Comp Act 2013

Companies Act - 2013
Accounts, Audit, Directors & Related Party Transactions
Overview
Overview Comparative
Comparative Analysis
Analysis
Special
Special Features
Features of
of New
New Act
Act
New
New Concepts
Concepts // Definitions
Definitions
Formation
Formation of
of Companies
Companies and
and MOA
MOA // AOA
AOA
Issue
Issue of
of Shares
Shares &
& Securities
Securities
Impact
Impact on
on Private
Private Limited
Limited Companies
Companies
For Private Circulation only

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CHARTERED ACCOUTANTS
Companies Act - 2013

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Overview Comparative Analysis
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Companies Act 2013

Lok Sabha approved on 18 December,
2012
Rajya Sabha approved on 8 August,
2013
The President of India approved on 29
August, 2013
Rules 340+ released on 31st March,
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Companies Act,1956
Companies Act, 2013
658 Sections
470 Sections
13 Parts
29 Chapters
15 Schedules
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07 Schedules
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Arrangement of Analysis
Chapter
Title
Sections of
Companies
Act, 2013
Corresponding
Sections of
Companies Act,
1956
1,2
1 to 10
Preliminary
II
Incorporation of Companies
3 to 22
11 to 54
III
Prospectus and allotment of securities
23 to 42
55 to 81
IV
Share Capital and Debentures
43 to 72
82 to 123
Acceptance of deposits by Companies
73 to 76
58A to 58B
VI
Registration of charges
77 to 86
124 to 145
VII
Management and administrations
88 to 122
146 to 197
VIII
Declaration and payment of dividend
123 to 127
205 to 207
IX
Accounts of Companies
128 to 138
209 to 223
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Chapter
(Contd..)
Title
Sections of
Companies
Act, 2013
Corresponding
Sections of
Companies Act,
1956
Audit & Auditors
139 to 148
224 to 233B
XI
Appointment and qualification of

directors
149 to 172
252 to 284
XII
Meeting of Board and its powers
173 to 195
285 to 308
XIII
Appointment and remuneration of

managerial personnel
196 to 205
309 to 311
XIV
Inspection, inquiry and Investigation
206 to 229
234 to 251
XV
Compromise, Arrangements and

Amalgamations
230 to 240
390 to 396A
XVI
Prevention of oppression and

mismanagement
241 to 246
397 to 409
XVII
Registered Valuers
247
--
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(Contd..)
Chapter
Title
Sections of
Companies
Act, 2013
Corresponding
Sections of
Companies Act,
1956
XVIII
Removal of names of companies from

the Register
248 to 252
560
XIX
Revival and rehabilitation of sick

companies
253 to 269
424A to 424L
XX
Winding up
270 to 365
425 to 559
XXI
Companies authorized to register

under this Act and Winding up of
unregistered companies
366 to 378
565 to 581 & 582

to 590
XXII
Companies incorporated outside India
379 to 393
591 to 608
XXIII
Government Companies
394 to 395
617 to 620
XXIV
Registration offices and fees
396 to 404
609 to 614A
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(Contd..)
Chapter
Title
Sections of
Companies
Act, 2013
Corresponding
Sections of
Companies Act,
1956
XXV
Companies incorporated outside India
405
615
XXVI
Nidhis
406
620A
XXVII
NCLT and NCLAT
407 to 434
10FB to 10GF
XXVIII
Special Courts
435 to 446
XXIX
Miscellaneous
447 to 470
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621 to 658
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Special Features of New Act
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Special Features
Self Regulation
Forced Compliance
Balancing of Private & Public Co(s)
Harmonise with internationally accepted practice
Strict Penal Provisions
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Special Features (Contd)

33 new definitions inserted
3 new schedules inserted :
o Corporate Social Responsibility (CSR)
o Code for independent directors
o Infrastructure projects & facilities
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New Concepts /Definitions
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New Concepts / Key Definitions

Associate Company [Section 2(6)]
2(6) defines Associate company, in relation to another

company, means a company in which that other company
has a significant influence, but which is not a subsidiary
company of the company having such influence and
includes a joint venture company.
Explanation.For the purposes of this clause, significant
influence means control of at least twenty per cent of total
share capital, or of business decisions under an agreement;
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New Concepts / Key Definitions (Contd.)

Book and paper and book or paper [section 2(12)]
Book and/or Paper include books of account, deeds, vouchers,
writings, documents, minutes, registers maintained on paper or
electronic form.
Books of account [Section 2(130]
Books of account includes records maintained in respect of:o (i) all sums of money received and expended by a company
and matters in relation to which the receipts and expenditure
take place.
o All sales and purchases of goods and services of the company
o The assets and liabilities of the company; and
o The items of cost as may be prescribed under section 148 in
the case of a company which belongs to any class of
companies specified under that section. (Cost Audit)
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Chief Executive Officer [Section 2(18)]
2(18) Chief Executive Officer means an officer of a company, who
has been designated as such by it;
Chief Financial Officer [Section 2(19)]
2(19) Chief Financial Officer means a person appointed as the
Chief Financial Officer of a company;
Control [Section 2(27)]
2(27) defines control shall include the right to appoint majority of
the directors or to control the management or policy decisions
exercisable by a person or persons acting individually or in concert,
directly or indirectly, including by virtue of their shareholding or
management rights or shareholders agreements or voting
agreements or in any other manner;
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Financial Statements [Section 2(40)]
o defines financial statement in relation to a company, includes
o (i) a balance sheet as at the end of the financial year;
o (ii) a profit and loss account, or in the case of a company
carrying on any activity not for profit, an income and
expenditure account for the financial year;
o (iii) cash flow statement for the financial year;
o (iv) a statement of changes in equity, if applicable; and
o (v) any explanatory note annexed to, or forming part of, any
document referred to in sub-clause (i) to sub-clause (iv):
o Provided that the financial statement, with respect to One Person
Company, small company and dormant company, may not include
the cash flow statement;
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Financial Year [Section 2(41)]
o 2(41) defines financial year, in relation to any company or body
corporate, means the period ending on the 31st day of March every
year, and where it has been incorporated on or after the 1st day of
January of a year, the period ending on the 31st day of March of the
following year, in respect whereof financial statement of the company
or body corporate is made up:
o Provided that on an application made by a company or body
corporate, which is a holding company or a subsidiary of a company
incorporated outside India and is required to follow a different
financial year for consolidation of its accounts outside India, the
Tribunal may, if it is satisfied, allow any period as its financial year,
whether or not that period is a year:
o Provided further that a company or body corporate, existing on the
commencement of this Act, shall, within a period of two years from
such commencement, align its financial year as per the provisions of
this clause;
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1. Need to align their Financial Year with the new requirement
within two years from the commencement of the new law.
2. Incorporated on/after 1 January to close books on 31 March
in the following year (i.e. more than 12 months period)
3. If incorporated before 1 January, then the year-end will be 31
March (period would be less than one year)
4. Not clear whether it is a one-time application to the Tribunal
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Key Management Personnel [Section 2(51)]
defines key managerial personnel, in relation to a company,

means
(i) the Chief Executive Officer or the managing director or the

manager;
(ii) the company secretary;
(iii) the whole-time director;
(iv) the Chief Financial Officer; and
(v) such other officer as may be prescribed;
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Net Worth [Section 2(57)]
o defines net worth means the aggregate value of the paid-up

share capital and all reserves created out of the profits and
securities premium account, after deducting the aggregate
value of the accumulated losses, deferred expenditure and
miscellaneous expenditure not written off, as per the audited
balance sheet, but does not include reserves created out of
revaluation of assets, write-back of depreciation and
amalgamation;
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Promoter [Section 2(69)
promoter means a person
(a) who has been named as such in a prospectus or is identified by the company in
the annual return referred to in section 92; or
(b) who has control over the affairs of the company, directly or indirectly whether as
a shareholder, director or otherwise; or
(c) in accordance with whose advice, directions or instructions the Board of

