chapter ii of companies act, 2013

Room No.6, 4th Floor, Commerce House2A, Ganesh Chandra Avenue, Kolkata 700013

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Companies Act, 2013

AT ‘YOU’ Institute for ProfessionalsBy CS Mamta Binani

Past Chairperson (Year 2010), EIRC of ICSIPractising Company Secretary

[email protected]

mailto:[email protected]

Room No.6, 4th Floor, Commerce House2A, Ganesh Chandra Avenue, Kolkata 700013

Connect me @ : (033) 3028 8955-57; (033) 3002 5630-33; 98310 99551

[email protected] me @ : www.mamtabinani.com

CHAPTER II Incorporation of Company And Matters

Incidental Thereto

UNDER THE COMPANIES ACT, 2013

& Draft Companies Rules, 2013

Companies

Private Company

One Person

Company

Small Company

Public Company

Limited by Shares/

Guarantee /Unlimited

Foreign Co. / Part XXI

Co. / Section 8 Co.

One Person Company

concept has been

introduced for the 1st time.

COMPANIES ACT, 2013

COMPANIES ACT, 1956

Section: 2(68) Same as previous

minimum paid-up capital of one lakh rupees or such higher paid-up share capital as may be prescribed and which by its articles:

Same as previous (i) It also restricts the

right to transfer its shares;

Section: 3 (1)(iii) means a company which

has a minimum paid-up capital of one lakh rupees or such higher paid-up capital as may be prescribed and which by its articles:

(a) restricts the right to transfer its shares, if any;

Private Company

contd…… Private CompanyCOMPANIES ACT,

2013COMPANIES ACT,

1956(ii) except in case of One

Person Company, limits the number of its members to 200;

In the counting of 200, what shall not be included is:

Same as previous

(b) limits the number of its members to 50;

(It is to be noted here that where 2 or more persons hold one or more shares in a company jointly, they are to be treated as a single member)

In the counting of 50, not including –

(i) persons who are in the employment of the company ; and


2013COMPANIES ACT,

1956

Same as previous

(ii) 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; and


2013COMPANIES ACT,

1956(iii) prohibits any

invitation to: the public to subscribe

for any securities of the company;

(Mark the word ‘securities’)

The point of prohibiting invitation or acceptance of deposits is not there

(Refer draft rules-Acceptance of Deposits by Companies)

(c) Prohibits any invitation to the

public to subscribe for any

shares in, or debentures of the

company.

(d) Prohibits any invitation or acceptance of deposits from

persons other than its members, directors or their relatives

COMPANIES ACT, 2013

COMPANIES ACT, 1956

Section 2(71)Means a company which—(a) is not a private

company (no change)

(b) has a minimum paid-up share capital of:

Rs. 5 lakhs; or such higher paid-up

capital, as may be prescribed

Section: 3(1)(iv)Means a company which -(a) is not a private

company;

(b) has a minimum paid-up share capital of:

Rs. 5 lakhs; or such higher paid-up

capital, as may be prescribed

Public Company

COMPANIES ACT, 2013

COMPANIES ACT, 1956

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

(c) is a private company which is a subsidiary of a company which is not a private company

contd….Public Company

Definition-A Company which has only 1 person as a member;

Is a Private Company (section 3(1)(c));

Only natural person, who is an Indian citizen and resident in India can become a member/nominee [Rule 2.1(1)];

Name of the person nominated shall be mentioned in the memorandum of One Person Company and the nomination in Form no. 2.1 along with consent of such nominee obtained in Form no. 2.2 and fee as provided in Annexure ‘B shall be filed with the Registrar at the time of incorporation of the company along with its memorandum and articles.

One Person Company(OPC) Definition – Section 2(62)

Perpetual Succession – MoA to mention name of nominee [Rule 2.2(2)];

Nominee may withdraw or member nominating may withdraw; In either of these cases, new nominee to be nominated within 15 days of the receipt of notice of withdrawal [Rule 2.2(3)] and company to file the name of new nominee with the ROC within 30 days of receipt of notice of withdrawal [Rule 2.2(4)];

One Person – shall be eligible to incorporate maximum 5 OPCs [Rule 2.1(2)];

Nominee becoming sole member on death of sole member/ incapacity to contract– need to nominate within 15 days of becoming a member and also file with ROC such cessation as well as nomination within 30 days of the change [Rule 2.2(6)];

