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List of Sections notified by the Central Government on September 12, 2013


List of Sections notified by the Central Government on September 12, 2013.
1. Definitions --
2(1)   Definition of Abridged Prospectus
2(3)   Definitions of Alter/ Alteration
2(4)   Definition of Appellate Tribunal
2(5)   Definitions of Articles
2(6)   Definition of Associate Company
2(8)   Definitions of Authorized Capital/ Nominal
Capital
2(9)   Definition of Banking Company
2(10) Definition of Board of Directors/ Board
2(11)           Definition of Body Corporate/ Corporation
2(12)           Definition of Book and Paper/ Book or
Paper
2(14)           Definition of Branch Office
2(15) Definition of Called-up Capital
2(16)           Definition of Charge
2(17)           Definition of Chartered Accountant
2(18)           Definition of Chief Executive Officer
2(19)           Definition of Chief Financial Officer
2(20)           Definition of Company
2(21) Definition of Company limited by
Guarantee
2(22) Definition of Company limited by Shares
2(24)           Definition of Company Secretary/
Secretary
2(25) Definition of Company Secretary in
Practice
2(26)           Definition of Contributory
2(27) Definition of Control
2(28) Definition of Cost Accountant
2(29) Definition of Court
2(30)           Definition of Debenture
2(32)           Definition of Depository
2(33)           Definition of Derivative
2(34)           Definition of Director
2(35)           Definition of Dividend
2(36)           Definition of Document
2(37)           Definition of Employees’ Stock Option
2(38)           Definition of Expert
2(39)           Definition of Financial Institution
2(40)           Definition of Financial Statement
2(43)           Definition of Free Reserves
2(44)           Definition of Global Depository Receipt
2(45)           Definition of Government Company
2(46)           Definition of Holding Company
2(49)           Definition of Interested Director
2(50)           Definition of Issued Capital
2(51)           Definition of Key Managerial Person
2(52)           Definition of Listed Company
2(53)           Definition of Manager
2(54)           Definition of Managing Director
2(55)           Definition of Member
2(56)           Definition of Memorandum
2(57)           Definition of Net Worth
2(58)           Definition of Notification
2(59)           Definition of Officer
2(60) Definition of Officer who is in Default
2(61)           Definition of Official Liquidator
2(63)           Definition of Ordinary or Special
Resolution
2(64)           Definition of Paid-up Share Capital/ Share
Capital Paid-up
2(65)           Definition of Postal Ballot
2(66)           Definition of Prescribed
2(67) Definition of Previous Company Law
2(68)           Definition of Private Company
2(69)           Definition of Promoter
2(70)           Definition of Prospectus
2(71)           Definition of Public Company
2(72)           Definition of Public Financial Institution
2(73)           Definition of Recognized Stock Exchange
2(74)           Definition of Register of Companies
2(75)           Definition of Registrar
2(76)           Definition of Related Party
2(77)           Definition of Relative
2(78)           Definition of Remuneration
2(79)           Definition of Schedule
2(80)           Definition of Scheduled Bank
2(81)           Definition of Securities
2(82)           Definition of Securities and Exchange
Board
2(84)           Definition of Share
2(86)           Definition of Subscribed Capital
2(87) Definition of Subsidiary Company/
Subsidiary
2(88)           Definition of Sweat Equity Shares
2(89)           Definition of Total Voting Power
2(90)           Definition of Tribunal
2(91)           Definition of Turnover
2(92)           Definition of Unlimited Company
2(93)           Definition of Voting Rights
2(94)           Definition of Whole-time Director
2(95)           Words and Expression not defined in this
Act.
19      Subsidiary Company not to hold shares in its Holding Company

