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Q.7.Indian Companies Act 2013 Salient Features - Clear IAS
Corporate Law (BLAW 2001)
Savitribai Phule Pune University
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Indian Companies Act 2013
: Salient Features
The Indian Companies Act 2013 replaced the Indian Companies Act, 1956. The Companies Act 2013 makes comprehensive provisions to govern all listed and unlisted companies in the country. The Companies Act implemented many new sections and repealed the relevant corresponding sections of the Companies Act 1956. This is a landmark legislation with far-reaching consequences on all companies incorporated in India.
Comparison of Companies Act 1956 and
Companies Act 2013
Indian Companies Act 2013 has fewer sections (470) than Companies Act 1956 (658). The new act empowers shareholders and gives high value for Corporate Governance.
Key Highlights of Indian Companies Act 2013
The maximum number of members (shareholders) permitted for a Private Limited Company is increased to 200 from 50. One Person company
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One-Person company. Section 135 of the Act which deals with Corporate Social Responsibility. Company Law Tribunal and Company Law Appellate Tribunal.
Salient features of the Companies Act
- 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
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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., 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.
- 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
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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
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Q.7.Indian Companies Act 2013 Salient Features - Clear IAS
Course: Corporate Law (BLAW 2001)
University: Savitribai Phule Pune University
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