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Salient Features of The Companies Act

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Aniket Mishra
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819 views3 pages

Salient Features of The Companies Act

Company LawCompany LawCompany LawCompany LawCompany LawCompany LawCompany LawCompany LawCompany LawCompany LawCompany LawCompany LawCompany LawCompany LawCompany LawCompany LawCompany LawCompany Law

Uploaded by

Aniket Mishra
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Salient features of the Companies

Act 2013

1. Class action suits for Shareholders: The Companies Act 2013 has
introduced new concept of class action suits with a view of making
shareholders and other stakeholders, more informed and knowledgeable
about their rights.
2. More power for Shareholders: The Companies Act 2013 provides
for approvals from shareholders on various significant transactions.
3. Women empowerment in the corporate sector: The Companies Act
2013 stipulates appointment of at least one woman Director on the
Board (for certain class of companies).
4. Corporate Social Responsibility: The Companies Act 2013 stipulates
certain class of Companies to spend a certain amount of money every
year on activities/initiatives reflecting Corporate Social Responsibility.
5. National Company Law Tribunal: The Companies Act
2013 introduced National Company Law Tribunal and the National
Company Law Appellate Tribunal to replace the Company Law Board
and Board for Industrial and Financial Reconstruction. They would
relieve the Courts of their burden while simultaneously providing
specialized justice.
6. Fast Track Mergers: The Companies Act 2013 proposes a fast track
and simplified procedure for mergers and amalgamations of certain
class of companies such as holding and subsidiary, and small companies
after obtaining approval of the Indian government.
7. Cross Border Mergers: The Companies Act 2013 permits cross border
mergers, both ways; a foreign company merging with an India
Company and vice versa but with prior permission of RBI.
8. Prohibition on forward dealings and insider trading: The
Companies Act 2013 prohibits directors and key managerial personnel
from purchasing call and put options of shares of the company, if such
person is reasonably expected to have access to price-sensitive
information.
9. Increase in number of Shareholders: The Companies Act
2013 increased the number of maximum shareholders in a private
company from 50 to 200.
10. Limit on Maximum Partners: The maximum number of
persons/partners in any association/partnership may be upto such
number as may be prescribed but not exceeding one hundred. This
restriction will not apply to an association or partnership, constituted by
professionals like lawyer, chartered accountants, company secretaries,
etc. who are governed by their special laws. Under the Companies Act
1956, there was a limit of maximum 20 persons/partners and there was
no exemption granted to the professionals.
11. One Person Company: The Companies Act 2013 provides new form
of private company, i.e., one person company. It may have only one
director and one shareholder. The Companies Act 1956 requires
minimum two shareholders and two directors in case of a private
company.
12. Entrenchment in Articles of Association: The Companies Act
2013 provides for entrenchment (apply extra legal safeguards) of
articles of association have been introduced.
13. Electronic Mode: The Companies Act 2013 proposed E-Governance
for various company processes like maintenance and inspection of
documents in electronic form, option of keeping of books of accounts in
electronic form, financial statements to be placed on company’s
website, etc.
14. Indian Resident as Director: Every company shall have at least one
director who has stayed in India for a total period of not less than 182
days in the previous calendar year.
15. Independent Directors: The Companies Act 2013 provides that all
listed companies should have at least one-third of the Board as
independent directors. Such other class or classes of public companies
as may be prescribed by the Central Government shall also be required
to appoint independent directors. No independent director shall hold
office for more than two consecutive terms of five years.
16. Serving Notice of Board Meeting: The Companies Act 2013 requires
at least seven days’ notice to call a board meeting. The notice may be
sent by electronic means to every director at his address registered with
the company.
17. Duties of Director defined: Under the Companies Act 1956, a director
had fiduciary (legal or ethical relationship of trust)duties towards a
company. However, the Companies Act 2013 has defined the duties of a
director.
18. Liability on Directors and Officers: The Companies Act 2013 does
not restrict an Indian company from indemnifying (compensate for
harm or loss) its directors and officers like the Companies Act 1956.
19. Rotation of Auditors: The Companies Act 2013 provides for rotation
of auditors and audit firms in case of publicly traded companies.
20. Prohibits Auditors from performing Non-Audit Services: The
Companies Act 2013 prohibits Auditors from performing non-audit
services to the company where they are auditor to ensure independence
and accountability of auditor.
21. Rehabilitation and Liquidation Process: The entire rehabilitation and
liquidation process of the companies in financial crisis has been made
time bound under Companies Act 2013.

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