Directors of the company is accustomed to act:
Provided that nothing in sub-clause (c) shall apply to a person who is acting merely
in a professional capacity;
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Related Party [Section 2(76)] related party, with reference to a company,

means
o (i) a director or his relative;
o (ii) a key managerial personnel or his relative;
o (iii) a firm, in which a director, manager or his relative is a partner;
o (iv) a private company in which a director or manager is a member or
director;
o (v) a public company in which a director or manager is a director or
holds along with his relatives, more than two per cent of its paid-up
share capital;
o (vi) any body corporate whose Board of Directors, managing director or
manager is accustomed to act in accordance with the advice, directions
or instructions of a director or manager;
o (vii) any person on whose advice, directions or instructions a director or
manager is accustomed to act: (professionals excluded)
o (viii) any company which is
o
o
(A) a holding, subsidiary or an associate company of such company; or

(B) a subsidiary of a holding company to which it is also a subsidiary;
(ix) such other person as may be prescribed
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Relative [Section 2(77)]

o relative, with reference to any person, means any one who is
related to another, if
o (i) they are members of a Hindu Undivided Family;
o (ii) they are husband and wife; or
o (iii) one person is related to the other in such manner as may be
prescribed;
o Under the Rules, a person is related to the other if he or she is related
to another in the following manner:
Father (including Step-father) ; Mother (including step-mother)
Son (including Step-son); Sons wife
Daughter; Daughters husband
Brother (including step-brother)
Sister (including step-sister)
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Small Company [Section 2(85)]
o small company means a company, other than a public company,

o (i) paid-up share capital of which does not exceed fifty lakh rupees
or such higher amount as may be prescribed which shall not be
more than five crore rupees; or
o (ii) turnover of which as per its last profit and loss account does not
exceed two crore rupees or such higher amount as may be
prescribed which shall not be more than twenty crore rupees:
o Provided that nothing in this clause shall apply to
o (A) a holding company or a subsidiary company;
o (B) a company registered under section 8 (Non-Profit Organization);
or
o (C) a company or body corporate governed by any special Act;
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Subsidiary company [Section 2(87)]
o subsidiary company or subsidiary, in relation to any other company (that is
to say the holding company), means a company in which the holding company
o (i) controls the composition of the Board of Directors; or
o (ii) exercises or controls more than one-half of the total share capital either at its
own or together with one or more of its subsidiary companies:
o Provided that such class or classes of holding companies as may be prescribed
shall not have layers of subsidiaries beyond such numbers as may be
prescribed.
o Explanation.For the purposes of this clause,
o (a) a company shall be deemed to be a subsidiary company of the holding
company even if the control referred to in sub-clause (i) or sub-clause (ii) is of
another subsidiary company of the holding company;
o (b) the composition of a companys Board of Directors shall be deemed to be
controlled by another company if that other company by exercise of some power
exercisable by it at its discretion can appoint or remove all or a majority of the
directors;
o (c) the expression company includes any body corporate;
o (d) layer in relation to a holding company means its subsidiary or subsidiaries;
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Sweat Shares [Section 2(88)]

o sweat equity shares means such equity shares as are issued by a
company to its directors or employees at a discount or for
consideration, other than cash, for providing their know-how or
making available rights in the nature of intellectual property rights or
value additions, by whatever name called;
Turnover [Section 2(91)]

o turnover means the aggregate value of the realisation of amount
made from the sale, supply or distribution of goods or on account of
services rendered, or both, by the company during a financial year;
(Ind AS 18 Excludes Taxes)
Total Share Capital

o Total Share Capital means the aggregate of the paid-up equity share
capital and convertible preference share capital
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Sick Company [Section 253(1)]
o Where on a demand by the secured creditors of a company
representing fifty per cent or more of its outstanding amount of debt,
the company has failed to pay the debt within a period of thirty days
of the service of the notice of demand or to secure or compound it to
the reasonable satisfaction of the creditors, any secured creditor may
file an application to the Tribunal in the prescribed manner along with
the relevant evidence for such default, non-repayment or failure to
offer security or compound it, for a determination that the company
be declared as a sick company.
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Dormant Company [Section 455]

o
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 a
dormant company.
Inactive Company
o inactive company means a company which has not been
carrying on any business or operation, or has not made any
significant accounting transaction during the last two financial
years, or has not filed financial statements and annual returns
during the last two financial years;
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Significant Accounting transaction means any transaction
other than:
o (a) payment of fees by a company to the Registrar;
o (b) payments made by it to fulfil the requirements of this
Act or any other law;
o (c) allotment of shares to fulfil the requirements of this
Act;
o (d) payments for maintenance of its office and records
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Types of Companies - Private Company; Public Company & One

Person Company (OPC).
Private Company
Section 2(68) defines private company means a company and which

by its articles,
o (i) restricts the right to transfer its shares;
o (ii) limits the number of its members to two hundred:
o
o
o
o
Joint holders treated as one

Employees/ex-employees who have taken shares while in employment
excluded.
(iii) prohibits any invitation to the public to subscribe for any

securities of the company; and
having a minimum paid-up share capital of one lakh rupees or
such higher paid-up share capital as may be prescribed,
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Public Company
o Section 2(71) defines public company means a company which
o (a) is not a private company;
o (b) has a minimum paid-up share capital of five lakh rupees or such
higher paid-up capital, as may be prescribed:
o Provided that a company which is a subsidiary of a company, not
being a private company, shall be deemed to be public company for
the purposes of this Act even where such subsidiary company
continues to be a private company in its articles ;
One Person Company
2(62) defines One Person Company means a company which has

only one person as a member;
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Companies with charitable objects [Section 8]
(1) Where it is proved to the satisfaction of the Central Government

that a person or an association of persons proposed to be registered
under this Act as a limited company
o
o
o
(a) has in its objects the promotion of commerce, art, science,

sports, education, research, social welfare, religion, charity,
protection of environment or any such other useful object;
(b) intends to apply its profits, if any, or other income in
promoting its objects; and
(c) intends to prohibit the payment of any dividend to its
members,
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Expert 1(38): Includes an Engineer, Valuer, a CA, a CS or a Cost

Accountant and any other person who has the power or authority
to issue a certificate in pursuance of any Law for the time being in
force
Fraud (Section 447): The term Fraud, first time defined in the Act.
Any person who is found to be guilty of fraud shall be punishable

with imprisonment for a term, which shall not be less than six
months but which may extend to ten years and shall also be liable
to fine, which shall not be less than the amount involved in the
fraud. Where the fraud involves public interest, the term of
imprisonment shall not be less than three years
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Formation of Companies
And
MOA / AOA
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Formation of Companies and MOA / AOA

Sr.
no.
Particulars
Companies Act,
1956
Companies Act, 2013
Types of Companies
Private Company
Public Company
Private Company
Public Company
One Person Company
Maximum number of
members for private
companies
A private company
can have a
maximum of 50
members
A private company can

have a maximum of
200 members
Commencement of
Business
Provision is
applicable only to
Public limited
companies
Now applicable to all

companies having
share capital
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Formation of Companies and MOA / AOA (Contd..)