One Person Company(OPC)

Rule 2.3 Penalty

• If One Person Company or any officer of the OPC contravenes the provisions of the rules, then:

•OPC or any officer of the OPC shall be punishable with:

fine which may extend to Rs.5000 and with a further fine which may extend to

Rs.500 for every day after the first during which such contravention continues

One Person Company (OPC)

Mandatory Conversion into Pvt. or Public Ltd. Co. if: [Rule 2.4(1 and 2)];

paid-up share capital exceeds Rs.50 lacs; or average annual turnover exceeds Rs.2 crores (in

immediately preceding 3 consecutive FYs) shall be mandatorily required to convert itself within 6 months: of the date on which its paid up share capital is

increased beyond Rs.50 lacs; or of the last day of the relevant period during

which its average annual turnover exceeds Rs.2 crores; or

of the close of the FY during which its balance sheet total exceeds Rs. 1 crore; as the case may be

Into either a private company or a public company;

Conversion of OPC (Rule 2.4)

Increase no. of members and directors to 2 or minimum of 7 members and 3 directors as the case may be [Rule 2.4(2)];

Alter MoA and AoA by passing Ordinary Resolution/ Special Resolution (also refer section 122(3)) [Rule 2.4(3)];

Notice to ROC in Form no. 2.6 within 30 days, informing that it has ceased to be a One Person Company and that it is now required to convert itself [Rule 2.4(4)];.

For conversion to any class of companies-compliance with section 18 of the new Act (section 32 is the corresponding old section to section 18 of the new Act)


Suo-motu conversion Increase no. of members and directors to 2 or

minimum of 7 members and 3 directors as the case may be [Rule 2.4(2)];

Alter MoA and AoA by passing Ordinary Resolution/ Special Resolution (also refer section 122(3)) [Rule 2.4(3)];

Maintaining the minimum paid-up capital as per requirements of the Act;

For conversion to any class of companies-compliance with section 18 of the new Act (section 32 is the corresponding old section to section 18 of the new Act)


Section 3Formation of Company

{corresponding Section 12}3(1): A company may be formed for any lawful

purpose by-

(a) 7 or more persons, in case of public company

(b) 2 or more persons, in case of private company; or

(c) 1 person, in case of One Person Company. By subscribing their names or his name to a

memorandum and complying with the requirements of this Act in respect of registration.

Section 3(2)

3(2): A company formed under sub-section (1) may be either-

(a) a company limited by shares; or(b) a company limited by guarantee; or(c) an unlimited company

Section 4Memorandum

{corresponding Sections 13, 14, 20, 23}

4(1): The memorandum of a company shall state:

(a) the name of the company with the last word-

“Limited” in the case of a public limited company;

“Private Limited” in the case of a private limited co.

Nothing in this clause shall apply to a company registered under section 8 (akin section 25 of old act);

(b) the State in which the registered office of the company is to be situated;

contd…. Section 4(1)(c) the objects of the company (main objects

and incidental objects). It is to be noted here that other objects will no more be allowed

(d) the liability of members of the company, whether limited or unlimited, and also state-

(i) in the case of a company limited by shares: that liability of its members is limited to the amount unpaid, if any, on the shares held by them; and

(ii) in the case of a company limited by guarantee: the amount up to which each member undertakes to contribute.

contd…. Section 4(1)(e) in the case of a company having a share

capital,— (i) the amount of share capital with which the

company is to be registered- > the division thereof into shares of a

fixed amount; > the number of shares which the

subscribers to the memorandum agree to subscribe which shall not be less than one share; and

(ii) indicated opposite his name- the number of shares each subscriber to the memorandum intends to take;

(f) in the case of OPC, the name of the person who, in the event of death of the subscriber, shall become the member of the company.

Section 4(2)4(2): The name stated in the memorandum

shall not-

(a) be identical with or resemble too nearly to the name of an existing company registered under this Act or any previous company law; or

(b) be such that its use by the company— (i) will constitute an offence under any

law; or (ii) is undesirable in the opinion of the CG.

Section 4(3)4(3): A company shall not be registered with a

name which contains-(a) any word or expression which is likely to give

the impression that the company is in any way connected with, or having the patronage of, the followings:

Central Government (CG); Any State Government;Any local authority;Corporation; Body constituted by the CG or any State

Government

contd…. Section 4(3)

(b) such word or expression, as may be prescribed;

For both (a) and (b), it cannot be used unless the previous approval of the Central Government has been obtained for the use of any such word or expression.

