause 41 of listing agreement

If the company has subsidiaries, (i) it may, in addition to submitting quarterly and year to date stand alone financial results to the stock exchange, shall also submit quarterly and year to date consolidated financial results within forty-five days from the end of the quarter; and (ii) while submitting annual audited financial results prepared on stand-alone basis, it shall also submit annual audited consolidated financial results to the stock exchange within sixty days from the end of the financial year.

In case a company

2012

has one or more subsidiaries, it shall in addition to stand alone financial statements if all the subsidiaries in the same form and manner as that of its own which shall also be laid before the AGM of the company.

Registered Valuer
Companies Act 1956
No provision provided for

Companies Bill 2012


When valuation is required to

registered valuer.

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. [Clause 247]

Acceptance of Deposits Eligibility for acceptance of deposits from public and shareholders
Companies Act 1956
Public companies are

Companies Bill 2012


Banking company, NBFC and

permitted to accept deposits from public and shareholders in accordance with Companies (Acceptance of Deposits) Rules 1975.(Section 58A)

such other company as the CG may specify, are permitted to accept deposits from public.

Acceptance of Deposits Eligibility for acceptance of deposits from public and shareholders
Companies Act 1956 Companies Bill 2012
A company may accept deposits from its members by passing a resolution in general meeting and subject to compliance of rules and subject to conditions which includes:Issuance Circular to member containing prescribed particulars. Obtaining credit rating Providing deposit insurance Depositing at least 15% of the amount of deposits maturing during current and next financial year in a scheduled bank to be called as deposit repayment reserve account (Clause73)

Kalani & Company

Acceptance of Deposits
Eligibility for acceptance of deposits from public and shareholders
Companies Act 1956

Companies Bill 2012


Public company having net worth or turnover as may be prescribed would be allowed to raise funds through public deposit Mandatory requirements for such companies to obtain rating from CRA (Clause 76)

Acceptance of Deposits Eligibility for acceptance of deposits from public and shareholders
Companies Act 1956

Companies 2012 Deposit acceptedBill before the


commencement of the new Act or any interest due thereon, shall (a) File a statement of old deposits within 3 months of such commencement and (b) repay within 1 year from such commencement or on date on which such payments are due whichever is earlier (Clause 74(1))

Acceptance of Deposits Eligibility for acceptance of deposits from public and shareholders
Companies Act, 1956

Companies Bill, 2012 Clause 73 is applicable both Public and Private Companies subject to compliance of such conditions and such rules prescribed by central govt. in consultation with RBI.

Inter-Corporate Loan, Guarantee, Security and Investment


Exemption is given to

Companies Act 1956

The provisions related to inter-

Companies Bill 2012

private companies under provisions of intercorporate loans, advances etc. [Section 372A]

corporate loans, guarantees, security and investments will also apply to private companies. No investment in companies more than two layers Listed companies shall take inter corporate loans and deposits not exceeding prescribed limit. (Clause 186)

Inter-Corporate Loan, Guarantee, Security and Investment

Companies Bill, 2012


In case loan, guarantee,

Companies Act, 1956

security or investment exceeds 60% of paid up capital and free reserve & Security Premium or 100% of free reserves, prior Special Resolution in GM. Financial Statement shall contain particulars prescribed in sub-clause (4). (Clause 186)

Resident Director
Companies Act 1956
No provision

Companies Bill 2012


It is mandatory for all companies to have at least one resident director, which is a person who has stayed in India or 182 days or more in the last calendar year. [Clause 149(3)]

Women Director
Companies Act 1956
No provision

Companies Bill 2012


For specified classes of companies, it will be mandatory to appoint at least one female director. [Clause 149(1)]

KMP Companies Act 1956


No provision

Companies Bill 2012


except in AS 18 Related Party Disclosures

Includes: Chief Executive Officer or Managing Director, Director or Manager, Company Secretary, Chief Financial Officer if appointed by the Board, Fulltime Directors, and Any other officer if prescribed. [Clause 51]

Appointment Of Whole Time Companies Bills,KMP 2012 Companies Act, 1956


Public Company having paid Every Company belonging to

up capital of Rs.5 Crore or more to have WTD or MD


(Sec. 269)

class or classes of companies as may be prescribed shall have KMPs


MD or CEO or Manager and

Company Secretary to be appointed Where Paid- up capital is 5 Crore or more


(Sec. 383)

in absence of a WTD Company Secretary Chief Financial Officer (Clause 203)

Independent Companies Act, 1956 Director Sec 292A contains provision of

Companies Bill 2012

independent director in audit committee (company having paid up capital not less than Rs 5 crores). In case of listed company clause 49 governs.