Sr.
no.
Particulars
Companies Act, 1956
Companies Act, 2013
Registered
Office
Companies are required to

furnish the details of the
Registered Office of the
company by filing Form 18
at the time of
incorporation
A Company shall on and

from the 15th day of its
incorporation to have a
registered office capable
of receiving &
acknowledging
communications and
notices as may be
addressed to it
Object Section
of MOA
Object clause 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.
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Reservation of Name (Form INC. 1)
Applicant to have DIN
Memorandum of Association
o
o
o
o
o
o
o
Name Clause
Domicile Clause
Objects Clause
Capital Clause
Liability Clause
Subscription Clause
Formats Schedule I Tables A - E
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Content: The 2013 Act specifies the mandatory content for the
memorandum of association which is similar to the existing
provisions of the 1956 Act and refers inter-alia to the following:
Name of the company with last word as limited or private limited as
the case may be
State in which registered office of the company will be situated
Liability of the members of the company
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Application for Reservation of Name (Form INC. 1)
Undesirable name
Name Clause
o
o
o
o
o
Should not be identical with or resemble too nearly to the name of

an existing company
Should not be such that its use will constitute an offence under
any law for the time being in force
Is undesirable in the opinion of the Central Government
Should not contain any word or expression which
is likely to give the impression that the company is in any way
connected with or having the patronage of the Government or
local authority, corporation or body constituted by the
Government; or
may be prescribed
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Where the application for availability of name was made by
furnishing wrong or incorrect information:
A) where the company is not incorporated : Cancel the
reservation of name, and the applicant shall be liable to a
penalty upto one lakh rupees
B) where the company is incorporated :
o
o
o
o
Show cause to be issued

Direct the company to change its name within 3 months after
passing Ordinary resolution
Strike off the name of the company
Make a petition for winding up of the company
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Application for change of name
Form No. INC. 24
Special Resolution [File Form no. MGT. 14]
Reasons for change of name
Relevant extract of minutes/resolutions
Certificate of Incorporation pursuant to change of name will be
issued by ROC in Form No. INC. 25. Change of name effective from
the date of issue of such certificate
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A company shall on or from the fifteenth day of its incorporation
and at all times thereafter have a registered office capable of
receiving and acknowledging all communications and notices
addressed to it. (Form INC. 22)
Verification of the registered office:
o
Registered document of title or Notarised copy of lease/rent

agreement
Authorisation from the owner/authorised occupant
Document of connection of utility service depicting the name of

the owner
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In case of change of Registered office from one State to
another:
o
o
o
o
o
o
o
o

Application for approval to Regional Director in Form No. INC. 23
Copy of Memorandum and Articles of Association
Copy of extract of minutes
Copy of challan for fees paid
Letter of Authority.
Advertisement to be published in Form No. INC. 26
File Form No. INC. 28 after the order is passed by the Regional
Director.
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In case of change of Registered office from one State to
another (Contd.) :
o
o
Form No. INC. 22 for giving notice to Registrar of Companies

after approval from RD is received.
List of debenture-holders, depositors, creditors or lenders and a
notice to them seeking objections, if any.
Other requirements (Section 12)

o
o
o
Paint or affix its name and address outside its registered office
Engrave its name on the company seal
Print name, registered office address, CIN, website address,
contact details on all its business letters, billheads, letter
papers, notices, and other official publications (Rule 26)
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Objects clause to state

o
A) The objects for which the company is incorporated
o
B) any matter considered necessary in furtherance thereof
The basic purpose in the 1956 Act for such a classification as set
out in section 149 of the 1956 Act, is to restrict a company from
commencing any business to pursue other objects of the company
not incidental or ancillary to the main objects except on satisfaction
of certain requirements as prescribed in the 1956 Act like passing a
special resolution, filing of declaration with the ROC to the effect of
resolution.
Reservation of name: The 2013 Act incorporates the procedural

aspects for applying for the availability of a name for a new
company or an existing company in sections 4(4) and 4(5) of 2013
Act.
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Change of objects for which money is raised through prospectus:
Send Notice for passing resolution through postal ballot to the

members/shareholders. Notice to contain the following particulars: the
total money received, utilised for the objects, unutilised money (raised
through prospectus), justification, estimated impact on the
earnings/cash flow and other relevant information. The place from
where a copy of the resolution to be passed can be obtained. The
notice should be hosted on the companys website.
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Types of shares
o
Equity Shares
Equity with differential rights
Preference Shares
The number of shares, each subscriber to the MoA agrees

to subscribe, which shall not be less than one share, shall
be indicated opposite/against his name.
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Limited by Share Capital
Limited by Guarantee
o
With share capital
Without share capital
Right to participate in the divisible profits to a person

other than a member is void
Unlimited Company
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The MoA and the AoA shall be signed each of the subscribers giving
their name, address, description and occupation, before at least one
witness who shall sign giving the same details and state that:
o
I witness to the subscriber(s), who has/have subscribed and signed in

my presence (date and place); Further I have verified his/her/their identity
details for their identification and satisfied myself of his her/their
identification particulars as filled in.
Rules specify in case where:

o
The subscriber is an illiterate
The subscriber is a foreign national residing outside India.
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Articles of Association
o
o
Entrenchment provisions [Section 5(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.
Formats Schedule I Tables F - J
Articles of association
The 2013 Act introduces the entrenchment provisions in respect of

the articles of association of a company. An entrenchment provision
enables a company to follow a more restrictive procedure than
passing a special resolution for altering a specific clause of articles
of association. A private company can include entrenchment
provisions only if agreed by all its members or, in case of a public
company, if a special resolution is passed [section 5 of 2013 Act].
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Certificate of Incorporation (Form INC. 11)
Copies of documents in relation to the registration of the company,

and filed with the Registrar at that time, should be maintained and
preserved till the dissolution of the company.
Consequences of formation of the company on the basis of false or

incorrect information
Certificate for Commencement of Business

o
o
Declaration (FORM INC. 21)

Proof of address - verification of address (along with Form INC. 22)
Proof of Registered Office Deed/Agreement/Rent Receipt. Copy of
recent (not older than two months) utility bills at the address. NOC to
use the office as registered office from the owner.
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Documents to be submitted for incorporation of a company, (other
than OPC and company with licence under Section 8):
o
Application for Incorporation of Company (Form INC. 7)
Declaration regarding compliance (Form INC. 8)
Affidavit regarding his non-conviction in any offence or guilty of any

fraud or misfeasance or for any breach of any duty under the company
law during the last five years (Form INC. 9)
Form for verification of signature of subscribers (Form INC. 10). NOC

in case there is change in promoters.
Address for correspondence till the registered office is established.
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Documents to be submitted for incorporation of a company, (other

than OPC and company with licence under Section 8) (Contd.):
o
Memorandum and Articles of Association
Particulars of subscribers including proof of identity, proof of residence

and PAN Card. Proof of nationality in case of foreign nationals.
Particulars of first directors including proof of identity, proof of

residence and PAN card.
Consent and other directorships/interests of the first directors
Entrenched Articles of Association, if any.
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One Person Company

o
Deemed to be a private company
MoA shall indicate the name of the other person (Form INC. 2) to be filed
at the time of incorporation, with his prior consent (Form INC. 3), who
shall in the event of the subscribers death or his incapacity to contract,
become the member of the company.
Withdrawal of consent by such other person (Form INC. 4) within thirty

days of such withdrawal
Subscriber may change the name of such other person (Form INC. 4)
within thirty days of the intimation to the company.
Duty of the subscriber to notify the change in the name of such other
person (Form INC. 4).
CA Suhas Deshpande
KIRTANE & PANDIT


One Person Company (Contd.)
Only a natural person who is an Indian citizen and resident
in India can incorporate an OPC or be a nominee for the
sole member of a OPC.
Resident shall mean a person who has stayed in India for >
182 days in the immediately preceding calendar year.
One person can form only one OPC.
Minors cannot be members or hold shares.
CA Suhas Deshpande
KIRTANE & PANDIT


One Person Company (Contd.)
Restrictions:
o
o
o
Cannot be converted into a company with licence u/s 8 of the Act.