Undesirable Names (Rule 2.5)

• Identical names: In considering whether identical or not, the

below mentioned points shall be disregarded:1. The words private, limited, LLP etc. written

in different ways2. Company, co., corporation written in

different ways3. Plural version4. Type and case of letters, punctuation,

spacing etc.5. Joining words or separating the words6. Use of different tense or number of the same

word


• Identical names:7.Using different phonetic spellings of spelling

variations (e.g P.Q. written as Pee Que Industries Limited)

8. Misspelled words, whether intentional or not9. Addition of internet related designation

(e.g. .com, .edu etc.)10. Addition of words like New, Modern etc. or

adding the name of the place (may be allowed-no obj-B/R)

11. Different combination of the same words (e.g. Builders & Contractors Limited/ Contractors & Builders)

12. Translation/ Transliteration of existing company/ llp


• Undesirable names:1.If it attracts the provisions of sec 3 of the

Emblems and Names (Prevention and Improper Use) Act, 1950

2. Includes the name of a registered trade mark3. Includes the name of a TM which is the

subject matter of application for registration4. Includes any word which is offensive to any

section of people5. Not in consonance with the principal objects

of the Co.6.Identical or too closely resembles the name of

the Company/ LLP incorporated outside India and reserved by such Company


• Undesirable names:7. Foreign Subsidiary (with the addition of

‘India’)8.Indicating a separate type of business

constitution e.g. sehkari, trust, HUF, firm etc.9. Implying connection with embassy or

consulate etc.10.Implying patronage of a national hero/

persons held in high esteem11. Is vague, e.g. ABC Limited12.Is abbreviated, e.g. DJMO Limited etc.13. Subsidiary/ Joint Venture/ Associate

company can use but shall carry the object of the Company


• Undesirable names:14. A period of 2 years have not elapsed from the

date of dissolution of the company15. If company struck off, then only after an

elapse of 20 years16. Is identical/ too clearly resembles the name of

a LLP in liquidation or the LLP which has been struck off (in this struck off case, name is blocked upto 5 years)

17. Includes ‘Insurance’, ‘Bank’ etc. unless a declaration that the mandated requirements of the respective Act(s) have been complied with

18. If the name ‘State’ – only with the approval of State Govt.


• Undesirable names:19. If it only contains the name of a continent,

country etc. e.g. Germany Limited20. The name is only a general one, like Cotton

Textile Mills 21. Misleading impression regarding the scope/

scale22. Includes the names of any foreign country or

any city of foreign country (allowed if MOU produced showing business relations)

23. Cannot use name of an enemy country24. Names combining the name of a foreign

country with the use of India, e.g. India Japan (shall be allowed, if government to government participation)

Section 4(4) A person may make an application,

in Form no.2.7 (akin Form no.1A) along with a fee, to the ROC for the reservation of a name set out in the application as (Rule 2.6)-

(a) the name of the proposed company; or

(b) the name to which the company proposes to change its name.

Section 4(5)(i) Upon receipt of an application

under sub-section (4), the ROC may- reserve the name for a period of 60

days from the date of the application (No additional 30 days after expiry of

its original period)

contd….Section 4(5)

(ii) After reservation of name, if it is found that name was applied by furnishing wrong or incorrect information, then-

(a) if the company has not been incorporated, the reserved name shall be cancelled;

and the person making application shall

be liable to a penalty which may extend to Rs.1 lakh;

contd…. Section 4(5)(b) if the company has been incorporated,

the ROC may, after giving the company an opportunity of being heard-

(i) either direct the company to change its name within a period of 3 months, after passing an OR;

(ii) take action for striking off the name of the company from the register of companies; or

(iii) make a petition for winding up of the company.

Section 4(6)4(6): The memorandum of a company shall

be in respective forms specified in:Table ATable BTable CTable DTable Ein Schedule I as may be applicable to such

company.

Section 4(7) Any provision in the memorandum or articles, in the case of a company-

limited by guarantee and; not having a share capital, purporting to give any person a right to participate in divisible profits-will be void.

Section 5Articles

{corresponding Sections 26, 27, 28 & 29}

5(1): The articles of a company shall contain the regulations for management of the company

contd…. Section 5(2)•The articles shall also contain such

matters, as may be prescribed.

