Indian Companies Act 2013Important changes as compared to Indian Compaanies Act 1956 and amendments: One-person company: The 2013 Act introduces a new type of entity to the existing list i.e. apart from forming a public or priate limited company! the 2013 Act enables the formation of a new entity a "one#person company$ %&'C(. An &'C means a company with only one person as its member )section 3%1( of 2013 Act*. &nly a natural person who is an Indian citi+en and resident in India can incorporate an &'C or be a nominee for the sole member of an &'C. , Private company: The 2013 Act introduces a change in the de-nition for a priate company! inter#alia! the new re.uirement increases the limit of the number of members from /0 to 200. )section 2%01( of 2013 Act*. Dormant company: The 2013 Act states that a company can be classi-ed as dormant when it is formed and registered under this 2013 Act for a future pro2ect or to hold an asset or intellectual property and has no signi-cant accounting transaction. 3uch a company or an inactie one may apply to the 4&C in such manner as may be prescribed for obtaining the status of a dormant company.)3ection 5// of 2013 Act* 1Indian Companies Act 2013Small company: A small company has been de-ned as a company! other than a public company. %i( 'aid#up share capital of which does not exceed /0 la6h I74 or such higher amount as may be prescribed which shall not be more than -e crore I74 %ii( Turnoer of which as per its last pro-t#and#loss account does not exceed two crore I74 or such higher amount as may be prescribed which shall not be more than 20 crore I748 As set out in the 2013 Act! this section will not be applicable to the following8 9 A holding company or a subsidiary company 9 A company registered under section 1 9 A company or body corporate goerned by any special Act )section 2%1/( of 2013 Act* 2Indian Companies Act 2013 Independent Director: The term$ Independent :irector$ has now been de-ned in the 2013 Act! along with seeral new re.uirements relating to their appointment! role and responsibilities. ;urther some of these re.uirements are not in line with the corresponding re.uirements under the e.uity listing agreement )section 2%5ort to introduce the culture of corporate social responsibility %C34( in Indian corporates by re.uiring companies to formulate a corporate social responsibility policy and at least incur a gien minimum expenditure on social actiities. Class action s&its The 2013 Act introduces a new concept of class action suits which can be initiated by shareholders against the company and auditors. /Indian Companies Act 20137o of partners in a 'artnership -rm8 The 2013 Act puts a restriction on the number of partners that can be admitted to a partnership at 100. Any -rm exceeding this number has to register itself as a company under Indian Companies Act. ).ception to the a"ove r!e: a/ 012 and "/ An association or partnership of professionas 3 i-e Chartered Acco!ntants section 505 of 2013 Act( 0Indian Companies Act 20134emorand!m of Association: The 2013 Act does not re'!ire the o"5ects ca!se in the memorand!m to "e cassified as the foowing: 3i/ The main o"5ect of the compan$ 3ii/ 6"5ects incidenta or anciar$ to the attainment of the main o"5ect 3iii/ 6ther o"5ects of the compan$ 7section 831/ of 2013 Act9 airs of the company are conducted fraudulently or in a manner iolatie of the ob2ects of the company or pre2udicial to public interest. The 2013 Act thus proides for more stringent proisions for companies incorporated with charitable ob2ects.=Indian Companies Act 2013Prospect&s and p&'lic o*er The 2013 Act has introduced a new section )section 23* to explicitly proide the ways in which a public company or priate company may issue securities. This section explains that a public company may issue securities in any of the following manners8 To public through prospectus Through priate placement Through rights issue or a bonus issue. ;or priate companies! this section proides that it may issue securities through priate placement! by way of rights issue or bonus issue. 10Indian Companies Act 2013Pro!i'ition on iss&e o( s!ares at a disco&nt Companies would no longer be permitted to issue shares at a discount. The only shares that could be issued at a discount are sweat e.uity wherein shares are issued to employees in lieu of their sericesIss&e o( 'on&s s!ares The 2013 Act includes a new section that proides for issue of fully paid#up bonus shares out of its free reseres or the securities premium account or the capital redemption resere account! sub2ect to the compliance with certain conditions such as authorisation by the articles! approal in the general meeting and so on11Indian Companies Act 2013Poer o( t!e company to p&rc!ase its on sec&rities Companies can buy bac6 its own shares but this facility is not aailable fora buy#bac6 from odd lots. 3?@I has also laid down certain guidelines re8 buybac6 of shares. The 2013 Act proides Aexibility in management and administration by recognising the electronic mode for notices and oting! which is in line with the BCA$s e>orts to gie cognisance to use of electronic media as eident from a number of green initiaties$ introduced recently! maintenance of registers and returns at a place other than the registered oCce.12The Indian Companies Act 2013+eneral meetings The -rst annual general meeting should be held within nine months from the date of closing of the -rst -nancial year of the company as against the earlier regulation of 11 months from the date of incorporation. The 2013 Act now de-nes as between = am and 0 pm. The 2013 Act states that annual general meeting cannot be held on a national holiday or a public holiday In order to call an annual general meeting at shorter notice! the 2013 Act re.uires consent of =/D of the members The 2013 Act states that besides director and manager! the nature of concern or interest of eery director! manager! any other 6ey managerial personnel and relaties of such director! manager or any other 6ey managerial personnel in each item of special business will also need to be mentioned in the notice of the meeting. The threshold of disclosure is reduced from 20D to 2D13The Indian Companies Act 2013,&or&m (or $eetings:The 2013 Act states that in case of a public company! the re.uired .uorum is as follows8 ;ie members if number of members is not more than one thousand ;ifteen members if number of members is more than one thousand but up to -e thousand Thirty members if number of members is more than -e thousand ;urther! it is releant to note that priate companies cannot impose restrictions on oting rights of members other than due to unpaid calls or sums or lien Eisted companies will be re.uired to -le with the 4&C a report in the manner prescribed in the rules on each annual general meeting including a con-rmation that the meeting was conened! held and conducted as per the proisions of the 2013 Act and the releant rules )section 121 of 2013 Act*. 15The Indian Companies Act 2013Woman director: The foowing t$pes of companies sha have ateast one woman director: %i( ?ery listed company! within one year from the commencement of second proiso to sub#section %1( of section 15= %ii( ?ery other public company that has paidFup share capital of one hundred crore rupees or more! or a turnoer of three hundred crore rupees or more within three years from the commencement of second proiso to sub#section %1( of section 15= -&m'er o( directors!ip The 2013 Act increases the limit for number of directorships that can be held by an indiidual from 12 to 1/ )section 15=%1( of 2013 Act*.3. &ne director to be resident in India for at least a period of 112 days.1/The Indian Companies Act 2013Code (or independent director : $andatory The 2013 Act includes 3chedule IG "Code for Independent :irectors$ %Code( which broadly prescribes the following for independent directors8 'rofessional conduct 4ole and functions :uties Banner of appointment 4eappointment 4esignation or remoal Holding separate meetings ?aluation mechanism 10The Indian Companies Act 2013Contribution to political parties8 The limits of contribution to political parties is proposed to be increased to