Cannot carry on non-banking financial investment activity
including investment in securities of any body corporate.
Cannot voluntarily convert into any kind of company unless:
Two years have elapsed since the date of incorporation of the OPC
Form INC. 6)
The paid up share capital is increased beyond Rs. 50 lakhs (being the
threshold limit of paid up share capital).*
The average annual turnover during the immediately preceding three
financial years (relevant period) exceeds Rs. 2 crores.*
* to be mandatorily converted Rule 6(1). (Form INC. 5)
CA Suhas Deshpande
KIRTANE & PANDIT


Documents to be submitted for incorporation of an OPC:
o
o
o
o
o
o
o
o
Application for Incorporation of OPC Form INC. 2

Nominee Consent Form Form INC. 3
Affidavit regarding his non-conviction in any offence or guilty of
any fraud or misfeasance or for any breach of any duty under the
company law during the last five years (Form INC. 9)
Form for verification of signature of subscribers (Form INC. 10).
List of all the companies having the same registered office, if any.
Particulars of member including proof of identity, proof of
residence and PAN Card.
Particulars of nominee including proof of identity, proof of
residence and PAN Card.
Proof of Registered Office Deed/Agreement/Rent Receipt. Copy
of recent (not older than two months) utility bills at the address.
NOC to use the office as registered office from the owner.
CA Suhas Deshpande
KIRTANE & PANDIT


Documents to be submitted for incorporation of a company
with licence under Section 8 :
To the Regional Director:
o
o
o
o
o
o

Application for licence under Section 8
Memorandum and Articles of Association (Form INC. 13)
Declaration by a chartered accountant/company secretary/cost
accountant, regarding compliance (Form INC. 14)
Declaration by the applicant in Form INC, 15
[Form No. INC. 26, in case of existing company applying for
licence u/s 8(5)]
CA Suhas Deshpande
KIRTANE & PANDIT


Documents to be submitted for incorporation of a company with
licence under Section 8 (Contd.) :
To the Regional Director (Contd.):
o
o
o
o
The copies of Balance Sheets, Profit & Loss Account of the

immediately preceding two financial years.
The statement showing in details of assets and liabilities of the
company- as on the date of application or in a such extended
period or within thirty days preceding that date,
An estimate of future annual income and expenditure for next
three years
Certified copies of resolutions passed in general board meetings
relating to registration of the company u/s 8.
CA Suhas Deshpande
KIRTANE & PANDIT


Documents to be submitted for incorporation of a company
with licence under Section 8 (Contd.) :
To the Registrar of Companies:
o
o
o
o
o

Memorandum and Articles of Association as approved by the
Regional Director (Form INC. 13)
Copy of licence under Section 8 issued by the Regional Director
[Form INC. 16 (new company) or Form INC. 17 (existing
company), as the case may be]
Declaration regarding compliance (Form INC. 8)
Address for correspondence till the registered office is
established.
CA Suhas Deshpande
KIRTANE & PANDIT


Documents to be submitted for incorporation of a company with
licence under Section 8 (Contd.) :
To the Registrar of Companies (Contd.):
o
o
o
o
o
Affidavit regarding his non-conviction in any offence or guilty of

any fraud or misfeasance or for any breach of any duty under the
company law during the last five years (Form INC. 9)
Form for verification of signature of subscribers (Form INC. 10).
NOC in case there is change in promoters.
Particulars of subscribers including proof of identity, proof of
residence and PAN Card. Proof of nationality in case of foreign
nationals.
Particulars of first directors including proof of identity, proof of
residence and PAN card.
Consent and other directorships/interests of the first directors
CA Suhas Deshpande
KIRTANE & PANDIT


Certificate for Commencement of Business
o
All companies, whether public or private, can start business

operations only after obtaining the Certificate for commencement
of Business
Declaration prior to the commencement of business/exercising

borrowing powers (Form No. INC. 21)
Specimen Signatures (Form No. INC. 10)
Certificate of registration from RBI, in case of NBFCs
CA Suhas Deshpande
KIRTANE & PANDIT


Conversion of Section 8 company into company of any other
kind
o Apply for licence under Section 8 to the Regional Director (RD) in
Form No. INC 18 along with the following documents:
o Memorandum & Articles of Association as approved by the RD.
o Copies of resolutions passed at the Board Meetings relating heretoabove.
o Notice of the general body meeting and a copy of special resolution
passed relating hereto-above.
o Certificate from CA/CS/CWA in practice
o Statement of Assets and Liabilities duly certified by the auditor
within 30 days thereof.
o Audited financial statements and annual returns for immediately
preceding two years
o Written consent/NOC from lenders/creditors, if any.
CA Suhas Deshpande
KIRTANE & PANDIT


Conversion of Section 8 company into company of any other
kind (contd.)
o
o
o
NOC from sectoral regulatory authority such as Chief

Commissioner of Income Tax, Income Tax Officer, Charity
Commissioner, Chief Secretary, State Government having
jurisdiction over the company. Proof of notice given to such
sectoral authorities to be attached.
Details of donation/grants etc. received since incorporation..
Declaration that no portion of the income of the company or
property had been paid or transferred, directly or indirectly, as
dividend or bonus or otherwise to members or any persons
claiming through them
Advertisement to be published in two local newspapers and
hosted on the companys website (Form No. INC 19)
CA Suhas Deshpande
KIRTANE & PANDIT


Conversion of Public into private company or private into public
company
o
o
o
File Special Resolution (Form No. INC. MGT. 14)

Application to ROC Form No. INC. 27
Certificate of Incorporation pursuant to change of name will be
issued by ROC in Form No. INC. 25
Notice of Order of any Court or any other competent authority

Notify ROC in Form No. INC. 28.
Alteration of Memorandum of Association
o Objects Clause
o Capital Clause
CA Suhas Deshpande
KIRTANE & PANDIT

Issue of Shares & Securities
CA Suhas Deshpande
67
KIRTANE & PANDIT


Issue of Securities
o
o
o
o
A) Public Offer includes initial public offer, further public offer as

also offer of sale of securities by existing shareholder(s) to the
public
B) Private Placement
C) Rights Issue
C) Bonus Shares
Issue by companies having share capital

o
o
Public companies any of the modes specified above.

Private companies any of the modes specified above except
public offer
CA Suhas Deshpande
KIRTANE & PANDIT


Important Changes regarding Share Capital
Sr.
no.
Particulars
Companies Act, 1956
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
issue of 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 shares holders.
CA Suhas Deshpande
KIRTANE & PANDIT

Issue of Shares & Securities (Contd..)