The Bill has

introduced the concept of Independent director and is defined in Clause 2(47).

Independent Director
Companies Act 1956
Where executive chairman

Companies Bill 2012


Clause 149 lays down that

half of the board strength should be of independent directors. If non-executive chairman is promoters or relative to promoters, in such case, there should be half of the strength of the independent directors.

every listed public company shall have at least one-third of the total number of directors as independent directors and the Central Government may prescribe the minimum number of independent directors in case of any class or classes of public companies.

Independent Director Companies Act 1956 Companies Bill 2012


Where non The company and independent

executive director not related to promoters, one third strength of the board should be of independent directors

director are required to abide by the provisions specified in Schedule IV. An independent director shall hold officefor a term up to five consecutive years on the Board of a company, but shall be eligible for re- appointment on passing of a special resolution by the company for another 5 year term. Thereafter 3 years gap.

Independent Companies Act 1956 Director Companies Bill 2012


Independent director shall

mean non-executive director, apart from receiving directors remuneration has no pecuniary relationship, transaction with company, its promoters, not occupying any position may effect independence[Clause 49(1A)] of listing Agreement.

The clause seeks to provide that an

independent director shall not be entitled to any remuneration, other than sitting fee, reimbursement of expenses for participation in Board meeting and profit related commission as approved by the members. The clause further provides for the provisions of rotation of independent director.

Nomination and Remuneration Committee(NRC)


Companies Act, 1956
Governed by Clause 49 of

Companies Bill, 2012


BOD of listed company or

listing agreement

such other company as may be prescribed shall constitute NRC


Consist of 3 or more non

executive director Not less than one half Independent Director Chairperson of Company may be member but not to chair (Clause 178)

Stakeholder Relationship Committee (SRC) Companies Act, 1956 Companies Bill, 2012
BOD of listed company or
Governed by Clause 49 of

listing agreement

such other company as may be prescribed shall constitute SRC


Where shareholders,

debenture holders, deposit holders exceeds 1000 in number Chairperson to be non executive director and such other member To resolve grievance of security holders
(Clause 178)

Maximum Directors
Companies Act 1956
The existing maximum limit is 12 directors.(Sec 259) According to the Act, a person can hold directorship in maximum 15 public companies.(Sec 275)

Bill 2012 A Companies company can have a maximum 15 directors but the limit can be increased after obtaining requite approval. A person can hold directorship in a maximum of 20 companies. However, out of the 20 companies, one cannot hold directorship in maximum 15 public companies. [Clause 149(1)]

Directors Duties and Liabilities Companies Act


1956 No provision directly. Not to hold office of profit. (Sec 314) General power of board (Sec 291)

Companies Bill 2012

Duties of the directors towards a company are prescribed in the Bill under Clause 166. A director shall act in accordance with the Companies Act. Work in accordance with the articles; Work in good faith promoting the object of the company and benefiting its members (shareholder), its employees, the community and for the protection of environment;

Directors Duties and Liabilities Companies Act 1956 Companies Bill 2012
Certain powers to be Work with due and reasonable

excercised by board only in meeting (Sec 292) Restriction on power of board (Sec 293 & 293A)

care, skill and diligence; exercising independent judgment; Not be involved in a position or activity that may be in a direct or indirect conflict of interest with company, or possibility of conflict;

Directors Duties and Liabilities Companies Act 1956 Companies Bill 2012
Board of directors shall Not take or attempt to take any undue

not exercise any power or do any act or things which beyond provision of Companies Act, Memorandum & articles of association or otherwise to be exercised in general meeting. (291(1) Proviso)

advantage either personally or for relatives, partners or associates. If any director is found guilty for achieving undue gain, the director will be liable to reimburse an amount equal to the gain to the company;

Directors Duties and Liabilities


Companies Act 1956
Not to assign office.

