Salient Feature of Company

Law 2013 from the perspective of

Company Act 1956
-Legal Aspect of Business in Retail
Introduction- Companies Act 1956

The Companies Act 1956 is administered by the Government of India through the
Ministry of Corporate Affairs and the Offices of Registrar of Companies, Official
Liquidators, Public Trustee, Company Law Board, Director of Inspection, etc.
The Act is 658 sections long.
This act states and discusses every single provision requires or may need to govern a
company.
It mentions what type on companies their differences, constitution , management,
members , capital, how should the shares should be issues, debentures, registration of
charge, at the end of the act it concludes the about winding up of a company, discussing
the situations a company needs to be winded up. The ways it should be done by volunteer
or through courts.
 Introduction Companies Act 2013

The Companies Act, 2013 (the 2013 Act) received the assent of the President of India on
29 August 2013, and has now become law.
The 2013 Act is the culmination of several years of effort to enact a new legislation
governing companies to replace the Companies Act, 1956 (the 1956 Act).
The 2013 Act marks a major step forward and appreciates the current economic
environment in which companies operate. It goes a long way in protecting the interests of
shareholders and removes administrative burden in several areas.
The 2013 Act is also more outward looking and in several areas attempts to align with
international requirements. There are many areas that are the subject to rules that are to
be issued under the 2013 Act.
 Milestones in making COMPANIES ACT,2013
enforceable
Companies bill Introduced in Lok sabha on 23rd October 2008
2008 for the first time, to replace 52 year old Companies Act

2012 Companies Bill passed in Lok Sabha on 18th December 2012

at 10:46 pm

2013 1956 Bill passed in Rajya Sabha on 8th August 2013 at 5:16
pm
Enacted as Companies Act 2013, with President assent on 29th
2013 August 2013
Structural Comparison
Companies Companies
act, 1956 act, 2013

13 parts 29 chapters

658 sections 470 sections

and 15 and 7
schedules schedules
 Salient features of new
Company Act 2013
Class action suits for Shareholders: The Companies Act 2013 has introduced new
concept of class action suits with a view of making shareholders and other stakeholders,
more informed and knowledgeable about their rights.

More power for Shareholders: The Companies Act 2013 provides for approvals from
shareholders on various significant transactions.

Women empowerment in the corporate sector: The Companies Act 2013 stipulates
appointment of at least one woman Director on the Board (for certain class of companies).

Corporate Social Responsibility: The Companies Act 2013 stipulates certain class of
Companies to spend a certain amount of money every year on activities/initiatives
reflecting Corporate Social Responsibility.

National Company Law Tribunal: The Companies Act 2013 introduced National
Company Law Tribunal and the National Company Law Appellate Tribunal to replace the
Company Law Board and Board for Industrial and Financial Reconstruction. They would
relieve the Courts of their burden while simultaneously providing specialized justice.

Fast Track Mergers: The Companies Act 2013 proposes a fast track and simplified
procedure for mergers and amalgamations of certain class of companies such as holding
and subsidiary, and small companies after obtaining approval of the Indian government.
Particulars Old Companies Act, 1956 New Companies Act,
2013
Members There can be maximum of 50 There can be maximum
members of 200 members
One person Does not exist The concept of one
Company person company was
introduced to form a
private limited
company. It will be
called OPC limited

Incorporation It can be treated as a It cant be treated as a

conclusive evidence conclusive evidence
because action can be
taken against
incorporation
Particulars Old Companies Act, 1956 New companies Act, 2013

Memorandum of It consists of name clause, It consists of all the clauses but in

situation clause, object clause, object clause the sub-clause
association Memorandum of subscription named other objectives is
clause etc excluded

Resident Director No such Provisions existed Every company shall have one
director who No such provision
existed. lives in India for a period of
180 days for last calendar year

First Board meeting No specific time Shall hold the first board
stipulated for holding the meeting within 30 days of
first board meeting its incorporation
Particulars Old Companies Act, 1956 New Companies Act,
2013

E-governance No such provisions existed Inspection of documents

in electronic form is made
mandatory

Women Director No such provisions existed In prescribed companies classes

or class women can be a director

Maximum number of Max. no of directors are 12 not Number increased to 15

beyond them with approval of
directors central government but only by passing a
special resolution
Particulars Old Companies Act, 1956 New Companies Act,
2013

Applicability of law Entire India except Sikkim. Entire India

Sikkim had their own
Companies Act

Issue of Bonus shares No such provisions existed Private limited companies

are not allowed to issue
bonus shares (clause 63
and 23)

Exit Option of No such provisions existed Shareholders can have

Shareholders exist option if the money
raised has not been
utilized
Particulars Old Companies Act, 1956 New Companies Act,
2013

Corporate Social No provisions for CSR Constitution of corporate social

responsibility (C.S.R.) Committee of
Responsibility (CSR) initiatives the board is compulsory for
companies: Having turnover of
rupees 1000 crore or more
or
Net worth of rupees 5000 crore or
more
or
a net profit of rupees 5 crore
during financial year.

Every financial year at least 2%

of the average net profits to be
spent on CSR activities
Provisions cited in companies act- 2013 for better
governance
New Provisions for Better Governance
Requirement to constitute Remuneration and Nomination Committee and
Stakeholders.
Grievances Committee.
Granting of More powers to Audit Committee.
Specific Section pertaining to duties of directors.
Continue

Mode of appointment of Independent Directors and their tenure.

Code of Conduct for Independent Directors.
Rotation of Auditors and restriction on Auditor's for providing non-audit
services.
Enhancement of liability of Auditors.
Conclusion
The Companies Act, 2013 is a progressive and forward looking which promises
improved corporate governance norms, enhanced disclosures and transparency.

Also it facilitates responsible entrepreneurship, increased accountability of

company managements and auditors, protection of interest of investors
particularly small and minority investors, better shareholder democracy.

Also it facilitates corporate social responsibility (CSR) and stricter enforcement

processes.
Conclusion
The new law also transits company secretaries to corporate governance
professionals. It brackets them in the category of key managerial personnel
and holds them responsible for implementation of all relevant laws
applicable to the companies.

It envisages a much larger role for them in the areas of secretarial audit,
restructuring, liquidation, valuation and much more. 43 Companies Act,
1956 vis--vis Companies Act, 2013