Important Changes regarding Share Capital
Sr.
no.
Particulars
Companies Act, 1956
3.
Issue of shares
on private
placement,
bonus shares
and GDRs
No specific provision for

issue of shares on private
placement, bonus shares
and GDRs exist in the
present Act.
Specific provision introduced for

issue of shares on private
placement, bonus shares and
GDRs in the Act.
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 hares
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
CA Suhas Deshpande
Companies Act, 2013
KIRTANE & PANDIT


Prospectus
o
o
o
Abridged Prospectus means a memorandum containing such salient

features of a prospectus as may be specified by the SEBI by making
regulations in this behalf
Shelf Prospectus means a prospectus in respect of which the
securities or class of securities included therein are issued for
subscription in one or more issues over a certain period without the
issue of a further prospectus
Information Memorandum [Form No. PAS-2]
Red Herring Prospectus means a prospectus which does not include
complete particulars of the quantum or price of the securities
included therein.
Deemed Prospectus Where a company allots or agrees to allot any
securities of the company with a view to all or any of the securities
being offered for sale to the public, any document by which the offer
for sale is made shall, for all purposes , be deemed to be a
prospectus issued by the company.
Advertisement [Form No. PAS-1]
CA Suhas Deshpande
KIRTANE & PANDIT


Contents of Prospectus
Refer Section 26 of the Act

Refer Rules 3, 4, 5 and 6 of Companies (Prospectus and Allotment)
Rules, 2014
Offer of Sale by members Rule 8

Variation in terms of contracts or objects for which prospectus
was issued Rule 7
o
Advertisement to be published in Form No. PAS 1.
Dematerialisation of securities Rule 9
CA Suhas Deshpande
KIRTANE & PANDIT


Allotment in case of issue of securities by public offer, shall be
made only after the minimum subscription, as specified in the
prospectus) is received within thirty days from the date of issue
of prospectus
Return of Allotment of Securities [Form No. PAS 3]
o
Shall be within 30 days of the date of allotment
CA Suhas Deshpande
KIRTANE & PANDIT


Private placement means any offer of securities or invitation to
subscribe securities to a select group of persons by a company
(other than by way of public offer) through issue of private placement
letter and which satisfies the conditions contained in Section 42,
Private placement offer letter (PPOL) [Form No. PAS. 4]
The offer to be made to upto 50 persons, but not exceeding 200
persons in the aggregate in a year, (excluding qualified institutional
buyers and employees under ESOPs) only.
Such Invitation or offer value shall not be less than Rs. 20,000/-.
CA Suhas Deshpande
KIRTANE & PANDIT


All monies payable towards subscription shall be through cheque/
demand draft or banking channels
Application money to be kept in a separate bank account and not used
till the allotment is made.
Allotment [Form No. PAS 3] shall be made within sixty days from the
date of receipt of money. Interest @ 12% p.a. shall be payable in case
the application money is not refunded within 60 days or shares not
allotted.
No fresh offer unless the previous offer is logically concluded.
CA Suhas Deshpande
KIRTANE & PANDIT


Relaxation in Rules for Non-Banking Financial Companies and
Housing Finance Companies in case the such offers are
regulated by RBI
List of persons to whom the offer is made to be maintained
[Form No. PAS. 5] and filed with the ROC(or SEBI, where the
company is listed), within 30 days of circulation of PPOL.
Penalty for non-compliance Amount involved subject to a
maximum of Rupees two Crores.
CA Suhas Deshpande
KIRTANE & PANDIT


Types of securities :o
Equity
With voting rights
With Differential voting rights

Preference Shares
Shares Certificate [Form No. SH-1]

Renewed/Duplicate Share certificate Register to be
maintained [Form No. Sh-2]
o
o
o
For defaced, mutilated, torn or old , decrepit worn out shares

On sub-division/consolidation
For lost/destroyed shares can charge up to Rs. 50 per share
certificate + out-of-pocket expenses + procedure.
CA Suhas Deshpande
KIRTANE & PANDIT


Issue of shares at a discount
Section 53 prohibits issue of shares at a discount except by way
of sweat shares.
Sweat Shares [Section 2(88)]
Sweat equity shares means such equity shares as are issued by a
company to its directors or employees at a discount or for
consideration other than cash , for providing their know-how or
making available rights in the nature of intellectual property rights
or value additions, by whatever name called.
CA Suhas Deshpande
KIRTANE & PANDIT


Issue of sweat shares (unlisted equity shares):
o
Employee means a permanent employee who has worked for at

least one year. Employee or Director of subsidiary/Holding
company shall also be eligible.
Value additions means actual or anticipated economic benefits

derived by the company from an expert /professional for providing
know how or making available rights in the nature of intellectual
property rights for which the consideration is not paid or included
in the normal remuneration or monetary consideration under any
contract
CA Suhas Deshpande
KIRTANE & PANDIT


Issue of sweat shares:
o
Should be authorised by a special resolution,

o
o
o
o
Resolution to specify, the number of shares, current market

price, consideration, if any, class or classes of directors or
employees to whom such equity shares are to be issued.
Validity of the resolution 12 months
Justification and Principal terms and conditions should also be

specified in the explanatory statement
At least one year should have elapsed from the date of
commencement of business
Where the equity shares are listed on a recognised stock exchange,
the provisions to be complied shall be as per SEBI regulations, or
where they are not so listed, as per prescribed Rules
Shall rank pari passu with other equity shareholders.
CA Suhas Deshpande
KIRTANE & PANDIT


Sweat Shares Other Issues
o
Valuation by a registered valuer
Non-cash transactions treatment in accordance with the

accounting standards
To be treated as compensation, where there is no acquisition of

asset.
Disclosure in the Directors Report
Diluted EPS pursuant to issue of sweat shares to be disclosed
Register of Sweat Equity Shares Issued [Form No. SH3]
CA Suhas Deshpande
KIRTANE & PANDIT


Securities Premium Account
o
o
Equivalent to share capital account

Application of Securities Premium Account : :
To issue of bonus shares*

To write off expenses/commission paid or discount allowed on any
equity shares*
For Buy-back of own shares/securities*
To write off preliminary expenses of the company
To write of f premium payable on redemption of preference shares or
debentures of the company
*Note : can be applied by such class of companies as may be

prescribed and whose financial statements comply with the accounting
standards prescribed under Section 133 of the Act
CA Suhas Deshpande
KIRTANE & PANDIT


Issue of Equity shares with differential rights
o
Authorised by Articles of Association
Authorised by ordinary resolution of the shareholders. In case of

listed company, by postal ballot or poll at general body meeting.
Cannot exceed 26% of the total post issue paid up equity share
capital
Track record of dividend payment of at least 10% for immediately

preceding last three financial years.
Filed financial statements and Annual returns for immediately

preceding five financial years.
The holders shall enjoy all other rights such as issue of bonus
shares, rights shares etc.,
CA Suhas Deshpande
KIRTANE & PANDIT

Issue of Equity shares with differential rights (contd.)

o
No subsisting default in regard to payment of dividend, repayment of

deposits or interest thereon, repayment of term loan from any financial
institution or interest thereon, redemption of preference
shares/debentures
The company has not been penalised by any Court or Tribunal or any
regulators during the last three years.
Existing equity shares with voting rights cannot be converted into

equity shares with differential voting rights.
Disclose the fact of the issue in the Boards Report for the financial
year in which such shares were issued.
Existing shares to continue till they are converted as per new Act.
CA Suhas Deshpande
KIRTANE & PANDIT


Redemption of preference shares (Section 55)
o
o
o
Cannot issue Irredeemable preference shares

Maximum term 20 years.
However higher term may be permitted for infrastructure
projects specified in Schedule VI. Redemption at least 10% per
year from the twenty first year.
Redemption
Share Transfer Form No. Sh-4

o
Notice in Form No. SH-5 to be given to the transferee in case of

transfer of party paid shares.
CA Suhas Deshpande
KIRTANE & PANDIT


Employees Stock Option
o Authorised by a special resolution
o Minimum one year gap between the grant of option and vesting of
option
o Lock-in period discretionary
o Option not transferable; cannot be pledged or hypothecated or
mortgaged or otherwise encumbered or alienated.
o On resignation/termination of employments, all options not vested
shall expire.
o Register of Employee Stock Options to be maintained in Form No.
SH. 6
CA Suhas Deshpande
KIRTANE & PANDIT


Issue of shares on preferential basis
o
Authorised by Articles of Association
Authorised by a special resolution. Notice to contain prescribed

details/disclosures.
Process completed within 12 months of passing the special resolution
Price to be determined by the registered valuer
Where the issue is made for a non-cash transaction, compliance with

accounting standards
Provision of money by company to purchase its own shares by

employees/trustees for the benefit of employees
CA Suhas Deshpande
KIRTANE & PANDIT


