TOPICTOPICTHE COMPANIES ACT, 1956

Vis-a-visTHE COMPANIES BILL, 2012

A COMPARATIVE STUDY…A COMPARATIVE STUDY…NATURE COMPANIES ACT,1956 COMPANIES BILL,2012

Sections 658 470

Chapter 13 29

Schedules 15 07

Financial Year Flexible

The period in respect of which any profit and loss account of the body corporate laid before it in annual general meeting is made up whether that period is an year or not.

Rigid

The period ending on the 31st day of March every year.

If company is incorporated on or after the 1st day of January of a year, the period ending on the 31st day of March of the following year.

One Person Company

No such concept exists. Means a company which has only one person as a

Member.

Small company No such concept exists Other than a public company,(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than five crore rupees; or(ii) turnover of which as per its last profit and loss account does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than twenty crore rupees:Provided that nothing in this clause shall apply to—(A) a holding company or a subsidiary company;(B) a company registered under section 8 (Companies with charitable objects); or(C) a company or body corporate governed by any special Act;

No. of members- (Pvt. co.)

50 200

Restriction on commencement of business

Public company cannot commence business before obtaining a certificate for commencement of business.

To commence business, a public/private company needs to file the following with the Registrar of Companies:  A declaration by a director in prescribed form stating that the subscribers to the memorandum have paid the value of shares agreed to be taken by them,

and A confirmation that the company has filed a verification of its registered office with the Registrar.

Mandatory committees for listed companies

Audit committee 1. Audit committee

2. Nomination committee

3. Remuneration committee

Stakeholders Relationship Committee

No such concept exists The Board of Directors of a company which consists of more than one thousandshareholders, debenture-holders, deposit-holders and any other security holders at any time during a financial year shall constitute a Stakeholders Relationship Committee consistingof a chairperson who shall be a non-executive director and such other members as may be decided by the Board.

Secretarial audit No mandatory provision Secretarial Audit mandatory for all listed companies, and such other companies to be

prescribed.

Presence of woman director No such mandatory requirement

At least one woman director being made mandatory in the

prescribed class(s) of companies.(to be specified by

the Government)

ANNUAL RETURN

Classes of Companies 1. Company having share capital;

2. Company not having share capital

No such class specified, single format for all the

companies

Disclosures in annual return Company having share capital

(a) Its registered office,

(b) the register of its members,

(c) the register of its debenture holders,

(d) its shares and debentures,

(e) its indebtedness,

(f) its members and debenture holders, past and present,

and

(g) its directors, managing directors , managers and secretaries, past and present

(a) Its registered office, principal business activities, particulars of its holding,

subsidiary and associate companies;

(b) its shares, debentures and other securities and shareholding pattern;

(c) its indebtedness;

(d) its members and debenture-holders along with changes therein since the

close of the previous financial year;

Company not having share capital(a) the address of the registered office of the company ;(aa) the names of members and the respective dates on which they became members and the names of persons who ceased to be members since the date of the annual general meeting of the immediately preceding year, and the dates on which they so ceased;(b) all such particulars with respect to the persons who, at the date of the return, were the directors of the company , its manager and its secretary.

(e) its promoters, directors, key managerial personnel along with changes therein

since the close of the previous financial year;

(f) meetings of members or a class thereof, Board and its various committees

along with attendance details;

(g) remuneration of directors and key managerial personnel;

(h) penalty or punishment imposed on the company, its directors or officers and

details of compounding of offences and appeals made against such penalty or

punishment;

(i) matters relating to certification of compliances, disclosures as may be

prescribed;

There shall be annexed to the return a statement containing particulars of the total amount of the indebtedness ofthe company, as on the day aforesaid in respect of all charges which are or were required to be registered with the Registrar under this Act or under any previous companies law, or which would have been required to be registeredunder this Act if they had been created after the commencement of this Act.

(j) details, as may be prescribed, in respect of shares held by or on behalf of the Foreign Institutional Investors indicating their names, addresses, countries of incorporation, registration and percentage of shareholding held by them; and

(k) such other matters as may be prescribed,

Signing of Annual return Director and by the manager or secretary of the company, or where there is no manager or Secretary, by two directors of the company, one of whom shall be the managing director where there is one.

A director and the company secretary, or where there is no company secretary, by a company secretary in whole

time practice.

LOAN TO DIRECTORS

Applicability of Section

Public companies only Both Public and Private companies

Scope No public company shall directly or indirectly, make any loan or give any guarantee or provide any security to its directors and other certain specified persons except with the approval of CG.

Save and otherwise provided in this Act no company shall directly or indirectly, make any loan or give any guarantee or provide any security to its directors and any other persons in which the director is interested.

Exemptions 1. Private Companies

2. Holding to its subsidiaries

3. Banking Companies

1. Loan to MD/WTD as part of the contract of services extended to all employees or Pursuant to scheme approved by members (SR).2. company which in the ordinary course of its business provides loans or gives guarantees or securities for the due repayment of any loan and in respect of such loans an interest is charged at a rate not less than the bank rate declared by the Reserve Bank of India.

Subsidiary Company (a) Controls the composition of its Board of directors ; or(b)(i) where the first-mentioned company is an existing company in respect of which the holders of preference shares issued before the commencement of this Act have the same voting rights in all respects as the holders of equity shares, exercises or controls more than half of the total voting power of such company ;(ii) where the first-mentioned company is any other company, holds more than half in nominal value of its equity share capital ; or(c) The first-mentioned company is a subsidiary of any company which is that other's subsidiary.