 21     Authentication of Documents, Proceedings
and Contracts

 22     Execution of Bills of Exchange, etc.

23      Public Offer and Private Placement

24      Power of Securities and Exchange Board to regulate Issue and Transfer of Securities

 25     Document containing Offer of Securities for Sale to be Deemed Prospectus

 29     Public Offer of Securities to be in Dematerialized Form

 30     Advertisement of Prospectus

 31     Shelf Prospectus

32      Red-Herring Prospectus

 33     Issue of Application Form for Securities --


34      Criminal Liability for Misstatement in Prospectus
Liable under Section 447

35      Civil Liability for Misstatement in Prospectus
Liable under Section 36

36      Punishment for fraudulently inducing people to invest money
Liable under Section 447
37      Action by Affected Persons Suit/ Action under Sections 34, 35 and/ or 36

 38     Punishment for Personating for Acquisition, etc. of Securities
Liable under Section 447/ Disgorgement of Gain/ Seizure and disposal of securities

39      Allotment of Securities by Company Penalty of Rs. 1,000 per day or Rs. 1,00,000 whichever is less
40      Securities to be dealt with in Stock Exchanges
For Company: Fine - Rs. 5,00,000 up to Rs. 50,00,000. For
Officer in Default: Imprisonment of up to 1 year and/ or
fine of Rs. 50,000 up to Rs. 3,00,000.
 44     Nature of Shares or Debentures --
 45     Numbering of Shares --
 49     Calls on Shares of same class to be made  on uniform basis

 50     Company to accept un-paid Share Capital although not called-up

 51     Payment of Dividend in proportion to amount paid-up

57     Punishment for Personation of Shareholder Imprisonment of 1 year up to 3 years and Fine of Rs. 1,00,000 up to Rs. 5,00,000.

58     Refusal of Registration and Appeal against Refusal Imprisonment of 1 year up to 3 years and Fine of Rs. 1,00,000 up to Rs. 5,00,000 for contravention of order of the Tribunal.

59     Rectification of Register of Members Company: Fine of Rs. 1,00,000 up to Rs. 5,00,000 Officer in Default: Imprisonment of up to 1 year or fine of Rs. 1,00,000 up to Rs. 3,00,000.

60      Publication of Authorized, Subscribed and Paid-up Capital
Company: Fine of Rs. 10,000 for each default. Officer in Default: Rs. 5,000 for each default.
65     Unlimited Company to provide for Reserve Share Capital on conversion into Limited Company

 69     Transfer of Certain Sums to Capital Redemption Reserve Account

 70     Prohibition for Buy Back in Certain Circumstances

86     Punishment for Contravention Company: Fine of Rs. 1,00,000 up to Rs. 10,00,000 Officer in Default: Imprisonment of up to 6 months or fine of Rs. 25,000 up to Rs. 1,00,000.

 91     Power to close register of members or Debenture Holders or other Security
Holders Company and Officer in Default: Rs. 5,000 per day up to a
maximum of Rs. 1,00,000.
100    Calling of Extraordinary General Meeting --
102    Statement to be Annexed to Notice Officer in Default: Fine up to Rs. 50,000 or five times the amount of benefit accruing to the Officer in Default or any
of his relatives, whichever is more.
103    Quorum for Meetings --
104    Chairman of Meetings --
105    Proxies --
106    Restriction on Voting Rights --
107    Voting by Show of Hands --
111    Circulation of Members' Resolution Company and Officer in Default: Fine of Rs. 25,000.
112    Representation of President and Governors in Meetings

113    Representation of Corporations at Meeting --
114    Ordinary and Special Resolutions --
116    Resolutions passed at Adjourned Meeting --
127    Punishment for failure to distribute Dividends Every Director: Imprisonment up to 2 years and Fine not less than Rs. 1,000 per day of default plus 18% interest.
133    Central Government to prescribe
Accounting Standards

161    Appointment of Additional Director,
Alternate Director and Nominee Director

162    Appointment of Directors to be voted individually

163    Option to Adopt Principle of Proportional Representation for Appointment of Directors

176    Defects in appointment of directors not to invalidate actions taken

180    Restrictions on powers of Board --
181    Company to contribute to bona fide and Charitable Funds, etc.

182    Prohibitions and restrictions regarding Political Contributions Company: Fine of amount five times the sum contributed. Officer in Default: Imprisonment up to 6 months and Fine of amount five times the sum contributed.
183    Power of Board and other persons to make Contributions to National Defense Fund, etc.