Issue of Bonus Shares (Section 63)
o
o
o
o
Authorised by AOA
Recommendation of Board and Approval of general body
Cannot issue in case of default deposits/employee statutory
dues
Cannot issue in lieu of dividend
Alteration of Share Capital

o
Return to be filed in Form No. SH.7
Reduction of Capital (Section 66)

o
o
Subject to confirmation of Tribunal

No reduction permitted in case of default deposits
CA Suhas Deshpande
KIRTANE & PANDIT


Further issue of Capital (Section 62)
o To existing members/shareholders
o To employees under ESOP, subject to special resolution
o To others, subject to special resolution and the price of the
share is determined by the Registered Valuer
Unlimited Companies
o
To provide for reserve share capital
CA Suhas Deshpande
KIRTANE & PANDIT


Buy Back of shares (Section 68)
o
Restrictions: No public company can directly or indirectly give any

financial assistance to purchase or subscribe shares of the
company subject to exceptions specified in the section.
Authorised by AoA and also by Special Resolution at general body.
Buy-back out of free reserves, securities premium account or new

issue of other securities.
Buy-back is of < 25% of the paid-up capital and free reserves
Debt Equity ratio (post buy back) = 2 : 1
Offer letter to be filed with Registrar of Companies in Form No. SH.8
CA Suhas Deshpande
KIRTANE & PANDIT


Buy Back of shares (Section 68) (Contd.)
o
No new offer of buy-back within one year of the closure of preceding buyback
Either by purchase from existing shareholders or by purchase from the

open market or purchase of ESOP/sweat shares
Declaration of Solvency in Form No. SH.9. Not applicable for listed

securities.
No fresh issue of the same kind of security
Register of securities bought back [Form No. SH.10]
Return to be filed on completion of buy back [Form No. SH.11] along

with declaration in Form No. Sh.15 that all the provisions relating to buyback have been complied.
CA Suhas Deshpande
KIRTANE & PANDIT

Issue of Debentures (section 71)

o
o
o
Registration of Charge
o
o
o
o
Debenture Trust Deed [Form No. SH.12]

Appointment of Debenture Trustees
Register of Debenture holders or other securities [Form No. MGT-2]
in case of delay beyond 300 days
Charge on all properties, whether movable or immovable, tangible or
intangible to be registered.
Charge to be filed within 30 days
Approval of Tribunal
Nomination [Form No. SH.13]

o
Cancellation or Variation of Nomination [Form No. SH.14]
CA Suhas Deshpande
KIRTANE & PANDIT

Impact on Private Limited Companies
CA Suhas Deshpande
93
KIRTANE & PANDIT

Impact on Private Limited Companies

A quick review of the Companies Act 2013 shows that many exemptions
given to Private limited companies under Companies Act are withdrawn.
The following provisions are applicable to Private limited companies
under the new Companies Act 2013.
Maximum Number of members

There is no change in the minimum number of member which is 2. The
maximum number the members in a private limited company are
increased from 50 members to 200 members. (Section 2 sub section
(68)).
Financial Year for the Balance Sheet

Financial year of the balance sheet will be 31st march for all the
companies.
For any relaxation approval from NCLT is required. (Section 2 sub
section (41)).
CA Suhas Deshpande
KIRTANE & PANDIT

Impact on Private Limited Companies (Contd..)

Further Issue of Shares
The exemption given to private limited companies regarding further issue of
shares is withdrawn. Further issue of shares under section 81 applicable to both
private and public limited companies. Valuation of shares shall be done
based on the certificate issued by registered valuer subject to such conditions as
may be prescribed. (Section 62)
Certification for Annual Return
Annual Return must be certified by a Practicing company secretary and
requirement of compliance certificate by practicing company secretary is
dispensed with. The annual return should contain particulars like:
(a) The extract of the annual return as provided under sub-section (3) of sec
92.
(b) Number of meetings of the Board.
(c) Directors Responsibility Statement;
(d) A statement on declaration given by independent directors under subsection.
And also PCS to certify that all the provisions of the Companies Act has been
complied with (Section 92)
CA Suhas Deshpande
KIRTANE & PANDIT


Number of days of Notice of General Meetings.
For private limited company as per the existing Companies Act is even seven
days notice is sufficient. This exemption is withdrawn. As per the New
Provisions 21 clear days notice has to be given to the shareholders and the
notice can be given by electronic mode also. However the general meeting
may be convened by giving shorter notice if consent is given in writing or
electronic mode by not less than ninety nine per cent of the members entitled
to vote at such meeting. (Section 101).
Postal ballot for passing the Resolutions

Till now postal ballot is applicable only for listed companies. Postal ballot is
applicable to private limited companies also for certain transactions after the
amendment prescribed by the central government by notification. (Section
110).
CA Suhas Deshpande
KIRTANE & PANDIT


Board Report to give more details
The Board report shall contain the following information (Section 134(3))
(a)
The extract of the annual return
(b)
Number of meetings of the Board;
(c)
Directors Responsibility Statement;
(d)
a statement on declaration given by independent directors
(e)
Companys policy on directors appointment and remuneration

including criteria for determining qualifications, positive attributes,
independence of a director and other matters ifrequired by Section
178 provided under sub-section (3) ofsection 178;
CA Suhas Deshpande
KIRTANE & PANDIT


Board Report to give more details (contd)
(f)
Explanations or comments by the Board on every qualification, reservation

or adverse remark or disclaimer made
(i) by the auditor in his report; and
(ii) by the company secretary in practice in his secretarial audit report;
(g)
Particulars of loans, guarantee s or investments
(h)
Particulars of contracts or arrangements with related parties referred to in

sub-section (1) of section 188 in the prescribed form;
(i)
The state of the companys affairs;
(j)
The amounts, if any, which it proposes to carry to any reserves;
(k)
The amount, if any, which it recommends should be paid by way of dividend;
CA Suhas Deshpande
KIRTANE & PANDIT


(l) Material changes and commitments, if any, affecting the financial position of
the company which have occurred between the end of the financial year of
the company to which the financial statements relate and the date of the
report;
(m) The conservation of energy, technology absorption, foreign Exchange

earnings and outgo, in such manner as may be prescribed;
(n) a statement indicating development and implementation of a
risk management policy for the company including identification therein of
elements of risk, if any, which in the opinion of the Board may threaten the
existence of the company;
(o) The details about the policy developed and implemented by the Company
on corporate social responsibility initiatives taken during the year;
CA Suhas Deshpande
KIRTANE & PANDIT


(p) In case of a listed company and every other public company having such
paid-up share capital as may be prescribed, a statement indicating the
manner in which formal annual evaluation has been made by the Board
of its own performance and that of its committees and individual directors;
(q) Such other matters as may be prescribed.
CA Suhas Deshpande
KIRTANE & PANDIT


Corporate Social Responsibility.
Every company having net worth of rupees five hundred crore or more, turnover of
rupees one thousand crore or more or a net profit of rupees five crore or more during
any financial year shall constitute a Corporate Social Responsibility (CSR) Committee
of Board consisting of three or more directors, out of which at least one director shall
be an independent director and 2 per cent of the average net profits of the
immediately preceding three financial years should be spent for CSR (Section 135).
Schedule VII prescribes the activities to be included under Corporate Social
Responsibility which is given below:
SCHEDULE VII
Activities which may be included by companies in their Corporate Social
Responsibility PoliciesActivities relating to:
(i)
(ii)
Eradicating extreme hunger and poverty;

