ppt on companies act 2013

8/10/2019 PPT on Companies Act 2013

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COMPANIES ACT, 2013

AN OVERVIEW OF SALIENT PROVISIONS

BY : PROF. ATUL SHUKLA


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Brief History of Companies Act

Concept of a Company and Companies Act

came to India with Britishers.

The present companies Act came into effect

from 12 Sept 2013 and many provisions were

effective from 1 April 2014. Yet many sections

are not effective till date.

Before Companies Act, 2013 came in to effect,

following acts were in force from time to time:


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INCORPORATION OF A COMPANY

A company may be formed under the CompaniesAct, 2013; for any lawful purpose by:

(a) sevenor more persons, where the company tobe formed is a Publiccompany;

(b) two or more persons, where the company tobe formed is a Privatecompany; or

(c) one person, where the company to be formed

is One Person Company (OPC).by subscribing their names (or his name in OPC)to a memorandum and complying with therequirements of the Act in respect of registration.


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Brief History of Companies Act

The Indian Companies Act, 1866;



The Registration of Transferred CompaniesOrdinance, 1942 and

The Companies Act, 1956. The previous act, stilloperative in some areas.

The present Companies Act, 2013 has 470sectionsand 7 Schedules (I to VII).

The act extends to whole of India.


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MEANING OF WORD LIMITED

A Companylimited by Guaranteemeans:A company where liability of members is limitedby such an amount as the members mayundertake to contribute to the assets of the

company in the event of its being wound up.

A Company limited by Shares means acompany having the liability of its members

limited by the memorandum to the amount, ifany, unpaid on the shares respectively held byeach one of them.


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PRIVATE COMPANY

Private Company means:1. A company having a minimum paid-up share

capital of Rs. 1,00,000 or such higher paid-upshare capital as may be prescribed,

2. A company, which by its articles:

(i) restricts the right to transfer shares;

(ii) except in case of OPC, limitsthe number of its

membersto 200.(iii) prohibits any invitation to the public tosubscribe for any securities of the company;


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ONE PERSON COMPANY(OPC)

OPC also comes under the category of PrivateCompany but the no. of members can not bemore than 1 person.

In case of OPC, the memorandum shall indicate

name of ONE other person, with his prior writtenconsent in the prescribed form, who shall, in theevent of the subscribers death or his incapacityto contract become the member of the company.

The written consent of such other person shallalso be filed with the Registrar at the time ofincorporation of the OPC along with itsmemorandum and articles:


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PUBLIC COMPANY

Public company means a company which:(a) is nota private company;

(b) has a minimum paid-up share capital Rs.

5,00,000 or higher paid-up capital, asprescribed:

1 exception: A company which is subsidiaryof

publiccompany shall be deemedto be publicfor the purposes of this Act even where such

subsidiary is a private company in its articles.


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SMALL COMPANY

Small company is a company other than public

companywhere:a. Paid-up capital does notexceedRs. 50 lakhs orsuch higher amount as may be prescribed but notmore than Rs. 5 crores.

b. Turnover as per its last P & L Account is notmorethan Rs. 2 crores or such higher amount asprescribed but not more than Rs. 20 crores.

This section will not apply to the following:

i. A holding company or a subsidiary company.ii.A company registered under section 8.

iii.A company or body corporate governed byany special Act.


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SUBSIDIARY & HOLDING COMPANY

SubsidiaryCompany means a company in which theHolding company:

(i) controls the composition of the Board ofDirectors; OR

(ii) controls more than 50% of total paid up sharecapital.

This may be happening either on its own by theHolding Co. or with its other subsidiary companies.

A company shall be deemed to be a Subsidiary ofHolding if:

(a) The control referred to in sub-clause (i) or sub-clause (ii) is of another subsidiary company of theholding company


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SUBSIDIARY & HOLDING COMPANY

(b) The composition of a companysBoard of Directorsshall be deemed to be controlled by another

company if that other company has discretionary

powers to appoint or remove all or a majority of the

directors.HoldingCompany,in relation to one or more other

companies, means a company of which such other

company or companies are subsidiary companies.

There can be chain of Holding and Subsidiary

Companies and every company which is subsidiary of

the subsidiary, automatically becomes subsidiary of

main Holding Co.


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GOVERNMENT COMPANY

Government company means any company

in which not less than 51% of the paid-upshare capital is held by:

The Central Government, or Any State Government or Governments, or

Partly by the Central Government and partly

by one or more State Governments, and It includes any company which is a subsidiary

of such a Government company;


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LISTED Cos and FOREIGN Cos.

listed company means a company which has any ofits securities listed on any recognised stock exchange ofIndia.

foreign company means any company or body

corporate incorporated outside India which

(a) has a place of business in India whether by itself orthrough an agent,

physically or through electronic mode; and (b) conducts any business activity in India in any other

manner.