Companies Bill 2012


Cannot assign over its office and such

assignment made would be held to be void. In case of infringement, a director can Disclosure of be fined a minimum of Rs. 100.000 interest(Sec- 299)(one hundred thousand rupees) Every director who fails extending to Rs. 500,000 (five to comply with liable to hundred thousand rupees). penalty upto Rs 50,000.

(Sec 312)

Directors Duties and Liabilities


Companies Act, 1956
Duty to make disclosure of

shareholding (Sec-308) and disclosure of interest directly or indirectly in appointment of manager, managing director, wholetime director (Sec-302)

Definition of Related Party and Relative


Related Party is defined in

Companies Bill 2012 Related Party means


Director or his relative KMP or his relative A Firm, in which director,

Companies Act 1956 Member of HUF


Husband and Wife

AS-18 Relatives are defined in Sec.6

Others mentioned in

Schedule IA

manager or his relative is partner A Private Company, in which director, manager is director or member A Public Company, in which director or manager is a director or holds more than 2% of paid-up capital with relatives.

Related Party Definition Contd


Companies Act, 1956
Any Body Corporate whose

Companies Bill, 2012

BOD, MD or manager is accustomed to act in accordance with advice, directions or instructions of a director or manager Any Person whose advice, direction or instructions a director or manager accustomed to act Contd

Related Party Definition Contd Companies Act, 1956


Companies Bill, which 2012 is Any Company
holding, subsidiary or an associate or subsidiary of holding company to which it is also subsidiary Other Person as may be prescribed (Clause 2(76)) *Relatives Member of HUF Husband and Wife As prescribed (Clause 2(77)

Related Party Transactions


Scope of Section
Companies Act 1956
A company cannot enter into the contracts relating to : Sale, purchase or supply of any goods or materials; Sale, purchase or supply of any services; Underwriting the subsidiaries of any shares, debentures of a company

Bill 2012 A Companies company cannot enter into the contracts relating to :Sale, purchase or supply of any goods or materials; Selling or otherwise disposing of, or buying, property of any kind; Leasing of property of any kind; Availing or rendering of any services;

Scope of Section Companies Act 1956

Companies Bill 2012

Appointment of any agents for purchase

or sale of goods, materials, services or property; Appointment to any office or place of profit in the company, its subsidiary company or associate company; and Underwriting the subscription of any securities or derivatives thereof, of the company [Clause 188(1)]

Related Parties Transaction Approval required


Companies Act 1956
Prior consent of the BOD by

Companies Bill 2012


Prior consent of the BOD

resolution passed at Board Meeting Prior approval of Regional Director, in case paid up capital of the company is exceeding Rs 1 crore.

passed by resolution at Board Meeting Prior approval of the shareholders, in case the paid up capital of company or transaction amount exceeds prescribed limit. [Clause 188(1)]

Specified persons with whom contracts are covered


Companies Act 1956
Director of the company Relative of such director A firm in which such director or

Companies Bill 2012


Director or his relative KMP (key managerial

relative is a partner Any other partner of such firm in which director or relative is a partner Private company in which such director is a director or member (Sec. 297)

personnel) or his relative Firm, in which a director, manager or his relative is a partner Private company in which a director or manager is a member or director (Clause 2(76) & Clause 188)

Specified persons with whom contracts are covered


Companies Act 1956
Public company in

Companies Bill 2012

Public company in which a director or

which a director hold more than 2% of paid-up share capital. (Sec.300(2)

manager is a director or holds along with his relatives, more than 2% of its paid-up share capital Any body corporate whose BOD, managing director or manager is accustomed to act in accordance with the advice, directions or instructions of a director or manager (Clause 2(76) & Clause 188)

Specified persons with whom contracts are covered


Companies Act 1956 Companies Bill 2012
Any person under whose advice,

directions or instructions a director or manager is accustomed to act Any company which is: A holding, subsidiary or associate company of such company or A subsidiary or a holding company to which it is also a subsidiary company Such other persons as may be prescribed (Clause 2(76) & Clause 188)

