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Until launchof thiswebsiteunlearningthe old and

Decoding the Provisions Old Vs New Law

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Necessity of New Law

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Highlights-Companies Bill 2011

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Old vs New Law

Old vs New Law

Under this section, we have made comparison between the Companies Bill 2011 and Companies Act 1956 on various topics under different

chapters of the bill. This section , can you help you in finding out in quick manner, the changes in the new or old law. Please click the relevant

chapter, to read the comparison .

Chapter -II - Incorporation of Company and matters incidental thereto

Chapter III - Prospectus and allotment of securities

Chapter -IV - Share Capital and Debentures

Chapter V - Acceptance of Deposits by Companies

Chapter VI - Registration of Charges

Chapter VII - Management and Administration

Chapter VIII - Declaration and Payment of Dividend

Chapter IX - Accounts of Companies

Chapter X - Audit and Auditors

Chapter XI - Appointment and Qualification of Directors

Chapter XII - Meetings of Board and its Power

Chapter XIII - Appointment and Management of Managerial personnel

Chapter XV - Compromise, Arrangements and Amalgamations

Chapter XVI - Prevention of Oppression and Mismanagement

Chapter XIX - Revival and rehabilitation of Sick Companies

Other Chapters

Chapter IV : Share Capital and Debentures

Basis of Difference Companies Bill, 2011 Companies Ac t, 1956

Kind of Shares •Equity share capital (withvoting rights or with differentialrights as to dividend, voting,etc.) and preference sharecapital

• Equity share capital (with votingrights or with differential rights as todividend, voting, etc.) andPreference Share Capital.

Voting Rights• The proportion of the voting

rights of equity shareholdersto the voting rights of thepreference shareholdersshall be in the sameproportion as the paid-upcapital in respect of theequity shares bears to thepaid-up capital in respect ofthe preference shares

• Classifications betweencumulative and noncumulative preferenceshares for purpose ofidentification of voting rightshas been dispensed with

• Preference shareholders

• No provision with respect toproportion of voting rightsbetween equity and preferenceshareholders was provided.

• The preference shares were

classified between cumulativeand non cumulative preferenceshares for purpose ofidentification of voting rights.

• In case of cumulative preferenceshares if the dividend has remainunpaid for an aggregate periodof not less than 2 yearspreceding the date ofcommencement of meeting

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can exercise such votingrights only when dividendspayable in respect of a classof preference shares are inarrears for a period of 2years or more

Application of Premium Premium may be utilized for

• Issue of unissued sharesof the company as fullypaid bonus shares

• Writing off preliminaryexpenses

• writing off the expenses of,or the commission paid ordiscount allowed on, anyissue of shares ordebentures of the company

• providing for the premiumpayable on the redemptionof any redeemablepreference shares or ofany debentures of thecompany

• purchase of its own sharesor other securities

• Additional provision hasbeen provided for certainCompanies to beprescribed whose financialstatement comply with theaccounting standardsprescribed for such classof companies.

Premium may be utilized for

• Issue of unissued shares of thecompany as fully paid bonusshares

• Writing off preliminaryexpenses

• writing off the expenses of, orthe commission paid ordiscount allowed on, any issueof shares or debentures of thecompany

• providing for the premiumpayable on the redemption ofany redeemable preferenceshares or of any debentures ofthe company

Issue of Shares at Discount Company cannot issue sharesat discount other than as sweatequity, no provision has beenprovided for any approvalunder the Companies Bill.

A company may issue shares at adiscount subject to the conditionsspecified and approval of theCentral Government

ESOP A Company having sharecapital proposes to increase itssubscribed capital by the issueof further shares, such sharesapart from existing shareholdermay also be offered toemployees by way of ESOPsubject to approval ofshareholders by way of specialresolution and complying withsuch other conditions as maybe prescribed.