185    Loan to directors, etc. Company: Fine Rs. 5,00,000 up to Rs. 25,00,000. Director/ other person to whom issued: Imprisonment up to 6 months and/ or Fine of Rs. 5,00,000 up to Rs. 25,00,000.
192    Restriction on Non-Cash Transactions Involving Directors
194    Prohibition on Forward Dealings in securities of Company by Director or Key Managerial Personnel Officer in Default: Imprisonment up to 2 years and/ or Fine of Rs. 1,00,000 up to Rs. 5,00,000.
195    Prohibition on Insider Trading of Securities Imprisonment up to 5 years and/ or Fine of Rs. 5,00,000 up to Rs. 25,00,00,000 or 3 times the amount made by such trade.
202    Compensation for loss of office of managing Or Whole-Time Director or
Manager

 379   Application of Act to Foreign Companies --
382    Display of Name, etc., of Foreign Company
 383   Service on Foreign Company --
386    Interpretation
394    Annual Reports on Government Companies

405    Power of Central Government to direct Companies to furnish information or
Statistics Company: Fine up to Rs. 25,000.
Officer in Default: Imprisonment up to 6 months and/ or Fine of Rs. 25, 000 up to Rs. 3,00,000.
407    Definitions --
408    Constitution of National Company Law Tribunal

409    Qualification of President and Members of Tribunal

410    Constitution of Appellate Tribunal
411    Qualifications of Chairperson and members of Appellate Tribunal

412    Selection of Members of Tribunal and Appellate Tribunal

 413   Term of office of President, Chairperson and other Members

 414   Salary, allowances and other terms and conditions of service of Members

 439   Offences to be Non-Cognizable --
443    Power of Central Government to appoint Company Prosecutors
444    Appeals against Acquittal --
445    Compensation for accusation without reasonable cause

 446   Application of Fines --
447    Punishment for Fraud Imprisonment of 6 months up to 10 years and Fine of amount involved in fraud up to three times the sum involved.
448    Punishment for False Statements Liable under Section 447.
449    Punishment for False Evidence Imprisonment of 3 years up to 7 years and Fine up to Rs. 10,00,000.
450    Punishment where no specific penalty or punishment is provided Fine up to Rs. 10,000 and for continuing default additional fine up to Rs. 1,000 per day after the first day.
451   Punishment in case of repeated default Imprisonment as provided for the offence plus double fine.
452    Punishment for wrongful withholding of property Fine of Rs. 1,00,000 up to   Rs. 5,00,000.  If sub-section (2) not fulfilled imprisonment of up to 2 years
453    Punishment for improper use of "Limited" or "Private Limited" Fine of Rs. 500 up to Rs. 2,000 per day.
456    Protection of action taken in good faith --
457    Non-disclosure of information in certain cases
 458   Delegation by Central Government of its powers and functions

459   Powers of Central Government or Tribunal to accord approval, etc., subject to conditions and to prescribe fees on applications

460    Condonation of delay in certain cases --
461    Annual Report by Central Government --
462    Power to exempt class or classes of companies from provisions of this Act
--
 463   Power of court to grant relief in certain cases

 467   Power of Central Government to amend
Schedules

468    Powers of Central Government to make rules relating to winding up

 469   Power of Central Government to make rules

 470   Power to remove difficulties --

September, 2013 DSK Legal Knowledge Center
____________________________________________________________________________________________________________________________________

COMPANY ACT 2013
The Company bill 2012 was passed in Rajya Sabha on 8 August 2013. Earlier the bill was passed by The Lok sabha on 18 December 2012.
The New Act Comprises of 29 chapters, 470 Sections and 7 Schedules as against 14 Schedules in Company act 1956.
The Ministry of Corporate affairs has notified 98 Sections (out of 470 sections) of The New Companies Act, 2013. These Sections have come into effect from 12th September 2013.
Many of the Sections which have been notified have provisions similar to that of Companies Act 1956. However in some of the Sections new provisions have been inculcated which demand our immediate attention. Immediately after notifying these Sections ministry has also issued some clarifications regarding their applicability for stakeholder convenience.
SECTION 2- DIFINITION 
Section 2 under Companies Act, 2013 contains 95 Definitions out of which all definitions except 12 definitions have been notified.  The definition of private company given under company act 2013 is different from the earlier Act.
Some of the definitions are as under:-

