{"id":4659,"date":"2013-11-11T09:08:20","date_gmt":"2013-11-11T03:38:20","guid":{"rendered":"http:\/\/lex-warrier.in\/?p=4659"},"modified":"2023-07-01T15:46:10","modified_gmt":"2023-07-01T15:46:10","slug":"companies-act-2013-milestone-indian-corporate-regime","status":"publish","type":"post","link":"https:\/\/lex-warrier.in\/archives\/companies-act-2013-milestone-indian-corporate-regime.html","title":{"rendered":"Companies Act 2013 &#8211; A Milestone in Indian Corporate Regime"},"content":{"rendered":"<p align=\"right\"><b>Abhinav Gaur, Research Associate<\/b><\/p>\n<p style=\"text-align: justify;\">The Companies Bill, 2009 for the first time was introduced on August\u00a03rd 2009. \u00a0On August 31, 2010 the Standing Committee presented its\u00a0report on the Bill. Later, in the winter session of 2011, the central<br \/>\ngovernment withdrew this Bill. Thus, on December 2, 2011, the Bill\u00a0was re-introduced. The Bill was finally after few Amendments was\u00a0passed in the Lok Sabha on 18 December 2012. The Companies Bill 2012<br \/>\nwas passed in Rajya Sabha on 8 August 2013 (during the monsoon session\u00a0of the parliament). \u00a0With the President\u2019s assent, the Companies Bill\u00a02012 became the Companies Act, 2013.<\/p>\n<p style=\"text-align: justify;\">The Companies Act 2013 although craved its existence for too long\u00a0years, but better late than never, this Act has been amended several\u00a0times after extensive debates on its applicability. This Act has given\u00a0a new hope to the Indian Corporate sector to revive with ever-growing\u00a0challenges, both domestic and international.<\/p>\n<p style=\"text-align: justify;\">To throw some light, on its few extensively important provisions,\u00a0under mentioned is a brief of the same.<\/p>\n<ul style=\"text-align: justify;\">\n<li>Definition of a Private Company has been changed as the maximum numberof members in a Private Company has been increased from 50 to 200.<\/li>\n<li>Small company has been defined as a company other than a public company:-\n<ul>\n<li>having a paid-up share capital of which does not exceed fifty lakhrupees or such higher amount as may be prescribed notexceedingRs.5crore or<\/li>\n<li>having turnover of which does not exceed two crore rupees or suchhigher amount as may be prescribed not exceeding twenty crore rupees.[section 2(85)].<\/li>\n<li>Furthermore, various relaxations in terms of reporting requirement,\u00a0board meetings and procedure for mergers\/ amalgamations have been\u00a0introduced.<\/li>\n<li>Substantial additional information, like principal business\u00a0activities, remuneration of directors and key managerial personnel,\u00a0etc is required to be given in the Annual Return of a company. Also,\u00a0in case of a listed company, even if the Annual Return is signed by\u00a0the Company Secretary in employment of the Company, it is further\u00a0required to be signed by the Company Secretary in Whole time in\u00a0practice.<\/li>\n<li>A listed company shall not appoint:-\n<ul>\n<li>An individual as auditor for more than one term\u00a0of five consecutive years.<\/li>\n<li>Hire a law firm to audit for more than two terms of five consecutive years.<\/li>\n<li>Auditor appointed shall continue to hold office up till the conclusion<br \/>\nof 6th\u00a0meeting.<\/li>\n<li>Financial Year of any Company shall end on March 31 and only exceptionis for companies, which are holding \/ subsidiary of a foreign entity,which require consolidation outside India, they can have a differentfinancial year, but with the approval of Tribunal.<\/li>\n<li>The bill provides for establishment of a National Company Law Tribunal\u00a0and National Company Law Appellate Tribunal consisting of body of\u00a0technical and judicial members from various fields.<\/li>\n<li>The provision relating to the mandatory transfer of profits to\u00a0reserves for dividend declaration out of profits has been ruled out.<\/li>\n<li>Concept of fast track merger without the requirement of a Court Process introduced to facilitate merger between 2 or more \u201cSmall Companies\u201d or between holding Company and its wholly owned subsidiary.<\/li>\n<li>The declaration of interim dividend can be out of surplus profits or\u00a0out of current year\u2019s profits. However, if in case the Company has\u00a0incurred loss up to preceding quarter during the year, the interim\u00a0dividend cannot be declared out at a rate higher than the average\u00a0dividend declared by the Company during immediately preceding 3\u00a0financial years.