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ASSOCIATE COMPANY

Associate Company, in relation to anothercompany, means:

A company in which that other company has asignificant influence, but which is not asubsidiary company of the company having suchinfluence.

It includes a joint venture company.

Explanation.For the purposes of this clause,significant influence means control of at least21% of total share capital or of the businessdecisions under an agreement;


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MEMORANDUM The memorandum of a company shall state

(a) the name of the company with the last word

"Limited" in the case of a public limited company, orthe last words "Private Limited" in the case of a privatelimited company: Provided that nothing in this clauseshall apply to a company registered under section 8;

(b) the State in which the registered office of thecompany is to be situated;

(c) the objects for which the company is proposed tobe incorporated and any matter considered necessaryin furtherance thereof;

(d) the liability of members of the company, whetherlimited or unlimited, and also state,

(i) in the case of a company limited by shares, thatliability of its members is limited to the amountunpaid, if any, on the shares held by them;
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MEMORANDUM

(ii) in the case of a company limited by guarantee, theamount up to which each member undertakes tocontribute (A) to the assets of the company in theevent of its being wound-up while he is a member or

within one year after he ceases to be a member, forpayment of the debts and liabilities of the company orof such debts and liabilities as may have beencontracted before he ceases to be a member, as the

case may be; and (B) to the costs, charges andexpenses of winding-up and for adjustment of therights of the contributories among themselves;


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MEMORANDUM

(e) in the case of a company having a share capital:

(i) the amount of share capital with which the companyis to be registered and the division thereof into shares ofa fixed amount and the number of shares which thesubscribers to the memorandum agree to subscribe

which shall not be less than one share; and (ii) the no. of shares each subscriber to the MOA intends

to take, indicated against his name;

(f) in the case of One Person Company, the name of the

person who, in the event of death of the subscriber,shall become the member of the company.


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MEMORANDUM (4) A person may make an application, in such form and

manner and accompanied by such fee, as may be

prescribed, to the Registrar for the reservation of aname set out in the application as

(a) the name of the proposed company; or (b) thename to which the company proposes to change its

name. (5)(i) Upon receipt of an application under sub-section (4), the Registrar may, on the basis ofinformation and documents furnished along with theapplication, reserve the name for a period of sixty days

from the date of the application. (ii) Where after reservation of name under clause (i), it

is found that name was applied by furnishing wrong orincorrect information, then,


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MEMORANDUM (a) if the company has not been incorporated, the reserved name

shall be cancelled and the person making application under sub-

section (4) shall be liable to a penalty which may extend to one lakhrupees;

(b) if the company has been incorporated, the Registrar may, aftergiving the company an opportunity of being heard(i) eitherdirect the company to change its name within a period of threemonths, after passing an ordinary resolution; (ii) take action forstriking off the name of the company from the register ofcompanies; or (iii) make a petition for winding up of the company.

(6) The memorandum of a company shall be in respective formsspecified in Tables A, B, C, D and E in Schedule I as may be applicableto such company.

(7) Any provision in the memorandum or articles, in the case of acompany limited by guarantee and not having a share capital,purporting to give any person a right to participate in the divisibleprofits of the company otherwise than as a member, shall be void.

A ti l


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Articles

(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 itsmanagement.

(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 morerestrictive than those applicable in the case of a special

resolution, are met or complied with.


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Articles

(4) The provisions for entrenchment referred to in sub-section (3) shall only be made either on formation of acompany, or by an amendment in the articles agreed toby all the members of the company in the case of a

private company and by a special resolution in the caseof a public company.

(5) Where the articles contain provisions forentrenchment, whether made on formation or by

amendment, the company shall give notice to theRegistrar of such provisions in such form and manneras may be prescribed.


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Articles

(6) The articles of a company shall be in respective formsspecified in Tables F, G, H, I and J in Schedule I as may beapplicable to such company.

(7) A company may adopt all or any of the regulationscontained in the model articles applicable to such company.

(8) In case of any company, which is registered after thecommencement of this Act, in so far as the registered articlesof such company do not exclude or modify the regulationscontained in the model articles applicable to such company,those regulations shall, so far as applicable, be the regulationsof that company in the same manner and to the extent as if

they were contained in the duly registered articles of thecompany.

(9) Nothing in this section shall apply to the articles of acompany registered under any previous company law unlessamended under this Act.

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