2. In this Act, unless the context otherwise requires,—

 (6) “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;


 (10) “Board of Directors” or “Board”, in relation to a company, means the collective body of the directors of the company;

(11) “Body corporate” or “corporation” includes a company incorporated outside
India, but does not include
(i) a co-operative society registered under any law relating to co-operative
societies; and
(ii) any other body corporate (not being a company as defined in this Act),
which the Central Government may, by notification, specify in this behalf;
(12) “book and paper” and “book or paper” include books of account, deeds,
vouchers, writings, documents, minutes and registers maintained on paper or in
electronic form;
(13) “books of account” includes records maintained in respect of—
(i) all sums of money received and expended by a company and matters in
relation to which the receipts and expenditure take place;
(ii) all sales and purchases of goods and services by the company;
(iii) the assets and liabilities of the company; and
(iv) 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;
(14) “Branch office”, in relation to a company, means any establishment described
as such by the company;

(20) “Company” means a company incorporated under this Act or under any previous company law;

(62) “One Person Company” means a company which has only one person as a member;
(63) "ordinary or special resolution" means an ordinary resolution, or as the
case may be, special resolution referred to in section 114;
(64) “paid-up share capital” or “share capital paid-up” means such aggregate
amount of money credited as paid-up as is equivalent to the amount received as paidup
in respect of shares issued and also includes any amount credited as paid-up in
respect of shares of the company, but does not include any other amount received in
respect of such shares, by whatever name called;
 (68) “Private company” means a company having a minimum paid-up share capital of one lakh rupees or such higher paid-up share capital as may be prescribed, and which by its articles,—
(i) restricts the right to transfer its shares;
(ii) Except in case of One Person Company, limits the number of its members to two hundred:
Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause, be treated as a single member:
Provided further that—
(A) Persons who are in the employment of the company; and
(B) Persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased, shall not be included in the number of members; and
(iii) Prohibits any invitation to the public to subscribe for any securities of the company;
 (71) “public company” means a company which—
(a) is not a private company;
(b)  has a minimum paid-up share capital of five lakh rupees or such higher paid-up capital, as may be prescribed:
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;
(72) “Public financial institution” means—
(i) The Life Insurance Corporation of India, established under section 3 of the Life Insurance Corporation Act, 1956;
(ii) The Infrastructure Development Finance Company Limited, referred to
In clause (vi) of sub-section (1) of section 4A of the Companies Act, 1956 so
Repealed under section 465 of this Act;
(iii) Specified company referred to in the Unit Trust of India (Transfer of
Undertaking and Repeal) Act, 2002;
(iv) Institutions notified by the Central Government under sub-section (2) of section 4A of the Companies Act, 1956 so repealed under section 465 of this
Act;
(v) Such other institution as may be notified by the Central Government in
Consultation with the Reserve Bank of India:
Provided that no institution shall be so notified unless—
(A) It has been established or constituted by or under any Central or
State Act; or
(B) Not less than fifty-one per cent. Of the paid-up share capital is
Held or controlled by the Central Government or by any State Government
or Governments or partly by the Central Government and partly by one or more State Governments;

(74) “Register of companies” means the register of companies maintained by the
Registrar on paper or in any electronic mode under this Act;

(75) “Registrar” means a Registrar, an Additional Registrar, a Joint Registrar, a
Deputy Registrar or an Assistant Registrar, having the duty of registering companies
and discharging various functions under this Act;

(76) “Related party”, with reference to a company, means—
(i) a director or his relative;
 (ii) a key managerial personnel or his relative;
(iii) a firm, in which a director, manager or his relative is a partner;
(iv) a private company in which a director or manager is a member or
director;
(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;
(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;
(vii) any person on whose advice, directions or instructions a director or
manager is accustomed to act:
Provided that nothing in sub-clauses (vi) and (vii) shall apply to the advice,
directions or instructions given in a professional capacity;
(viii) any company which is—
(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;

