Key highlights and analysis - companies act 2013 | Business Laws for CA Foundation PDF Download

 Page 1


Companies Act, 2013    1
Companies Act, 2013
Key highlights and analysis
Significant changes and 
implications 
Page 2


Companies Act, 2013    1
Companies Act, 2013
Key highlights and analysis
Significant changes and 
implications 
Contents 
04 | Introduction
06 | Key definitions and concepts
10 | Setting up of a company
16 | Management and administration
18 | Directors
24 | Accounts and audit
30 | Dividend
32 | Compromises, arrangements and amalgamations
34 | Revival and rehabilitation of sick companies
36 | Corporate social responsibility
38 | Implications on private companies
40 | Other areas
44 | Sections notified till date and circulars or orders issued
Page 3


Companies Act, 2013    1
Companies Act, 2013
Key highlights and analysis
Significant changes and 
implications 
Contents 
04 | Introduction
06 | Key definitions and concepts
10 | Setting up of a company
16 | Management and administration
18 | Directors
24 | Accounts and audit
30 | Dividend
32 | Compromises, arrangements and amalgamations
34 | Revival and rehabilitation of sick companies
36 | Corporate social responsibility
38 | Implications on private companies
40 | Other areas
44 | Sections notified till date and circulars or orders issued
Foreword
The long-awaited Companies Bill 2013 got its assent in the Lok Sabha 
on 18 December 2012 and in the Rajya Sabha on 8 August 2013. After  
having obtained the assent of the President of India on 29 August 
2013, it has now become the much awaited Companies Act, 2013 
(2013 Act). An attempt has been made to reduce the content of the 
substantive portion of the related law in the Companies Act, 2013 as 
compared to the Companies Act, 1956 (1956 Act). In the process, much 
of the aforesaid content has been left, ‘to be prescribed’, in the Rules 
(340+) which are yet to be finalised and notified. As of the date of this 
publication, 99 sections have been notified and a few circulars have 
been issued clarifying the applicability of these.
We are pleased to bring you our new publication, Companies Act, 2013: 
Key highlights and analysis. This publication brings out the significant 
changes proposed by the 2013 Act as compared to the 1956 Act and 
our initial analysis thereon. It is pertinent to note that for the complete 
understanding of the implications of various sections of the 2013 Act, 
the related Rules will need to be read with. These Rules have been 
opened for public comments and consultation in tranches and are 
expected to be notified thereafter by the end of this fiscal year.
The 2013 Act introduces significant changes in the provisions related to 
governance, e-management, compliance and enforcement, disclosure 
norms, auditors and mergers and acquisitions. Also, new concepts such 
as one-person company, small companies, dormant company, class 
action suits, registered valuers and corporate social responsibility have 
been included.
We hope this publication clearly explains the significant changes and 
their potential implications.
PwC India
30th November, 2013
Page 4


Companies Act, 2013    1
Companies Act, 2013
Key highlights and analysis
Significant changes and 
implications 
Contents 
04 | Introduction
06 | Key definitions and concepts
10 | Setting up of a company
16 | Management and administration
18 | Directors
24 | Accounts and audit
30 | Dividend
32 | Compromises, arrangements and amalgamations
34 | Revival and rehabilitation of sick companies
36 | Corporate social responsibility
38 | Implications on private companies
40 | Other areas
44 | Sections notified till date and circulars or orders issued
Foreword
The long-awaited Companies Bill 2013 got its assent in the Lok Sabha 
on 18 December 2012 and in the Rajya Sabha on 8 August 2013. After  
having obtained the assent of the President of India on 29 August 
2013, it has now become the much awaited Companies Act, 2013 
(2013 Act). An attempt has been made to reduce the content of the 
substantive portion of the related law in the Companies Act, 2013 as 
compared to the Companies Act, 1956 (1956 Act). In the process, much 
of the aforesaid content has been left, ‘to be prescribed’, in the Rules 
(340+) which are yet to be finalised and notified. As of the date of this 
publication, 99 sections have been notified and a few circulars have 
been issued clarifying the applicability of these.
We are pleased to bring you our new publication, Companies Act, 2013: 
Key highlights and analysis. This publication brings out the significant 
changes proposed by the 2013 Act as compared to the 1956 Act and 
our initial analysis thereon. It is pertinent to note that for the complete 
understanding of the implications of various sections of the 2013 Act, 
the related Rules will need to be read with. These Rules have been 
opened for public comments and consultation in tranches and are 
expected to be notified thereafter by the end of this fiscal year.
The 2013 Act introduces significant changes in the provisions related to 
governance, e-management, compliance and enforcement, disclosure 
norms, auditors and mergers and acquisitions. Also, new concepts such 
as one-person company, small companies, dormant company, class 
action suits, registered valuers and corporate social responsibility have 
been included.
We hope this publication clearly explains the significant changes and 
their potential implications.
PwC India
30th November, 2013
Introduction
Companies  Act, 2013: A statistical snapshot 
Number of schedules : 7
Number of chapters: 29
Number of sections: 470
7
Schedules 
470
Sections
29
Chapters 
Page 5