•And of course the company can include such additional matters in its articles as may be considered necessary for its management.

Section 5(3) The articles may contain provisions

for entrenchment to the effect that specified provisions of the articles may be altered only if

conditions or;procedures as that are more

restrictive than those applicable in the case of a SR;

are met or complied with.

Section 5(4)

Entrenchment provisions can be made:

•either at the time of formation; or

•by an amendment in the AOA For amendments:

• in case of private company-the said amendment to be agreed by all the members

• in case of public company- SR

Section 5(5)Entrenchment notice to ROC

• In either of the cases (formation or amendment), the company to give notice to the ROC

•Form no. 2.8 along with fee

•Within 30 days from the date of formation of the company or amendment, as the case may be (Rule 2.7)

Section 5(6)The articles of a company shall be in

respective forms specified in (Rule 2.8):

Table FTable GTable HTable ITable J in Schedule I as may be applicable

to such company. {The Co. can also provide additional matters}

Section 5(7)

A company may adopt all or any of the regulations contained in the model articles

applicable to such company.

Section 5(8) In case of any company, which is

registered after the commencement of this Act, in so far as the registered articles of such company do not

exclude or; modify; the regulations contained in the model

articles will apply as if they were contained in the duly registered articles of the company.

Section 6Act to override Memorandum,

Articles {corresponding Section 9}

The provisions of this Act shall have effect notwithstanding anything to the contrary contained in the:

MOA; or AOA of the company; or In any agreement executed by it; or In any resolution passed by the company-

be it BOD or GM

contd…. Section 6 To the extent that it is repugnant to the provisions of the Act, it will become or be void;

Section 6 (akin section 9) did not introduce anything new.

Section 7Incorporation of

Companies {corresponding sections 15, 30, 33}

7(1): The following documents shall be filed with the ROC for registration (Form no.2.9, Rule 2.9):

7(1)(a): Rule 2.10: the MoA and AoA of the company duly signed by all the subscribers to the memorandum who shall give the following details:

name address description and occupation, if any.

contd…. Section 7(1) In the presence of at least one witness

who shall- attest the signature and shall likewise

sign and add his name address description occupation, if any and shall also state: ‘Further I have verified his/ their ID for

their identification and satisfied myself of his/her/ their identification particulars as filled in’

contd…. Section 7(1) Where a subscriber to the memorandum

are the following:1)Illiterate (Rule 2.10(2))- he shall affix his thumb impression.The number of shares taken by him shall

be written against his name (by the person writing for

him. Such person shall also read and explain

the contents of the MoA/AoA to the subscriber and make an endoresment to that effect on the MoA/AoA

contd…. Section 7(1)2)Body corporate (Rule 2.10(3)) - The memorandum and articles of

association shall be signed by the: director; officer; or employee of the body corporate- duly authorized in this behalf by a

resolution of the BOD of the body corporate.

contd…. Section 7(1)3)Limited Liability Partnership (Rule

2.10(3))- it shall be signed by a partner of the LLP, duly authorized by a resolution approved

by all the partners of the LLP

• Provided that in either case, the person so authorized shall not, at the same time, be a subscriber to the MoA and AoA

contd…. Section 7(1)4)Foreign national residing outside India

(Rule 2.10(4)- :(a) in a country in any part of the

Commonwealth-his signaturesand address on the MoA/AoAand proof of identity

• shall be notarized by a Notary (Public) in that part of the Commonwealth.

contd…. Section 7(1)(b) in a country which is a party to the

Hague Apostille Convention, 1961 -his signaturesand address on the MOA/AOA and proof of identity

• shall be notarized before the Notary (Public) of the country of his origin and be duly apostillised in accordance with the said Hague Convention.

contd…. Section 7(1)(c) in a country outside the Commonwealth

and which is not a party to the Hague Apostille Convention, 1961-

his signaturesand address on MOA/AOA and proof of identity

• shall be notarized before the Notary (Public) of such country and the certificate of the Notary (Public) shall be authenticated by a Diplomatic or Consular Officer.

contd…. Section 7(1)(d) If a foreign national visited in India and

intended to incorporate a company, in such case the incorporation shall be allowed if-

He/she is having a valid Business Visa.

In case the person is of Indian Origin or Overseas Citizen of India, requirement of Business Visa will not be applicable.