(77) ‘‘relative’’, with reference to any person, means any one who is related to
another, if—
(i) they are members of a Hindu Undivided Family;
(ii) they are husband and wife; or
(iii) one person is related to the other in such manner as may be prescribed;

 (85) ‘‘small company’’ means a company, other than a public company,—
(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
(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:
Provided that nothing in this clause shall apply to—
(A) a holding company or a subsidiary company;
(B) a company registered under section 8; or
(C) a company or body corporate governed by any special Act;

SHAREHOLDING IN A HOLDING COMPANY
The section1 pertaining to shareholding in a holding company in the New Company Law is similar to section 42 of the Old Company Law, which restricts acquisition or holding of any share in a holding company by its subsidiary. The definition of ‘Subsidiary Company’ under the New Company Law includes a company in which the holding company exercises or controls more than one-half of the total share capital either on its own or Together with one or more of its subsidiary companies. Unlike the Old Company Law wherein only equity share capital was considered for determining the holding subsidiary relationship, under the New Company Law, the calculation of total share capital will factor in both equity shareholding and the preference shareholding. However, a clarification or exemption may be expected in this regard as the inclusion of preference shareholding is unwarranted for determining holding subsidiary relationship

SHARE TRANSFER RESTRICTIONS
The New Company Law has a provision similar to Section 111A of the Old Company Law. As per the said provision, the shares of a public company shall be freely transferable. The New Company Law Explicitly provides that any contract or arrangement between two or more persons in respect of transfer of securities of a public company shall be enforceable as a contract. The said provision, to a certain extent puts to rest the ambiguity with respect to enforceability of contractual arrangement viz. a right to first offer, a right of first refusal, tag along right, etc (“Contractual Arrangement”). The enforceability of such Contractual Arrangement has been subject matter of much litigation and the courts have taken divergent views from time to time. The said provision only validates the enforceability of the aforesaid Contractual Arrangement as a contract. It must be noted that the provision is in line with the judgment of the Bombay High Court in the matter of Messer Holdings Limited3. As per the Bombay High Court judgment, such Contractual Arrangement can be enforced like any other contract, but does not impede the free transferability of shares at all. However, the ambiguity regarding the power of the company to refuse the transfer which is in violation of such Contractual Arrangement to which the public company is a party, still exists.


PUBLIC OFFER
The provisions pertaining to public offer in the New Company Law have been notified. The Securities and Exchange Board of India is empowered to regulate such public issue and transfer of securities of a listed company and in other cases the responsibility is of the Central Government. The definition of public offer contemplates offer of securities to the public through issue of a prospectus. Every prospectus should contain a declaration about the compliance of the provisions of the New Company Law and a statement to the effect that nothing in the prospectus is contrary to the applicable provisions of the New Company Law, the Securities Contracts (Regulation) Act, 1956 and the Securities and Exchange Board of India Act, 1992 and the rules and regulations made there under. Any misrepresentation of facts and/or concealment of material facts in a prospectus will be dealt more stringently under the New Company Law. The company shall be liable to be punished with a fine which shall not be less than Rupees fifty thousand but which may extend up to Rupees three lakh and every person who is knowingly a party to the issue of such prospectus shall be liable to be punished with imprisonment for a term which may extend to three years or with fine which shall not be less than fifty thousand rupees but which may extend to three lakh rupees or with both. Further, if such misrepresentation or concealment amounts to fraud, the punishment may go up to 10 years of imprisonment as per Section 447 of the New Company Law. It may be noted that the provision pertaining to private placements is yet to be notified.
EXTRAORDINARY GENERAL MEETING
Calling of Extraordinary General Meeting:
Like earlier, an Extraordinary General Meeting may be called by the Board or at
The requisition made by the members, Under the New Company Law.