Promotion of education;
CA Suhas Deshpande
KIRTANE & PANDIT


SCHEDULE VII (Contd..)
(iii) Promoting gender equality and empowering women;
(iv) Reducing child morality and improving maternal health;
(v) Combating human immunodeficiency virus, acquired immune deficiency syndrome,
malaria and other diseases;
(vi) Ensuring environmental sustainability;
(vii) Employment enhancing vocational skills;
(viii) Social business projects;
(ix) Contribution to the Prime Ministers National Relief Fund or any other fund set up
by the Central Government or the State Governments for socio-economic
development and relief and funds for the welfare of the Scheduled Castes, the
Scheduled Tribes, other backward classes, minorities and women; and
(x) such other matters as may be prescribed.
CA Suhas Deshpande
KIRTANE & PANDIT


Appointment of Auditors
A. An auditor will be appointed in the first annual general meeting for a five-year
term. Thereafter, the auditor will be changed as per the members decisions.
B. Secondly, an audit firm cannot be re-appointed for more than two five-year
terms. (i.e. 10 years) For re-appointment purposes for the individual auditor
or audit firm, there has to be a gap of five years. Moreover, for appointment or
re-appointment purposes, there should be no common partners between the
new firm and old audit firm. Another interesting clause is that members can
resolve to ask the audit firm to rotate the audit partner and team every year.
The company shall inform the auditor concerned of his or its appointment,
and also file a notice of such appointment with the Register within fifteen days
of the meeting in which the auditor is appointed. Every company shall comply
with the requirements of this sub-section within three years from the date of
commencement of this Act. (Section 139)
CA Suhas Deshpande
KIRTANE & PANDIT


Appointment of Internal Auditor
Such class or classes of companies as may be prescribed shall be required to
appoint an internal auditor, who shall either be a Chartered Accountant or a Cost
Accountant or such other professionals as may be decided by the Board conduct
internal audit of the functions and activities of the company. (Section 138).
Duties of Directors
1.
2.
3.
4.
A director of a company shall act in good faith in order to promote the object
of the company.
A director of a company shall exercise his duties with due care, skill and
diligence.
A Director of a company shall not assign his office and any assignments so
made shall be void.
If a director of the company contravenes the provisions of this section such
director shall be punishable with fine which shall not be less than Rs.1,
00,000/- but which may extend to Rs.5, 00,000/- (Section 166).
CA Suhas Deshpande
KIRTANE & PANDIT


Borrowing Powers
The exemption given to private limited company for borrowings under section.293 is
withdrawn. Borrowing powers now require approval by shareholders and applicable to
both private and public limited companies. (Section 180).
Loan and Investment

The exemption given to private limited company under Section 372A regarding loan and
investment is withdrawn. Existing limit of 60% Paid up capital and free reserves or 100%
of free reserves applicable to both private limited and public limited companies.
(Exemption to private limited Company for loan and investment under section372A is
removed now) (Section 186).
Related party Transactions

Only with the consent of the Board of Directors given by a resolution at a meeting of the
Board and subject to such conditions as may be prescribed no company shall enter into
any contract or arrangement with a related party with respect to
(a) Sale, purchase or supply of any goods or materials;
(b) Selling or otherwise disposing of, or buying, property of any kind;
CA Suhas Deshpande
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Related party Transactions (contd..)
c) Leasing of property of any kind;
(d) Availing or rendering of any services;
(e) Appointment of any agent for purchase or sale of goods, materials, services or
product.
(f) Such related partys appointment to any office or place of profit in the company, or its
subsidiary company or associate company.
No contract or arrangement, in the case of a company having a paid-up share capital of not
less than such amount, or transactions not exceeding such sums, as may be
prescribed, shall not be entered into except with the prior approval of the company by a
special resolution. Further that no member of the company shall not vote on such
special resolution to approve any contract or arrangement which may be entered into
by the company, if such member is a related party. (Section 188).
Loan to Directors
The exemption given to the Private Limited Company under section 295 regarding loan
given to director of a private limited of company is withdrawn. Loan should not be given
to directors of any company including private limited company or to any private
company in which a director is a director or member (Section 185).
CA Suhas Deshpande
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Appointment of Key Managerial Personnel
Appointment of Key Managerial Personnel Every company belonging to such
class or description of companies as may be prescribed shall have the following
whole time Key Managerial Personnel (Section 203).
Managing Director or Chief Executive Officer or Manager and in their
absence a Whole Time Director.
2. Company Secretary and;
3. Chief Financial Officer.
1.
Secretarial Audit Report

Every listed company and company belonging to other class of companies as
may be prescribed shall annex with its Boards report a secretarial audit report
given by Practicing Company Secretary in such form as may be prescribed.
(Section 204).
CA Suhas Deshpande
KIRTANE & PANDIT


Director to stay in India for 182 days
Every company shall have at least one director who has stayed in India for a
total period of not less than one hundred and eighty-two days in the previous
calendar year. Every company existing on or before the date of
commencement of this Act shall, within one year from such commencement
or from the date of notification of the rules in this regard as may be
applicable, comply with the requirements of this provision (Section 149(3)).
Board and Annual General Meeting minutes
Hereafter the companies shall follow the Secretarial Standards while making
the minutes of Board and General Meeting. (Section 118 (10))
Books of Accounts
The Books of Accounts may be kept in electronic form also. (Section 128)
CA Suhas Deshpande
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Managing Director
The exemption given to private limited company under section 269 for
appointment of Managing Director is withdrawn. Provision relating to the
appointment of Managing Director is also applicable to the private limited
companies (Section 196).
Need for Amendment of Articles of Association of private limited
company:
Sec 171 to 186 sections which are not applicable to Private Limited companies
is now deleted in the Companies Act. Hence, after Companies Act, 2013,
comes into effect, it may require to amend the article of association of Private
Limited by substituting the new set of article of association so that it will not
contain any contrary provision of the Companies Act, 2013.
CA Suhas Deshpande
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A comparison is made with respect to exemptions given in the Companies Act,
1956 and new Companies Act 2013. The following are the exemptions available
to Private Limited Companies in Companies Act 1956 and its status in New
Companies Act 2013.
Sr.
No
1.
Existing
Section in
Companies
Act, 1956.
Nature of exemptions in
the Companies Act, 1956.
Status in Companies Act 2013
Section 77(2) Financial assistance can be Section 67 Restrictions on purchase

given for purchase of or
by Company or giving of loans by it
subscribing for its own
for purchase of its shares. Private
shares in its holding
limited company not specifically
company, Whereas not
mentioned in the clause. Hence
applicable to Public company exemption is available.
CA Suhas Deshpande
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Sr. Existing Section Nature of exemptions in the
Companies Act, 1956.
No in Companies
Act, 1956.
2.
Section 81(3) Further shares can be

Section 62 Further issue of shares now
issued without passing
applicable to Private limited Company also.
special resolution or
Exemption is withdrawn.
obtaining central
governments approval and
without offering the same
necessarily to existing
shareholders
3.
Section 149(7)Exemption from Certificate Section 11 Commencement of business

of Commencement of
declaration has to be filed by Private Limited
business
Company. Exemption is withdrawn.
Section 198(1)No restriction on the
Section 197 Overall maximum managerial
payment of Managerial
remuneration applicable to Public Company.
Remuneration on net profits For Private Limited Company this section is
not applicable. Exemption is withdrawn.
4.
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Sr.
Existing Section
No in Companies Act,
1956.
Nature of exemptions in the

5.
Section 252(2) Need not have more than two Section 149 Minimum two directors.
directors
There is no change in the existing
provisions. Exemption continues.
6.
7.
Section 255(1) A proportion of directors need Section 152 The exemption continues
not retire every year
but as per the AOA of the Company.
Section 257(2) Statutory notice, etc., is not Section 160 Exemption is
required for a person to stand withdrawn.
for election as a director
8.
Section 259
CA Suhas Deshpande
Central Governments
Section 149 The Company to have
sanction is not required to
Board of Directors. Exemption given
affect increase in the number now to maximum of 15 Directors.
of directors beyond 12 or the
number fixed by articles of
association
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Sr.
Existing Section
No in Companies Act,
1956.
9.