Section 7(1)(b) A declaration in Form no.2.10 (Rule 2.11) by

an- advocate; or a chartered accountant; or a cost accountant; or a company secretary in practice, who is engaged in the formation of the company;And also by a person named in the articles as a director; manager, or secretary of the company, that all the requirements of this

Act and the rules have been complied with.

Section 7(1)(c) An affidavit in Form no.2.11 (Rule

2.12)from – each of the subscribers to the memorandum, from persons named as the first directors, if any, in the

articles that he is not convicted of: any offence in connection with the promotion; formation; or management of any company; or that he has not been found guilty of any fraud; or misfeasance; or of any breach of duty to any company under this Act or any previous company law during the

preceding 5 years . All the documents filed with the Registrar for

registration of the company contain information that is correct and complete and true to the best of his knowledge and belief

Section 7(1)(d)

The address for correspondence till its registered office is established.

Section 7(1)(e) (1)The particulars of name of

subscriber(s), including (Rule 2.13)-Surname or family name, Recent photograph affixed and scan with MoA and AoA Father’s/Mother’s/ Spouse’s nameNationalityDate of birthPlace of birth (District and State)OccupationIncome-tax permanent account number Email id of subscriber Mobile no. of subscriber Phone no. of subscriber Fax no. of subscriber

contd…. Section 7(1)(e) residential address nationality Along with other particulars of every subscriber

to the memorandum along with: proof of identity;Proof of Identity, such as:For Indian Nationals: PAN Card (mandatory) and any one of the

following:Voter’s identity card Passport copy Driving License copy Unique Identification Number (UIN)

contd…. Section 7(1)(e) For Foreign nationals and Non Resident Indians

: Passport OthersProof of nationality in case the subscriber is a

foreign national

Residential proof such as : Ration Card Voter’s card Driving licence Passport Unique Identification Number (UIN) Registered Rent Agreement etc. Bank Statement, Electricity Bill, Telephone / Mobile

Bill (not be more than two months old)etc.

contd…. Section 7(1)(e) Each subscriber (including first directors

of the company) to the MoA/AoA shall furnish the specimen signature duly verified by their respective banker at the time of incorporation (Rule 2.13)

The specimen signature shall be in the prescribed form no 2.32.

contd…. Section 7(1)(e) If the subscriber (in case of an individual)

is already a director or promoter of a company(s), the following details (Rule 2.13)-

(i) Name of the company (ii) CIN (iii) Whether interested as a director or

promoter

contd…. Section 7(1)(e) If the subscriber is a body corporate,

then the following particulars shall be filed with the Registrar (Rule 2.13)-

(a) CIN of the Company/ Registration no. of the body corporate, if any

(b) GLN, if any (c) Name of the body corporate (d) Registered office address/ principal place of

business (e) E-mail Id

contd…. Section 7(1)(e) If the subscriber is a company: CTC of the BR specifying the authorization to

subscribe to the MoA of the proposed company and to make investment in the proposed company;

the number of shares proposed to be subscribed by the the company;

the details like the name; address; and designation of the person authorized to subscribe to the

MoA for and on behalf of the company

contd…. Section 7(1)(e) If the subscriber is LLP-CTC of the resolution agreed to by all the

partners specifying the authorization to subscribe to the MoA of the proposed company and to make investment in the proposed company;

the number of shares proposed to be subscribed in the company;

the name of the partner authorized to subscribe to the MOA

contd…. Section 7(1)(e) (g) In case of foreign bodies corporate,

following additional details to be submitted:

i) copy of certificate of incorporation of the foreign body corporate; and

ii) registered office address along with proof.

contd…. Section 7(1)(f) About Directors (Rule 2.14): The particulars of the persons mentioned in the

AoA as the first directors of the company: Their names, including:surnames or family namesthe Director Identification Numberresidential addressnationality and such other particulars andproof of identity shall be filed in Form no. 2.12 with a fee

contd…. Section 7(1)(g) The particulars of the interests of

the persons mentioned in the AoA as the first directors of the company (Rule 2.14):

• in other firms or

•bodies corporate along with their

•consent to act as directors of the company

Shall be filed in Form No. 2.12 with a fee.

Section 7(2)The Registrar on the basis of: documents and information filed

• shall register all the documents and information referred to in that subsection in the register

• and issue a COI in the prescribed form (2. 13), rule 2.15

• to the effect that the proposed company is incorporated under this Act

Section 7(3) The ROC shall allot to the company a CIN-

• which shall be a distinct identity for the company and

•which shall also be included in the certificate.