Time Period
The Board is required to call the meeting within 21 (twenty-one) days from the date of receipt of a valid requisition in regard to any matter, on a day not later than 45 (forty-five) days from the date of receipt of such requisition. If the Board does not call a meeting within the said time period, the meeting may be called and held by the requisitonists themselves within a period of 3 (three) months from the date of the requisition.

Statement to be annexed to Notice of Meeting
A statement setting out the following material facts concerning each item of special business to be transacted at a general meeting, shall be annexed to the
notice calling such meeting, namely:
(a) The nature of concern or interest, financial or otherwise, if any, in respect of each items of:
(i) Every director and the manager, if any;
(ii)every other key managerial personnel; and
 (iii) relatives of the persons mentioned in sub-clauses (i)and (ii);

(b) Any other information and facts that may enable members to understand
The meaning, scope and implications of the items of business and to take
Decision thereon;
(c) Where any item of special business to be transacted at a meeting of the
Company relates to or affects any other company, the extent of shareholding interest in that other company of every promoter, director, manager, if any, and of every other key managerial personnel of the first mentioned company shall, if the extent of such shareholding is not less than two percent of the paid-up share capital of that company, also be set out in the statement;
(d) where any item of business refers to any document, which is to be considered at the meeting, the time and place where such document can be inspected shall be specified in the statement.

MCA Clarification:
The MCA vide its circular dated September 13, 2013 has clarified that all companies which have issued notices of general meeting on or after September 12, 2013, the statement to be annexed to the notice shall comply with additional requirements as prescribed in the New Company Law as set out

Quorum of Meetings
The quorum requirement for a public company has undergone change in the
New Company Law, which is as follows:
(a) five members personally present if the number of members as on the
date of meeting is not more than one thousand;
(b) fifteen members personally present if the number of members as on the
date of meeting is more than one thousand but up to five thousand;
(c) thirty members personally present if the number of members as on the
date of the meeting exceeds five thousand.
For a private company, two members
personally present, shall be the quorum for a meeting of the company. if the quorum is not present within half-an hour from the time appointed for holding a
meeting of the company:
(a) the meeting shall stand adjourned to the same day in the next week at the
same time and place, or to such other date and such other time and place as the Board may determine;
Or
(b) The meeting, if called by requisitonists, shall stand cancelled:
In case of an adjourned meeting or of a change of day, time or place of meeting,
The company shall give not less than three days’ notice to the members either
individually or by publishing an advertisement in the newspapers (one in English and one in vernacular language) which is in circulation at the place where the registered office of the company is situated. If at the adjourned meeting also,
a quorum is not present within half-an-hour from the time appointed for holding
Meeting, the members present shall be the quorum.
The Articles of a company may provide for a greater number of members required to constitute a quorum. Further, though the members can participate in the meetings through electronic modes, such participation shall not be counted for quorum requirement.

RESTRICTION ON VOTING RIGHTS
The Articles of a company may restrict the right of vote of a member in respect of
Any shares registered in his name on which any calls or other sums presently payable by him have not been paid, or in regard to which the company has exercised any right of lien.
A company cannot prohibit any member from exercising his voting right on any
other ground. Earlier, the private companies could provide for other grounds restricting the exercise of vote, which is not possible under New Company Law.

ADDITIONAL DIRECTOR
The Articles of a company may provide for the power of its Board of Directors to
Appoint any person as an additional director. However, a person who fails to
Get appointed as a director in a general meeting cannot be appointed as an
Additional director
NOMINEE DIRECTOR
The Board may appoint any person as a director nominated by any institution in
pursuance of the provisions of any law for the time being in force or of any agreement. Interestingly, there is no restriction on term of such appointment and this does not require approval in general meeting. However, the same may
be restricted by the Articles of a company.