<\/li>\n<li>Minimum rate of Interest on inter corporate loans to be prevailing\u00a0rate of interest on dated government securities. Private Companies maynot be able to grant interest free loans.<\/li>\n<li>There has to be a minimum of 1 year gap between 2 buy-backs of an\u00a0unlisted company, whether approved by board of directors or\u00a0shareholders.<\/li>\n<li>Merger and Amalgamation between two small companies have been\u00a0simplified without requiring the Court process. Also, Merger and\u00a0Acquisition between an Indian Company and Foreign Company or vice\u00a0versa has been possible with the permission of RBI.\u00a0Until now, merger of listed company with unlisted company entailed\u00a0listing of the unlisted company. However, under the present Act\u00a0(2013), the unlisted company has an option to continue as unlisted\u00a0company subject to payment of cash to existing shareholders of listed<br \/>\ntransferor company in accordance with determined valuation.<\/li>\n<li>Concept of fast track merger without the requirement of a Court Process introduced to facilitate merger between 2 or more \u201cSmall Companies\u201d or between holding Company and its wholly owned subsidiary.<\/li>\n<li>Board has to ensure to spend 2% of average profits of last 3 years on CSR. Applicable to Companies having net-worth of INR 500 crore or more or Turnover of INR 1,000 crore or more or net profit of INR 5 crore or more. Company also required constituting CSR committee.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p style=\"text-align: justify;\">Thus, with changing times and also the needs, it is hoped that the new Companies Act opens up new avenues to success and prosperity for Indian Companies as well as boost up Indian Economy.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Abhinav Gaur, Research Associate The Companies Bill, 2009 for the first time was introduced on August\u00a03rd 2009. \u00a0On August 31, 2010 the Standing Committee presented its\u00a0report on the Bill. Later,&hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[87],"tags":[735,737],"class_list":["post-4659","post","type-post","status-publish","format-standard","hentry","category-corp-ipr","tag-companies-act","tag-companies-act-2013-a-milestone-in-indian-corporate-regime","no-post-thumbnail","clearfix","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Companies Act 2013 - A Milestone in Indian Corporate Regime<\/title>\n<meta name=\"description\" content=\"Companies Act 2013 although craved its existence for too long years, but better late than never, this Act has been amended several times after\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/lex-warrier.in\/archives\/companies-act-2013-milestone-indian-corporate-regime.html\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Companies Act 2013 - A Milestone in Indian Corporate Regime\" \/>\n<meta property=\"og:description\" content=\"Companies Act 2013 although craved its existence for too long years, but better late than never, this Act has been amended several times after\" \/>\n<meta property=\"og:url\" content=\"https:\/\/lex-warrier.in\/archives\/companies-act-2013-milestone-indian-corporate-regime.html\" \/>\n<meta property=\"og:site_name\" content=\"The Lex-Warrier: Online Law Journal\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/lex.warrier.page\/\" \/>\n<meta property=\"article:published_time\" content=\"2013-11-11T03:38:20+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-07-01T15:46:10+00:00\" \/>\n<meta name=\"author\" content=\"Lex-Warrier\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@LexWarrier\" \/>\n<meta name=\"twitter:site\" content=\"@LexWarrier\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Lex-Warrier\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/lex-warrier.in\/archives\/companies-act-2013-milestone-indian-corporate-regime.html#article\",\"isPartOf\":{\"@id\":\"https:\/\/lex-warrier.in\/archives\/companies-act-2013-milestone-indian-corporate-regime.html\"},\"author\":{\"name\":\"Lex-Warrier\",\"@id\":\"https:\/\/lex-warrier.in\/archives\/#\/schema\/person\/ab2bb19b344a2bfcbc373777495f8f82\"},\"headline\":\"Companies Act 2013 &#8211; 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