In case of ESOP allotment,either in cash or forconsideration other than cash,the price shall be arrived onthe base of the report of theregistered valuer subject to

Provision for ESOP has been dealtunder Unlisted Public

Companies (Preferential.Allotment) Rules, 2003

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such condition as may beprescribed.

Bonus Shares Company may issue fullypaid-up bonus shares to itsmembers, in any mannerwhatsoever, out of its freereserves, securities premiumaccount or the capitalredemption reserve accountsubject to the conditionsprovided therein.

Provision for bonus issue has beendealt under the Companies Act,1956

Sweat Equity Sweat Equity cannot begranted to employee ofsubsidiary companyincorporated outside India

Sweat Equity was allowed to begranted to employee of subsidiarycompany incorporated outside India

Preference Shares for More than20 years

Company may issuepreference shares redeemableafter 20 years for suchinfrastructure projects as maybe specified subject toredemption of specified % ofpreference shares on annualbasis at the option of thepreference shareholder

No Company limited by shares shallissue any preference shares whichis redeemable after the expiry of aperiod of 20 years from the date ofissue.

Further Issue of Share Capital• The provisions of clause

related to further issue ofcapital will now beapplicable to all types ofCompanies.

• No time limit has beenprescribed, Company cananytime increase its sharecapital by issue of furthershares

• Provision introduced foroffer of shares toemployees for ESOP

• Prescribed Conditions haveto be followed when acompany proposes toincrease its subscribedcapital by offering the sameto existing shareholders

• Private Companies are out of thepreview of provisions of furtherissue of Capital.

• Such provision shall be applicableat any time after the expiry of twoyears from the formation of acompany or at any time after theexpiry of one year from theallotment of shares in that companymade for the first time after itsformation, whichever is earlier.

No direct provision for ESOP,company may issue shares toemployees in the category of otherpersons not being members of theCompany by way of specialresolution.

Reduction of Share Capital• No reduction of capital will

be allowed if the company isin arrears for payment ofdeposits, accepted eitherbefore or after thecommencement of this Act.

• The tribunal will give noticeof the application of thereduction of the sharecapital to the CentralGovernment, SEBI (in caseof the listed company) andevery creditor. If norepresentation is receivedthen it shall be presumedthat there is no objection.

• No condition with regard topayment of deposits wasprescribed.

• No provision was mentioned in theact for asking the representationfrom Central Government, SEBI forreduction of share Capital

Time Period for issue of sharecertificate

The time period for issue ofshare or any other certificatesis 2 months in case ofallotment of shares, 1 month incase of transfer andtransmission and 3 months incase of allotment ofdebentures

The time period for issue of shareor any other certificates is 3 monthsin case of allotment of shares, 2months in case of transfer andtransmission and 6 months in caseof allotment of debentures.

Prohibition on Buyback in certaincases

A company can make buybackeven if any default regarding

• repayment of depositor interest payablethereon,

• redemption ofdebentures or prefer-

A company cannot makebuyback if default regarding:

• repayment of deposit orinterest payable thereon,

• redemption of debenturesor preference shares or

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ence shares or• payment of dividend

to any shareholder or• repayment of any term

loan or interestpayable thereon toany financial institutionor bank

have been remedied and aperiod of 3 years must havelapsed after such defaultceased to subsist

• payment of dividend to anyshareholder or

• repayment of any termloan or interest payablethereon to any financialinstitution or bank

is subsisting

Debenture Trustee• The Company is required

to appoint debenturetrustee only when thecompany issuesprospectus or make anoffer or invitation to thepublic or to its membersexceeding five hundred forthe subscription of itsdebentures

• In case where theCompany is unable todischarge the principalamount as and when itbecomes due, than thedebenture trustee may filea petition before theTribunal

• The Company is required toappoint debenture trustee whenthe company issues prospectusor make an offer or invitation tothe public, irrespective of thenumber.

• In case where the Company isunable to discharge theprincipal amount as and when itbecomes due, than thedebenture trustee may file apetition before the CentralGovernment

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