SECTION-102_____STATEMENT TO BE ANNEXED TO NOTICE

Section 102 of CA, 2013 Corresponds to Section 173 of company act 1956 which specifies the requirement of annexing a statement along with the notice of general meeting where any special business has to transact. The important changes in this section are:
·        The interest of not only directors/ managers has to be disclosed (as prescribe in CA 1956) but also that of key managerial personnel and relatives of directors, manager and KMP.
·        Earlier, With regard to any special business concerning another company, disclosure of shareholding interest director /manager in that another company had to be disclosed if such shareholding was more than 20%. The percentage has been changed to 2% and also the same has been applicable to all promoters, directors, managers, KMP.

CA 2013 also specifies that if any benefit accrues to any director, manager, promoter or KMP or their relatives because of non disclosure or insufficient disclosure, the concerned person will be deemed to be holding the amount of benefit in trust of the company. This is the new specification under company act 2013.
·        CA, 2013 also contains penalty clause which provides for a penalty of rs 5000 or 5 times the amount of benefit whichever is more. Earlier no Specific penalty was provided.

This section is applicable to all companies except on Person Company.


RESTRICTION ON POWER OF BOARD

This Section Corresponds to section 293 of company act 1956 which contains a list of items which can be transacted by the board only after obtaining approval of the shareholders. The important point of difference is:
·        Company Act 2013 mandates approval by means of special resolution only.
·        This section is applicable to all companies.


CONTRIBUTION TO CHARITABLE AND OTHER FUNDS
The Board of Directors of a company may contribute to bona fide charitable and other funds. A prior permission of the company in general meeting (ordinary resolution) shall be required for if the aggregate of such contributions in a financial year exceeds 5 % (five percent) of its average
net profits for the three immediately preceding financial years.
POLITICAL CONTRIBUTIONS
A company with approval from its Board of Directors may contribute any amount
directly or indirectly to any political party in a financial year up to 7.5 % (seven and a half percent) of its average net profits during the three immediately preceding financial years. However, a Government company and a company which has been in existence for less than three financial years cannot make such political contribution.
LOANS TO DIRECTORS AND OTHER PERSONS IN WHOM THE DIRECTOR IS INTERESTED
Like Section 295 of the Old Company Law, the New Company Law also restricts a
Company from giving any loan to including any loan represented by a book debt or give any guarantee or provide any security in connection with any loan taken by any of its directors or to the following person (in which director is interested):
(a) any director of the lending company, or of a company which is its holding
company or any partner or relative of any such director;
(b) any firm in which any such director or relative is a partner;
(c) any private company of which any such director is a director or member;
(d) any body corporate at a general meeting of which not less than twenty five percent of the total voting power may be exercised or controlled by any such director, or by two or more such directors, together;
or
(e) any body corporate, the Board of Directors, managing director or manager, whereof is accustomed to act in accordance with the directions or instructions of the Board, or of any director or directors, of the lending company.
However, this restriction does not apply to:
(a) the giving of any loan to a managingor whole-time director:
(i) as a part of the conditions of service extended by the company to all its employees;or
 (ii) pursuant to any scheme approved by the members by a special resolution; or

(b) a company which in the ordinary course of its business provides loans or gives guarantees or securities for the due repayment of any loan and in respect of such loans an interest is charged at a rate not less than the bank rate declared by the Reserve Bank of India.
However, the following are main differences between the provisions under New Company Law vis-à-vis the provisions under the Old Company Law:
(a) This restriction also applies to private companies under the New Company Law. Under the Old Company Law, this restriction was applicable only to public companies and subsidiaries of a public company.
(b) Under the Old Company Law, a company could provide such loan, guarantee or security with the approval of the central government. However, this is not possible under the New Company Law.
(c) Unlike Old Company Law, this provision also restricts the holding company from providing loan to its subsidiary company and security or guarantee with respect to a loan obtained by its subsidiary company.

RESTRICTION ON NON-CASH TRANSACTIONS WITH DIRECTORS
A company will require prior approval in general meeting for entering into an
Arrangement by which:
(a) a director of the company or its holding, subsidiary or associate company or a person connected with him acquires or is to acquire assets for consideration other than cash, from the company; or
(b) The company acquires or is to acquire assets for consideration other than cash, from such director or person so connected. Further, if the director or connected person is a director of its holding company, an approval shall also be required to be obtained by the holding company by passing a resolution in its general meeting.