Exemptions from Approval of Central Government


Companies Act 1956 Purchase/ sale of goods and
materials for cash at prevailing market price Purchase/ sales of goods and materials or services the cost of which does not exceed Rs. 5000/- in any year during the period of contract Any transaction of banking/ insurance company in the ordinary course of such company

Companies Bill 2012


Any transaction entered by

company in its ordinary course of business other than transactions which are not an arms length basis. [Clause 188]

Loan to Director
Applicability ofAct Section Companies 1956
directly or indirectly make any loan or give any guarantee or provide any security to its directors and other certain specified persons, except with the approval of CG. [Section 295(1)]

Companies Bill 2012

Public companies.[Section 295] Public and Private companies. No public company shall [Clause 185] No company shall directly or

indirectly make any loan including book debt or give any guarantee or provide any security to its directors or to any other persons in whom the director is interested. [Clause 185(1)]

Loan to Director Exemptions


Companies Act 1956
The said section does not apply to: Private Companies Holding to its Subsidiary Banking Companies. [Section 295(2)]

Companies Bill 2012


The said section does not apply to: Loan to MD/WTD As a part of contract of services extended to all its employees; or Pursuant to scheme approved by members by special resolution

Loan to Director Exemptions


Companies Act 1956
A company which in the

Companies Bill 2012

ordinary course of its business provides loan, guarantee or security for due repayment of any loan and charges interest thereon being not less than bank rate declared by RBI. [Clause 185]

Compromise, Arrangement and Amalgamation Approval required


Companies Act 1956
Approval by majority in

Companies Bill 2012


Approval by majority

number representing 3/4th in value of creditors or members or class thereof present and voting in person or by proxy. Approval of High Court (NCLT). [Section 391(2)]

representing 3/4th in value of the creditors or members or class thereof present and voting in person or by proxy or by postal ballot. Approval of High Court (NCLT). [Clause 230(6)]

Valuation Report
Companies Act 1956
No need to give Valuation

Companies Bill 2012


Valuation Repost to be given

Report to the Shareholders/ Creditors along with notice convening meeting. [Section 393]

to Shareholders/ Creditors along with notice convening meeting. [Clause 230(2)]

Objection to Compromise or Arrangement


Companies Act 1956
Objection to Compromise or

Companies Bill 2012


Objection to Compromise or Arrangement be made only by: Person holding >10% of the shareholding or Having outstanding debt of >5% of total outstanding debt as per the latest audited balance sheet. [Clause 230(3)]

Arrangement can be made by any shareholder or creditor, as the case may be, irrespective of their shareholding/ outstanding debt. [Section 396(4)]

Buy-Back of securities by scheme of compromise/arrangement


Companies Act 1956
A scheme of

Companies Bill 2012


A scheme of compromise or

compromise/arrangement can include any buy back of securities

arrangement can include buy back of securities, provided it is in accordance for buy-back provisions. [Clause 230(10)]

Takeover Offer
Companies Act 1956
A scheme of compromise and

Companies Bill 2012


A scheme of compromise and

arrangement cannot include a takeover offer.

arrangement may include takeover offer in a prescribed manner. In case of listed companies such takeover offer shall be as per SEBI Regulations. [Clause 230(11)]

Transfer of Listed Company with Unlisted Company


Companies Act 1956
No specific

Companies Bill 2012


In case of compromise/ arrangement

provisions for compromise/arrang ement between a listed transferor company and an unlisted transferor company and an unlisted transferee company

between a listed transferor company and an unlisted transferee company. NCLT to provide that transferee company shall remain unlisted company until it becomes listed and exit option be given to the shareholders of the transferor company wherein the exit price to be not less than the price under any SEBI Regulations. [Clause 232(3)(h)]

Notice of Meeting
Companies Act 1956
No specific provisions for

Companies Bill 2012


Notice to be served to CG,

serving of notice to Income Tax and other regulators

income-tax authorities, RBI, SEBI, stock exchanges, CCI (competition commission of India), sectored regulators/ authorities. [Clause 230(5)]

Fast Track Merger


Companies Act 1956
No specific provision for Fast

Companies Bill 2012


Fast track provisions made to

Track Merger.

facilitate merger between two or small companies or between holding company and its wholly owned subsidiary company or such other class of companies as may be prescribed.