Section 7(4)

The company shall maintain and preserve at its registered office copies of all documents and information as originally filed under sub-section (1) till its dissolution under this Act.

Section 7(5)If any person furnishes any:false or incorrect particulars of any

information and/orsuppresses any material

information;

•of which he is aware in any of the documents filed with the ROC

• in relation to the registration of a company

•he shall be liable for action under section 447 (fraud)

Section 7(6) If after the incorporation of a company, it is proved

that the company has been got incorporated by furnishing any

false; or incorrect information; orIncorrect representation; orby suppressing any material fact; orby suppressing any information in any of the

documents; orthe declaration filed; or made for incorporating such company; or by any fraudulent action; the promoters, the persons named as the first

directors of the company and the persons making declaration under clause (b) of subsection (1) shall each be liable for action under section 447

Section 7(7) Without prejudice to the provisions of sub-

section (6), where a company has been got incorporated by furnishing any

any false or incorrect information; or representation; or by suppressing any material fact; or information in any of the documents; or declaration filed; ormade for incorporating such company; or by any fraudulent action; the Tribunal may, on an application made to

it, on being satisfied that the situation so warrants-

contd…. Section 7(7)(a) pass such orders, as it may think fit, for

regulation of the management of the company including changes, if any, in its MoA/AoA, in public interest or in the interest of the company and its members and creditors; or

(b) direct that liability of the members shall be unlimited; or

(c) direct removal of the name of the company from the register of companies; or

(d) pass an order for the winding up of the company; or

(e) pass such other orders as it may deem fit:

contd…. Section 7(7) Provided that before making any order

under this sub-section:

• the company shall be given a reasonable opportunity of being heard in the matter; and

• the Tribunal shall take into consideration the transactions entered into by the company, including the obligations, if any, contracted or payment of any liability.

New: Under this Act, OPC can also be incorporated for

charitable purposes. A firm can be a member of the Company with

Charitable Objects. The CG at the time of revoking the license under

this section may, if it is satisfied that it is essential in the public interest, order that the Co. be wound up under this Act or amalgamated with another Co. registered under this section.

Section 8Formation of Companies with

Charitable Objects etc. {corresponding Section 25}

contd…. Section 8In case of winding up or dissolution of an association not for profit under this section, there remain, after the satisfaction of its debts and liabilities, any assets

Then that may be transferred to another Co. registered under this section and having similar objects

But subject to such conditions as the Tribunal may impose

Or may be sold and proceeds thereof credited to the Rehabilitation and Insolvency Fund formed u/s 244.

contd…. Section 8

A company with charitable objects can only amalgamate with a company registered under same section having similar objects

Where it is proved that the affairs of the company registered under same section were conducted fraudulently, every officer in default shall be liable for action u/s 447 and

Will be subject to stringent punishment

contd…. Section 8Documents with Application (Rule 2.16): Draft MOA & AOA; Declaration in Form No. 2.15; An estimate of the annual income and

expenditure (3 yrs); Declaration by each persons making application

in Form no. 2.16; A copy of the board resolution (in case of

change of name); Financial statements, Board’s reports, audit

reports for two years (in case of change of name);

Shareholders Resolution (in case of change of name).

Contd…. Section 8Conditions and Process for registration

(Rule 2.17): Publish a notice in form no. 2.18;Copy of the notice, as published, shall be

sent forthwith to the Registrar;Approval or concurrence of appropriate

authority, regulatory body to be submitted (if applicable);

The ROC after considering the objections received by it, if any, within 30 days from the date of publication

To decide, whether the license should or should not be granted

contd…. Section 8Key modifications:In the Act, activities like :sportseducationresearchsocial welfareprotection of environment have been specifically added in the ambit of the

objects, for which an Association not for profits, can be formed.

• Under the Companies Act 1956 these activities were covered under the general term i.e. any other useful objects.

contd…. Section 8

Now the Memorandum & Articles of such company can only be altered with the prior approval of CG.

Earlier prior CG approval was required only for alteration of objects.

contd…. Section 8The punishment has been introduced for a

default by a company in complying with any of the requirements laid down in the section of formation of companies with charitable objects- the company will be punishable with fine which shall not be less than-

Rs.10 lakhswhich may extend to Rs.1 crore; or with both. Further the director of the company and every

officer of the company who is in default shall be punishable with-

imprisonment for a term which may extend to 3 years; or

with fine which shall not be less than Rs. 25000.which may extend to 25 lakh rupees or with

both.