Section 263(1) In passing resolution for

Section 162 Appointment of directors
election of directors, all
to be voted individually. Exemption is
directors can be appointed by withdrawn. Single resolution for the
a single resolution.
appointment of directors can be passed
both by private and public company
provided, a proposal to move such a
motion has first been agreed to at the
meeting without any vote being cast
against it.
10. Section 264(3) Consent to act as director

need not be filled with
registrar
CA Suhas Deshpande
Section 152 Appointment of directors.

Exemption removed. Private Limited
Companies also to file consent.
Exemption is withdrawn.
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Sr.
No
Existing
Section in
Companies
Act, 1956.

11. Section 269(2) Central Governments

Section 196 Exemption is
approval is not required for withdrawn. Applicable to Private
appointment of managing or Limited Companies
whole-time director or
manager
12. Section 275 to Restrictive provisions
279
regarding total number of
directorships which any
person may hold do not
include directorships held in
private companies which are
not subsidiary of public
company
CA Suhas Deshpande
Section 165 The maximum number of

companies in which a director can hold
office is 20 companies. Out of this he
can hold only up to 10 public
companies. There is no restriction for
private limited companies. One can
become director in 20 private limited
companies. Exemption is withdrawn.
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Sr.
No
Existing
Section in
Companies
Act, 1956.
13. Section 293(1) Certain restrictions on powers Section 180 Exemption is

of board of directors do not withdrawn.
apply
14. Section 295(2) Prohibition against loans to
directors does not apply
15. Section 300(2) Prohibition against
participation in board
meetings by interested
director does not apply
CA Suhas Deshpande

withdrawn. Loan to directors
applicable to private limited company
withdrawn. Disclosure of directors
interested applicable to private limited
company.
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Sr.
No
Existing
Section in
Companies
Act, 1956.
16. Section 303(1) Date of birth of director need Section 170 Register of directors and
not be entered in the register key managerial personnel and their
of directors
shareholding. Exemption is
withdrawn. Anybody can view the
particulars of the directors through their
DIN numbers.
17. Section 309(9) There is no restriction on
remuneration payable to
directors
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Section 197 Overall maximum

managerial remuneration applicable to
Public Company. For Private Limited
Company this section is not applicable.
Exemption continues.
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Sr.
No
Existing
Section in
Companies
Act, 1956.
18. Section 316(1) No restriction on appointment Section 203 Appointment of Key

of managing director
Managerial Personnel. Exemption is
withdrawn.
19. Section 349
Provisions relating to method Section 198 Calculation of Profits.

of determination of net profits Exemption is withdrawn.
and ascertainment of
depreciation do not apply
20. Section 372(A) No prohibition against

purchase of shares, etc., in
other companies
CA Suhas Deshpande

withdrawn. Applicable to Private
Limited Companies
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The following provisions which exempted private limited companies have
been deleted in the Companies Act, 2013.
S.NoExisting Section Particulars
in Companies
Act, 1956.
Status in
Companies Act
2013
1.
Section 70(3)
Statement in lieu of prospectus need not be No provisions exist

delivered to the registrar before allotting
shares
2.
Section 90(2)
Provisions as to kinds of share capital

No provision exist
(sec.85), further issue of share of
capital(sec.86), voting rights(sec 87), issue
of shares with disproportionate rights (sec
88) and termination of disproportionate
excessive rights (sec 89)
3.
Section 165(10)
Exemption from Statutory Meeting and

Statutory Report
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No provision exist
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in Companies
Act, 1956.
Status in
Companies Act
2013
4.
Section 170(1)
Articles of private company having

provisions relating to general meetings
without being subject to the provisions of
sections 171 to 186
No provision exist
5.
Section 204(6)
6.
Section 266(5)
Can appoint a firm or body corporate to an No provision exist

office or place of profit under the company
Restriction on appointment or
No provision exist
advertisement of directors as regards
consent and qualification of shares does not
apply.
7.
Section 268
CA Suhas Deshpande
No Central Government approval to modify No provision exist

any provision relating to appointment of
managing, whole-time or non-rotational
directors
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in Companies
Act, 1956.
8.
Section 273
9.
Section 310
10. Section 311
11. Section 317(4)
No share qualification u/s 270 for Directors No provision exist

of a private company.
No Government approval for change in
No provision exist
restriction on remuneration to directors
No central government approval for increase No provision exist
in the remuneration beyond specified limit of
directors on an appointment or
reappointment
No restriction on appointment of managing

director
12. Section 350 & 355Provisions relating to method of
determination of net profits and
ascertainment of depreciation do not apply
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Status in
Companies Act
2013
No provision exist
No provision exist.
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S.No Existing Section Particulars
in Companies
Act, 1956.
13.
Section 370(2)
14.
Section 388A
15.
Section 409(3)
16.
Section 416(1)
CA Suhas Deshpande
Status in
Companies Act
2013
No restriction on making loans to other

No provision exist
companies
Provisions of sections 386 and 387, which
No provision exist
restrict the number of companies of which a
person can be appointed as manger,
remuneration of the manager, etc., and also
provisions of sections 269, 310,311,312 and
317, do not apply
Central Government cannot exercise its power No provision exist
to prevent change in board of directors which
is likely to affect the company prejudicially
Person can enter into contract on behalf of
No provision exist
company as undisclosed principle and need
not give intimation to the other directors
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Disclaimer:
Care has been taken while preparing the subject
Presentation. However, the reader should refer the
Bare Act / Rules before taking any further actions /
steps.
CA Suhas Deshpande
KIRTANE & PANDIT

Thank
You
Any
Questions
?
Suhas.deshpande@kirtanepandit.com
Suhas.deshpande@kirtanepandit.com
Mobile : 98230 57193
CA Suhas Deshpande
KIRTANE & PANDIT


Comp Act 2013

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Companies Act - 2013

Accounts, Audit, Directors & Related Party Transactions

For Private Circulation only

KIRTANE & PANDIT

Companies Act - 2013

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Overview Comparative Analysis

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Companies Act 2013

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Overview Comparative Analysis

Companies Act, 2013

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Overview Comparative Analysis

Prospectus and allotment of securities

Share Capital and Debentures

Acceptance of deposits by Companies

Management and administrations

Declaration and payment of dividend

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Overview Comparative Analysis

Audit & Auditors

Appointment and qualification of

Meeting of Board and its powers

Appointment and remuneration of

Inspection, inquiry and Investigation

Compromise, Arrangements and

Prevention of oppression and

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Overview Comparative Analysis

Removal of names of companies from

Revival and rehabilitation of sick

Companies authorized to register

565 to 581 & 582

Companies incorporated outside India

Registration offices and fees

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Overview Comparative Analysis

Companies incorporated outside India

NCLT and NCLAT

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Special Features of New Act

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Harmonise with internationally accepted practice

Strict Penal Provisions

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Special Features (Contd)

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New Concepts /Definitions

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New Concepts / Key Definitions

2(6) defines Associate company, in relation to another

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New Concepts / Key Definitions (Contd.)

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New Concepts / Key Definitions (Contd.)

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New Concepts / Key Definitions (Contd.)

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New Concepts / Key Definitions (Contd.)

New Concepts / Key Definitions (Contd.)

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New Concepts / Key Definitions (Contd.)

defines key managerial personnel, in relation to a company,