The Old Company Law did not have such kind of restriction.

FORWARD CONTRACTS BY DIRECTOR OR KEY MANAGERIAL PERSONS
The New Company Law restricts whole time directors and key managerial persons
from entering into forward contracts and call option contracts with respect to shares or debentures of holding, subsidiary or associate company.

PROHIBITION ON INSIDER TRADING
The New Company Law forbids the insider trading by a person including any director or key managerial personnel of a company “insider trading” has been defined as:
(i) an act of subscribing, buying, selling, dealing or agreeing to subscribe,
buy, sell or deal in any securities by any director or key managerial personnel or any other officer of a company either as principal or agent if such director or key managerial personnel or any other officer of the company is reasonably expected to
have access to any non-public price sensitive information in respect of securities of company; or
(ii) an act of counseling about procuring or communicating directly or indirectly any non-public price sensitive information to any person.
“price-sensitive information” has been defined as any information which relates,
Directly or indirectly, to a company and which if published is likely to materially affect the price of securities of the company.
Under the existing legal framework, the insider trading restrictions pertains to public listed companies, as such activity is considered to cause prejudice to public Shareholder. Under the New Company Law, the insider trading restriction also applies to a private company and unlisted public companies, also. However, the
Purpose of this restriction is not clear. An exemption may be expected from the MCA from applicability of this provision to private companies and unlisted public companies.

PUNISHMENT FOR FRAUD
The New Company Law provides for strict punishment for any fraud. The punishment for fraud is 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 pay a fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud. Where the fraud in question involves public interest, the term of imprisonment shall not be less than three years.
POWER TO EXEMPT
The New Company Law empowers the Central Government to exempt a particular class of companies from applicability of particular provisions. Considering the unwarranted applicability of many provision to private companies and unlisted public companies.

NATIONAL COMPANY LAW TRIBUNAL AND NATIONAL COMPANY LAW APPELLATE TRIBUNA
Section 2(90) of the New Company Law defines ‘Tribunal’ as the National Company Law Tribunal and Section 2(4) defines ‘Appellate Tribunal’ as the National Company Law Appellate Tribunal and thereafter Chapter XXVII (Sections 407 to 434) deals with the Tribunal and the Appellate Tribunal. However, only Sections 2(4), 2(90) and 407 to 414 (both inclusive) have been notified by the Central Government till now. The notified sections of the chapter mostly deal with the establishment/constitution of the tribunal and the appellate tribunal. While Section 407 sets out the definitions for the purpose of this chapter, Section 408 establishes the tribunal to be known as the National Company Law Tribunal exclusively for dealing with and adjudicating matters pertaining to company law and company affairs and Section 409 sets out the eligibility criteria for the appointment of the president, judicial members and the technical members of the tribunal. Thereafter, Section 410 establishes the appellate tribunal to be known as the National Company Law Appellate Tribunal for dealing with appeals from the National Company Law Tribunal and Section 411 sets out the eligibility criteria of the chairperson, judicial members and technical members of the appellate tribunal. Section 412 sets out that the president of the tribunal and the chairperson of the appellate tribunal shall be appointed only after due consultation with the Chief Justice of India and that the members of the tribunal and the technical members of the appellate tribunal shall be appointed on the recommendation of the selection committee comprising of persons set out therein. Section 413 sets out the term of office for the office bearers of the tribunal and the appellate tribunal and Section 414 sets out that the salary, allowances and other terms and conditions of service shall be as may be prescribed. Sections pertaining to the acting president/chairperson, resignation of members, removal of members, staff, benches, order of the tribunal, appeal from orders of the tribunal, expeditious disposal, appeal to Supreme Court, power to punish for contempt, delegation of power, limitation, etc. of the tribunal and the appellate tribunal has not been notified yet.
It is pertinent to note that although the notification of Sections 407 to 414 establishes the tribunal and the appellate tribunal but the procedure to be followed by the tribunal/appellate tribunal or the powers of the tribunal/appellate tribunal has not been notified yet.



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