Section 9Effect of Registration{corresponding Section 34}

• From the date of incorporation, the subscribers become the members of the company

• The company shall be a body corporate

•With a name

• Capable of exercising all the functions of an incorporated company

• Shall have perpetual succession

• Shall have a common seal

• Power to acquire, hold and dispose of property

contd…. Section 9

•Power to enter into contracts

•Power to sue and be sued

No changes in section 9

Section 10Effect of Memorandum &

Articles{corresponding Section 36}

10(1): Subject to the provisions of this Act, the MoA/AoA shall, when registered, bind the company and the members thereof to the same extent

• as if they respectively had been signed by the company and by each member and

• therefore all covenants become individually applicable

10(2): All monies payable by any member to the company under the memorandum or articles shall be a debt due from him to the company.

Section 11Commencement of Business

{corresponding Section 149}Key modifications: As per the Act, for commencement of

business by public company, the following documents are required to be submitted with ROC:

i. A declaration by Directors in prescribed form providing that the subscribers have paid the value of shares agreed to be taken by them.

ii. A confirmation that the Company has filed with the Registrar, a verification of its registered office.

contd…. Section 11Where no declaration is filed by the Director

within- 180 days of incorporation and the Registrar has

sufficient reasons to believe that the Company is not carrying any business or operations, then it may initiate action for removal of the name of the Company from the Register of the Companies.

In case of default, the prescribed punishment has increased. Further now, as opposed to Companies Act, 1956, the Company shall also be liable for punishment along with officer in default. For Company:

Fine which may extend to Rs.5000; andevery officer who is in default shall be

punishable with the fine which may extend to Rs.1000 for every day of continuing default

contd…. Section 11

New :- In the Act, in addition to the public Limited

Companies, even the private companies would be required to file the following, with the Registrar of Companies, for commencement of business:

i. a declaration by the Directors in prescribed form providing that the subscribers have paid the value of shares agreed to be taken by them, and

ii. a confirmation that the Company has filed with the Registrar, a verification of its registered office.

Section 12Registered Office of

Company{corresponding Sections 17A, 146,

147}New:-Every company is required to print CINTelephone no.Fax no.EmailWebsite address On all its >business letters >billheads >letter

paper and >all its notices and >other official publications.

contd…. Section 12In case of change of name, each

company is required to mention its old name for a period of 2 years, at its registered & other offices & other stationery like:

Business lettersLetter headLetter paper etc.


OPC needs to mention in brackets, below the name of the Co. wherever its name is printed affixed or engraved the words

“One Person Company”

contd…. Section 12Key ModificationsUnder the Act, the intimation of

change of registered office is required to be given with in 15 days of change, instead of 30 days.

Punishment has been increased, in case of default & now the company and every officer who is in default shall be liable to a punishment of Rs.1000 for every day during which the default continues but not exceeding Rs.1 lakh.

contd…. Section 12Instead of having Registered office

from the date of incorporation, a company may have registered office on & from the -

15th day of its incorporation. Verification of registered office has

to be filed within-30 days of its incorporation.

Section 13Alteration of

Memorandum{corresponding Sections 16, 18,

21}New:-

In case of change of registered office from one state to another, new COI will be issued.

Any alteration of Memorandum of Company limited by guarantee and not having share capital for giving right to participate in the divisible profits of the Company otherwise than as a member shall be void.


Now a Co. which has raised money from public through prospectus & still has any unutilised amount out of the money so raised, shall not change its objects for which it raised the money through Prospectus unless a SR is passed by the company and

i. the details as may be prescribed, in respect of such resolution shall also be published in the newspapers-

One in English One in vernacular languageAnd shall also be placed on the website of the Co.

contd…. Section 13ii. the promoters & shareholder having the

control shall give an opportunity to the dissenting shareholder to exit, in accordance with the regulations to be specified by SEBI.

Approval of the CG is not required for change of in name if there is only addition or deletion of the word

“Public” “Private” to the name.


The limit of 60 days has been provided for disposal of application of change of registered office from one sate to another, by CG.

Section 14 Alteration of Articles

{corresponding Section 31}New:Provision of Conversion of Public Company

into “One Person Company” with the approval of the Tribunal has been provided in the Act.