Companies Act, 2013    1
Companies Act, 2013
Key highlights and analysis
Significant changes and 
implications 
Contents 
04 | Introduction
06 | Key definitions and concepts
10 | Setting up of a company
16 | Management and administration
18 | Directors
24 | Accounts and audit
30 | Dividend
32 | Compromises, arrangements and amalgamations
34 | Revival and rehabilitation of sick companies
36 | Corporate social responsibility
38 | Implications on private companies
40 | Other areas
44 | Sections notified till date and circulars or orders issued
Foreword
The long-awaited Companies Bill 2013 got its assent in the Lok Sabha 
on 18 December 2012 and in the Rajya Sabha on 8 August 2013. After  
having obtained the assent of the President of India on 29 August 
2013, it has now become the much awaited Companies Act, 2013 
(2013 Act). An attempt has been made to reduce the content of the 
substantive portion of the related law in the Companies Act, 2013 as 
compared to the Companies Act, 1956 (1956 Act). In the process, much 
of the aforesaid content has been left, ‘to be prescribed’, in the Rules 
(340+) which are yet to be finalised and notified. As of the date of this 
publication, 99 sections have been notified and a few circulars have 
been issued clarifying the applicability of these.
We are pleased to bring you our new publication, Companies Act, 2013: 
Key highlights and analysis. This publication brings out the significant 
changes proposed by the 2013 Act as compared to the 1956 Act and 
our initial analysis thereon. It is pertinent to note that for the complete 
understanding of the implications of various sections of the 2013 Act, 
the related Rules will need to be read with. These Rules have been 
opened for public comments and consultation in tranches and are 
expected to be notified thereafter by the end of this fiscal year.
The 2013 Act introduces significant changes in the provisions related to 
governance, e-management, compliance and enforcement, disclosure 
norms, auditors and mergers and acquisitions. Also, new concepts such 
as one-person company, small companies, dormant company, class 
action suits, registered valuers and corporate social responsibility have 
been included.
We hope this publication clearly explains the significant changes and 
their potential implications.
PwC India
30th November, 2013
Introduction
Companies  Act, 2013: A statistical snapshot 
Number of schedules : 7
Number of chapters: 29
Number of sections: 470
7
Schedules 
470
Sections
29
Chapters 
The 1956 Act has been in need of a substantial 
revamp for quite some time now, to make  it 
more contemporary and relevant to corporates, 
regulators and other stakeholders in India.
While several unsuccessful attempts have been 
made in the past to revise the existing 1956 
Act, there have been quite a few changes in the 
administrative portion of the 1956 Act. The most 
recent attempt to revise the 1956 Act was the 
Companies Bill, 2009 which was introduced in the 
Lok Sabha, one of the two Houses of Parliament 
of India, on 3 August 2009. This Companies Bill, 
2009 was referred to the Parliamentary Standing 
Committee on Finance, which submitted its report 
on 31 August 2010 and was withdrawn after 
the introduction of the Companies Bill, 2011. 
The Companies Bill, 2011 was also considered 
by the Parliamentary Standing Committee on 
Finance which submitted its report on 26 June 
2012. Subsequently, the Bill was considered and 
approved by the Lok Sabha on 18 December 2012 
as the Companies Bill, 2012 (the Bill). The Bill 
was then considered and approved by the Rajya 
Sabha too on 8 August 2013. It received the 
President’s assent on 29 August 2013 and has now 
become the Companies Act, 2013.
The changes in the 2013 Act have far-reaching 
implications that are set to significantly change 
the manner in which corporates operate in India. 
In this publication, we have encapsulated the 
major changes as compared to the 1956 Act and 
the potential implications of these changes. We 
have also included, where relevant, the provisions 
of the draft rules, which have been issued by 
the Ministry of Corporate Affairs (the MCA) till 
date for public comments. Such inclusions have 
been highlighted with an asterix at the end of the 
sentence (*). However, please note that these are 
only draft rules and will undergo changes before 
being notified.