Important changes from the Previous Companies Act 1956
Companies Act, 2013
Companies Act, 1956
|1.||Definition of “Charge”||Section 2(16): “charge” means an interest or lien created on the property or assets of a company or any of its undertakings or both as security and includes a mortgage.||No provision||Charge was not defined earlier but includes interest and lien in the definition provided now.|
|2.||Definition of “Listed Company”||Section 2(52): “listed company” means a company which has any of its securities listed on any recognised stock exchange||Section (23A): “listed public companies” means a public company which has any of its securities listed in any recognised stock exchange||Now covers all types of companies and not only public companies.|
|3.||Definition of “Officer who is in Default”||Section 2(60): “officer who is in default”, for the purpose of any provision in this Act which enacts that an officer of the company who is in default shall be liable to any penalty or punishment by way of imprisonment, fine or otherwise, means any of the following officers of a company, namely:—
(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
|Section 2(31) “officer who is in default”, in relation to any provision referred to in section 5, has the meaning specified in that section.
Section 5: For the purpose of any provision in this Act which enacts that an officer of the company who is in default shall be liable to any punishment or penalty, whether by way of imprisonment, fine or otherwise, the expression “officer who is in default” means all the following officers of the company, namely :
(a) the managing director or managing directors ;
(b) the whole-time director or whole-time directors ;
(c) the manager ;
(d) the secretary ;
(e) any person in accordance with whose directions or instructions the Board of directors of the company is accustomed to act ;
(f) any person charged by the Board with the responsibility of complying with that provision :
Provided that the person so charged has given his consent in this behalf to the Board ;
(g) where any company does not have any of the officers specified in clauses (a) to (c), any director or directors who may be specified by the Board in this behalf or where no director is so specified, all the directors :
Provided that where the Board exercises any power under clause (f) or clause (g), it shall, within thirty days of the exercise of such powers, file with the Registrar a return in the prescribed form.
|The scope of officer in default has been broadened. The share transfer agents, registrars and merchant bankers to the issue or transfer related issue of shares, are also brought under its ambit.
Directors who are aware of the default by the way of participation in board meeting or receiving the minutes will also be included in this category even if company has Managing Director/Whole Time Director/ other Key Managerial Personnel.
CFO is also included in this category. Moreover any Key Managerial Personnel/ person charged with duty of the compliance, will only be included under this category, if they knowingly commit the default.
|4.||Definition of “One Person Company”||Section 2(62): “One Person Company” means a company which has only one person as a Member.||No Provision||New definition, the concept was not there under the Companies Act, 1956.|
|a5.||Articles of Association||Section 5: (1) The articles of a company shall contain the regulations for management of the company.
(2) The articles shall also contain such matters, as may be prescribed:
Provided that nothing prescribed in this sub-section shall be deemed to prevent a company from including such additional matters in its articles as may be considered necessary for its management.
(3) The articles may contain provisions for entrenchment to the effect that specified provisions of the articles may be altered only if conditions or procedures as that are more restrictive than those applicable in the case of a special resolution, are met or complied with.
(4) The provisions for entrenchment referred to in sub-section (3) shall only be made either on formation of a company, or by an amendment in the articles agreed to by all the members of the company in the case of a private company and by a special resolution in the case of a public company.
(5) Where the articles contain provisions for entrenchment, whether made on formation or by amendment, the company shall give notice to the Registrar of such provisions in such form and manner as may be prescribed.
(6) The articles of a company shall be in respective forms specified in Tables, F, G, H, I and J in Schedule I as may be applicable to such company.
(7) A company may adopt all or any of the regulations contained in the model articles applicable to such company.
(8) In case of any company, which is registered after the commencement of this Act, in so far as the registered articles of such company do not exclude or modify the regulations contained in the model articles applicable to such company, those regulations shall, so far as applicable, be the regulations of that company in the same manner and to the extent as if they were contained in the duly registered articles of the company.
(9) Nothing in this section shall apply to the articles of a company registered under any previous company law unless amended under this Act.
|Section 26: There may in the case of a public company limited by shares, and there shall in the case of an unlimited company or a company limited by guarantee or a private company limited by shares, be registered with the memorandum, articles of association signed by the subscribers of the memorandum, prescribing regulations for the company.
Section 27: (1) In the case of an unlimited company, the articles shall state the number of members with which the company is to be registered and, if the company has a share capital, the amount of share capital with which the company is to be registered. (2) In the case of a company limited by guarantee, the articles shall state the number of members with which the company is to be registered. (3) In the case of a private company having a share capital, the articles shall contain provisions relating to the matters specified in sub-clauses (a), (b) and (c) of clause (iii) of sub-section (1) of section 3; and in the case of any other private company, the articles shall contain provisions relating to the matters specified in the said sub-clauses (b) and (c).
Section 28: (1) The articles of association of a company limited by shares may adopt all or any of the regulations contained in Table A in Schedule I. (2) In the case of any such company which is registered after the commencement of this Act, if articles are not registered, or if articles are registered, insofar as the articles do not exclude or modify the regulations contained in Table A aforesaid, those regulations shall, so far as applicable, be the regulations of the company in the same manner and to the same extent as if they were contained in duly registered articles.
Section 29: The articles of association of any company, not being a company limited by shares, shall be in such one of the forms in Tables C, D and E in Schedule I as may be applicable, or in a form as near thereto as circumstances admit :
Provided that nothing in this section shall be deemed to prevent a company from including any additional matters in its articles insofar as they are not inconsistent with the provisions contained in the form in any of the Tables C, D and E, adopted by the company.