1. Controls the composition of the Board of Directors.

2. Exercises or controls more than one half of the total share capital either at its own or together with one or more of its subsidiary companies.

Maximum no. of Directors

12Beyond it C.G. approval is

required.

15Beyond it S.R. is required.

Atleast One Resident Director No such Requirement exists. Atleast one Resident director.

(who stayed minimum 182 days in the P.Y. in India)

Independent director No such requirement. All listed companies shall have at least one-third of the Directors' on the Board as independent directors.

Appointment of Auditors Every company shall, at each annual general meeting, appoint an auditor or auditors to hold office from theconclusion of that meeting until the conclusion of the next annual general meeting.

Every company shall, at the first annual general meeting, appoint an individual or a firm as an auditor who shall hold office from the conclusion of that meeting till the conclusion of its sixth annual general meeting and thereafter till the conclusion of every sixth meeting.

Corporate Social Responsibility

No such concept exists. • Every company with net worth of Rs 500 crore or more, or turnover of Rs 1,000 crore or more or a net profit of Rs 5 crore or more during any financial year to constitute a CSR Committee of the Board consisting of three or more directors, of which at least one director shall be an independent director.

• The Board’s report to disclose the composition of the CSR Committee.

The main functions of the CSR Committee are to :

• Formulate and recommend to the board, a CSR policy indicating the activity or activities to be undertaken by the company;

• Recommend the amount to be spent on these activities; and

• Monitor the company's CSR policy periodically.

Associate Company No such concept exists. in relation to another company, means a company in which that other company has a significant influence, but which is not a subsidiarycompany of the company having such influence and includes a joint venture company.Explanation.—For the purposes of this clause, “significant influence” meanscontrol of at least twenty per cent of total share capital, or of business decisionsunder an agreement

Promoter means a promoter who was a party to the preparation of the prospectus or of the portionthereof containing the untrue statement, but does not include any person by reason of his acting in a professionalcapacity for persons engaged in procuring the formation of the company

means a person—(a) who has been named as such in a prospectus or is identified by the company in the annual return referred to in section 92; or(b) who has control over the affairs of the company, directly or indirectly whether as a shareholder, director or otherwise; or

Promoter (c) in accordance with whose advice, directions or instructions the Board of Directors of the company is accustomed to act.Provided that nothing in sub-clause (c) shall apply to a person who is acting merely in a professional capacity

Global Depository Receipt No such concept exists means any instrument in the form of a depository receipt, by whatever name called, created by a foreign depository outsideIndia and authorised by a company making an issue of such depository receipts

Related Party No such concept exists means—(i)a director or his relative;a key managerial personnel or his relative;(iii) a firm, in which a director, manager or his relative is a partner;(iv) a private company in which a director or manager is a member ordirector;(v) a public company in which a director or manager is a director or holdsalong with his relatives, more than two per cent. of its paid-up share capital;(vi) any body corporate whose Board of Directors, managing director or manager is accustomed to act in accordance with the advice, directions orinstructions of a director or manager;(vii) any person on whose advice, directions or instructions a director ormanager is accustomed to act,

Related Party Provided that nothing in sub-clauses (vi) and (vii) shall apply to the advice,directions or instructions given in a professional capacity;(viii) any company which is—(A) a holding, subsidiary or an associate company of such company; or(B) a subsidiary of a holding company to which it is also a subsidiary;(ix) such other person as may be prescribed

Key Managerial Person No such concept exists (i) the Chief Executive Officer or the managing director or the manager;(ii) the company secretary;(iii) the whole-time director;(iv) the Chief Financial Officer; and(v) such other officer as may be prescribed.

Officer In Default means all the following officers of the company, namely :(a) the managing director or managing directors ;(b) the whole-time director or whole-time directors ;(c) the manager ;(d) the secretary ;(e) any person in accordance with whose directions or instructions the Board of directors of the company isaccustomed to act ;(f) any person charged by the Board with the responsibility of complying with that provision

means any of thefollowing officers of a company, namely:—(i) whole-time director;(ii) key managerial personnel;(iii) where there is no key managerial personnel, such director or directors as specified by the Board in this behalf and who has or have given his or their consent in writing to the Board to such specification, or all the directors, if no director is so specified;(iv) any person who, under the immediate authority of the Board or any key managerial personnel, is charged with any responsibility includingmaintenance, filing or distribution of accounts or records, authorises, activelyparticipates in, knowingly permits, or knowingly fails to take active steps toprevent, any default;

Officer In Default (v) any person in accordance with whose advice, directions or instructions the Board of Directors of the company is accustomed to act, other than a person who gives advice to the Board in a professional capacity;(vi) every director, in respect of a contravention of any of the provisions of this Act, who is aware of such contravention by virtue of the receipt by him ofany proceedings of the Board or participation in such proceedings withoutobjecting to the same, or where such contravention had taken place with his consent or connivance;(vii) in respect of the issue or transfer of any shares of a company, the share transfer agents, registrars and merchant bankers to the issue or transfer

Object Clause Bifurcation as follows:-•Main•Ancillary•Others

Only the objects for which the company is incorporated along with matters considered necessary for its furtherance to be mentioned. The company cannot provide for other object clause

Private Placement No such concept exists Entire set of regulations governing private placement introduced.

Class Action/ Class Suit No such concept exists A class action or a class suit is a lawsuit that allows a large number of people with a common interest in a matter to sue or be sued as a group. The provision of class suit gives stakeholders an edge in retrenching their rights.