Companies Act, 2013 Most Awaited Statute

The new companies bill has been passed by both the Honble Houses of Parliament and it has also received the Honble President assent on 29th August, 2013 which will make it into a law replacing the nearly six-decade old regulations that govern corporates in the country. The new Companies Act, 2013 is a sweep change in the way companies operate and are regulated in the country.

In the new Companies Act, 2013 bucket various new provisions has been inserted which requires companies to spend on social welfare activities, empowers investors against any frauds committed by promoters, encourages companies to have women directors, and seeks to bring in greater transparency in corporate governance matters. It also provides about three dozen new definitions, including for terms such as frauds, promoters, turnover, small companies, associate companies and employee stock options.

Bird�s eye view on the new Companies Act, 2013

The Bill has 470 clauses as against 658 Sections in the existing Companies Act, 1956.
The entire bill has been divided into 29 chapters.
New chapters have been introduced, viz., Registered Valuers, Government companies, Companies to furnish information or statistics, Nidhis, National Company Law Tribunal & Appellate Tribunal, Special Courts.

New definitions are introduced in the Bill, some of which are accounting standards, auditing standards, associate company, CEO, CFO, 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.

The Bill particularly promotes good governance, relies heavily on self-regulation by the corporate sector, has removed several ambiguities that existed in the extant Act, and is a great attempt to bring it at par with the current realities of the economy.

There are some significant provisions in the new act that merit attention, such as additional powers to the Serious Fraud Investigation Office, auditor's liability for fraudulent conduct, one-person company, concept of independent directors, setting up of the National Company Law Tribunal (NCLT) and many more.

A glance on the key insertions and amendment in the new Companies Act, 2013

Private company definition changed	Limit on maximum number of members increased from 50 to 200
Private company which is a subsidiary of public company	Shall be deemed to be a public company
Listed Company	A company which has any of its securities listed on any recognised stock exchange
Associate company	A new concept introduced
Dormant company	A new concept introduced
Expert	A new definition introduced
Foreign company	Definition Changed
Key Managerial Personnel (KMP)	A new concept inserted
Officer in default	Definition changed
Promoter	Definition introduced
Subsidiary Company	Definition changed
One Person Company	New concept introduced
Small Companies	A new concept introduced
Provision of conversion of companies already registered	Introduced
Registration Process	Faster and compatible with e-governance.
Entrenchment Provision	Inserted in the Articles
Registered office	Provision changed
Commencement of business	Provision changed
Prospectus & Allotment of Securities	Provision changed
Share Capital & Debentures	Amendment in the recent provision
E-Governance	Maintenance & inspection of documents, books of accounts in electronic form, placing of financial statements on companies website, holding of board meetings through video conferencing/other electronic mode, voting through electronic means.
Number of Directors	Limit increased from 12 to 15
Women Director	One women director on prescribed companies
Resident Director	Every company shall have at least one director who has stayed in India for a total period of not less than 182 days in the previous calendar year.
Independent Directors	Concept introduced for the first time
Resignation of director	Provision changed
Notice of board meeting	Now required
Duties of directors	First time defined
Annual Return	Amended
Board's Report	Amended
Corporate Social Responsibility	Introduced for prescribed companies
Deposits	Provisions amended
Investment by companies	Clause modified
Company Secretary	Secretarial Audit & Secretarial Standard introduced
General Meeting	Provisions amended
Auditors	Provisions amended with respect to appointment, term and number of audit
Financial Statement	New Term introduced
National Financial Reporting Authority	Central Government may constitute
Investors Protection Measures	New measures to combat investor protection
Inspection, Enquiry and Investigation	New clause introduced
Restructuring and Liquidation	Provisions amended
Company Liquidator	New concept introduced paving way for Company Secretaries, Chartered Accountants, Advocates and Cost Accountants
Compounding of offences	Provisions amended
National Company Law Tribunal (NCLT)	Tribunal be named by NCLT
Special Courts	New concept for speedy disposal of cases
Mediation or Conciliation Panel	New concept introduced
Cross Border Mergers	Nod by Central Government
Registered Valuers	New Chapter on Registered Valuer introduced

The best thing about the new Companies Act is that it is simple, with greater clarity of intent and purpose. It replaces the old law with over 700 conflicting clauses with something shorter and sweeter: 470 clauses and all of it in 309 pages. Not bad for something that will govern all listed and unlisted companies in the country.

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Companies Act, 2013 Most Awaited Statute