No approval is required for conversion of private company into One Person Company or One Person Company into a private company.

contd…. Section 14Key Modifications:In case of alteration of Articles of

Association of a Company, the copy of alteration along with the altered Article shall be filed with Registrar of Companies within 15 days instead of 30 days

In case of conversion of Public Company into Private Company, approval of the Tribunal is required instead of CG as provided under the Companies Act, 1956.

Section 15 Alteration of MOA & AOA

to be noted in every copy{corresponding Section 40}

Key Modifications :-

• The penalty provided for not making the alteration in copies of Memorandum & Articles has been increased.

• In case of such default, the Company and every Officer in default shall be liable to a penalty of Rs.1000 for every copy of MoA/AoA issued without such alteration.

Section 16 Rectification of Name of

Company{corresponding Section 22}

New:-If the Companies rectifies its name under

the order of CG, then such notice along with the copy of the CG’s Order shall be given to the ROC within 15 days of such order.


Key Modifications:

A registered trademark owner has to file an application for rectification of name, which is similar to name of its trademark:

Within 3 years (instead of 5 years) of incorporation of Company or change of name.


In case of rectification of name due to similarity with registered trademark, on the order of the CG

Rectification shall be done within 6 months (instead of 3 months) as was provided under the Companies Act, 1956

contd…. Section 16In case of default of the aforesaid

provisions, the punishment has been increased.

The Company shall be punishable with fine of Rs.1000 for every day during which the default continues and

Every officer who is in default shall be punishable with fine which shall not be less than Rs.5000 but may extend to Rs.1 lakh.

Section 17 Copies of MOA/AOA {corresponding Section 39}

Key Modifications:-MoA/AoA to be sent within 7 days of requestFees to be charged for sending MoA/AoA,

agreement/resolution -to be prescribed.In case of default of the said section, the

penalties have been increased and for each default, the Company shall be liable to a penalty of Rs.1000 for every day of continuing default but not exceeding Rs.1 lakh.

Section 18 Conversion of

Companies Already Registered

{corresponding Section 32}New:-Any company of any class registered under this

Act, may convert itself into a co. of other class under this Act by-

Alteration of its MOA/ AOA with their respective new sets.

The Registration of a Co. under this section shall not affect any debts, liabilities, obligations or contracts or entered into by or on behalf of company before re-registration.

APPLICABLESection 19

Subsidiary company not to hold shares in its holding co.

{corresponding Section 42}

New:-Subsidiary can hold shares in a holding company

as trustee, even if holding or Subsidiary is beneficiary of the same, which is not allowed under the Companies Act, 1956.


Key Modifications:No holding company shall allot or

transfer its shares to any of its subsidiary companies and any such allotment/ transfer shall be void

Section 20 Service of Documents{corresponding Sections 51, 52,

53}New;It is clarified that a document may be served

upon a Company or its officer (at the registered office) by

registered post orby speed post orby courier service orby leaving it at its registered office orby means of such electronic or other mode as may be prescribed

contd…. Section 20A document to Registrar of

Companies, and members may be served by sending it to him by

post or registered post orby speed post orby courier service orby leaving it his office or address orby means of such electronic orother mode as may be prescribed


Proviso to section 20(2): If a member requests delivery of any

document through a particular mode, he shall pay such fee. Such fee as may be determined by the Company in its AGM.

Courier service means the agency which provide the services with proof of delivery.

APPLICABLE Section 21

Authentication of Documents, Proceedings

& Contracts {corresponding Section 54}

In the next slide


Any document, proceeding requiring authentication by a Company or contract entered into by or on behalf of a Company may now be signed by any KMP or an officer of the Company

Only after having due authorization by the Board of Directors.

APPLICABLE Section 22

Execution of Bills of Exchange, etc

{corresponding Section 47}22(1): A bill of exchange, hundi or promissory note

shall be deemed to have been-made, accepteddrawn or endorsed on behalf of the company: If it is made, accepted, drawn etc. in the name

of, or on behalf of the company by any person acting under its authority, express or implied.


A company may: a. by writing b. under its common seal c. authorize any person (either

generally or in respect of any specified matters)

d. as its attorney to execute other deeds on its behalf in any place either in or outside India.


a. A deed signed by such an attorney on behalf of the company and under his seal shall bind the company; and

b. have the effect as if it were made under its common seal.

chapter ii of companies act, 2013

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