Fast Track Merger


Companies Act 1956
Approval required of: ROC

Companies Bill 2012

Official liquidator
Member or class of members

holding at least 90% of total no. of shares Majority of creditors or class of creditors representing 9/10th in value. [Clause 233]

Merger of Indian Company with Foreign Company


Companies Act 1956
Indian company cannot be Foreign company, may with

Companies Bill 2012

merged with foreign company.

the prior approval of RBI, merge into Indian company or vice versa. The consideration for merger can be in the form of Cash and/or Depository Receipt. This would apply to foreign companies in jurisdiction as notified by CG. [Clause 234(2)]

Offer to sell by Minority shareholders to Majority shareholders


Companies Act 1956
No specific provisions for

Companies Bill 2012


The Minority shareholders of

offer to sell by the Minority shareholders to Majority shareholders

the company may also offer to sell their shares to the majority shareholders at a price determined in accordance with the rules as may be prescribed. [Clause 236]

Purchase of Minority shareholding by Majority shareholders


Companies Act 1956
No specific

Companies Bill 2012


Acquirer and/or PAC (person acting in

provisions for acquisition of Minority shareholders by Majority shareholders

concert) or person/group of persons holding 90% 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 form minority shareholders at a price determined by registered valuer.

Purchase of Minority shareholding by Majority shareholders


Companies Act 1956
Minority shareholders may

Companies Bill 2012

also offer to the majority shareholders to purchase their equity shareholding in the company at the price determined by registered valuer. [Clause 236]

Grounds for winding-up Companies Bill

Companies Act 1956 2012 Several criteria provided for winding- Certain criteria for up of company by NCLT such as:winding-up by If the company has, by special NCLT deleted like resolution, resolve that the company minimum be wound up number of If the company is unable to pay its members falling debt below prescribed If a company does not commence its limit, non business within 1 year from its commencement incorporation or suspends its business of business for 1 for a whole year year etc. If the minimum no. of members is reduced below 2 in case of private and 7 in case of public company. [Section 433]

Grounds for winding-up


Companies Act 1956

Companies Bill 2012

Additional ground providing for winding-up:NCTL (national company law tribunal) is of the opinion that The affairs of the company have been conducted in a fraudulent manner Company was formed for fraudulent and unlawful purpose

Grounds for winding-up


Companies Act 1956
The persons concerned in the

Companies Bill 2012

formation or management of its affairs have been guilty of fraud, misfeasance or misconduct in connection therewith. [Clause 271(1)]

Dormant Company
Companies Act 1956

Companies Bill 2012

Where a company is formed and

registered under this Act for a future project or to hold an asset or intellectual property and has no significant accounting transaction such a company or an inactive company may make an application to the registrar in such manner as may be prescribed for obtaining the status of Dormant company. [Clause 455 (1)]

Dormant Company
Companies Act 1956
The registrar on

Companies Bill 2012

consideration of application shall allow the status and issue a certificate. [Clause 455(2)] Registrar shall maintain a register of Dormant Company in such form as may be prescribed. [Clause 455(3)]

Grounds for strike off


Companies Act 1956
A company may be struck off

Companies Bill 2012


A company may be struck off by ROC for below reasons: Subscribers to the memorandum have not paid the subscription money within 180 days from the date of incorporation Company has failed to commence its business within 1 year of its incorporation

by ROC if it has reasonable cause to believe that a company is not carrying on business or operations. [Section 560(1)]

Grounds for strike off


Companies Act 1956
Company is not carrying on

Companies Bill 2012

any business or operation for 2 immediately preceding financial year and has within such period applied for status of dormant company . [Clause 455(6)

Serious Fraud Investigation Office (SFIO)


Companies Act 1956
SFIO was set up

Companies Bill 2012

The provision for establishment of

wide resolution dated 2-07-03 of Government independent office in ministry of finance, deptt of Company Affair to professionally investigate financial fraud of serious nature.

SFIO by the Central government is another significant feature of the Bill. Clause 212 empowers the Central Government to Assign the Investigation into the affairs of the said company to the SFIO.

Question

THANK YOU

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