Tabular comparison between old versus new provisions:

Rajat Poddar (Qualified CS and CA Finalist) (3355 Points)

28 August 2013

S.no	Subject matter	Old provision in the Companies Act,1956	Corresponding new provision in the Companies Bill,2011
1	Composition	Contains 658 sections and 15 schedules	Contains 29 chapters with 470 clauses and with 7 schedules.
2	Defination	Secton 2 containd 67 Definations	Clause 2 of elephant size contains 95 definitions. The additional definitions not included in section 2 are: Auditing Standards; Associate Company; Chief Executive Officer; Chief Financial Officer; Company Liquidator; Called up capital; Company limited by shares; Company limited by guarantee; Control; Employees’ Stock Option; Financial Statement; Financial Year; Global Depository Receipt; Independent Director; Interested Director; Indian Depository Receipt; Issued capital; Financial statement; Key Managerial Personnel ;( Whole-time director’ has been included in the definition of the term ‘key managerial personnel’) One Person Company; Promoter; Remuneration; Small Company; Sweat equity shares; Unlimited company; Turnover.
3	Definition of Private Company	Restricts the maximum number of members to 50	To restrict the maximum number of members to 200
4	Definition of Public Company	Financial year not defined in section 2	Defined in clause 2(41) as under: Financial year as defined in clause 2(41) requires Company or body corporate to adopt uniform financial year of 1^st April to 31^st March every year except in certain exceptional cases. Existing Companies not adopting 1 April to 31 March as financial year for Companies Act purposes to align themselves with 1 April-31 March within two years of commencement of the Companies Act, 2012.
5	Types of Company that can be formed	Public Company or Private Company which can be limited by shares/limited by guarantee or unlimited company	Besides Public and Private Company, clause 3 also provides for One Person Company as a Private Company.
6	One Person Company(OPC)-clause 3	Such a concept was absent hitherto.	OPC can be formed
7	Mandatory contents of the Memorandum	Five clauses were mandatory: Name Clause; Registered office Clause; Objects divisible into: Main Objects; Objects ancillary or incidental to the Main Objects; Other Objects; Liability Clause; Capital Clause	Same except that no classification required for the object clause into Main objects, incidental/ancillary objects, other objects. As a result of the above, section 149(2A) and 149(2B) of the Companies Act is no longer applicable
8	Definition of Financial Year.	Financial year not defined in section 2	Defined in clause 2(41) as under: Financial year as defined in clause 2(41) requires Company or body corporate to adopt uniform financial year of 1^st April to 31^st March every year except in certain exceptional cases. Existing Companies not adopting 1 April to 31 March as financial year for Companies Act purposes to align themselves with 1 April-31 March within two years of commencement of the Companies Act, 2012.
9	Reservation of name for proposed Company-procedural aspects-clause 4(4) and 4(5)	Procedural aspects not covered.	Provides for making an application for reservation of new name or change of name of an existing company to the ROC on payment of prescribed fees.
10	Penalty for obtaining name by providing wrong or incorrect information	No recourse provided	If company is not incorporated, reserved name shall be cancelled after imposing a penalty not exceeding Rs. 100,000; and If Company is incorporated the ROC may : Give direction to change name within 3 months by passing ordinary resolution or Make a petition for winding up of the company.
11	Entrenchment provisions in Articles. Clause 5	No such provision existed	Articles may provide for more stringent or restrictive procedure than passing of special resolution for altering certain provisions of the AoA (like a provision can be altered only if agreed to by all the members of the company in writing).
12	Formats of articles of association.	Table A - AoA of Company limited by shares. Table B-MoA of Company limited by shares. Table C-MAA of Company limited by Guarantee and not having a share capital Table D-MAA of Company limited by Guarantee and having a share capital Table E-MAA of an Unlimited Company	Table F-Company limited by Shares. Table G-Company limited by Guarantee and having share capital. Table H-Company limited by Guarantee and not having share capital. Table I-Unlimited Company having share capital. Table J-Unlimited Company not having share capital.

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13	Incorporation of a Company.-clause 7	Certificate of Incorporation to be conclusive evidence	Action can be taken even after incorporation if incorporation is on the basis of false or incorrect incorporation. Thus Certificate of Incorporation is not treated as conclusive evidence.
14	Formation of Companies with Charitable objects.-clause 8	Section 25 Company. Did not specifically provide for sports, education, research, social welfare and environment protection. Could be only by way of a public or private company. Max. action that can be taken by Central Government (CG) was revocation of license and that too only for violation of any terms of the license.	Specifically provides for all these words. Could be as a OPC or an Association of Persons (AOP). Action besides revocation can be direction for winding up of the Company or amalgamation with another company registered with same objects. Provides for additional grounds for revocation like affairs being conducted fraudulently or prejudicial to public interest.
15	Commencement of Business-clause 11	Applicable only to Public Companies. If not complied, no powers to the ROC to initiate action for the removal of the name of the Company from the Register of Companies.	Applicable to both public as well as private companies. –clause 11 Empowers ROC to remove the name of the Company from the Register of Companies if: Declaration is not filed within 180 days from the date of incorporation of the Company and ROC has reasonable cause to believe that the Company is not carrying on any business.
16	Name change of a Company during the last two years.-clause 12	No provision existed	Company to paint or affix outside every office or place of business letters, bill heads, etc. along with its name, the former name or names changed during the last two years. Also company shall, on and from the 15^th day of its incorporation and at all times have a registered office address. Not necessary to have a registered office at the time of incorporation.
17	New restrictions on alteration of objects clause where Co. has any unutilized proceeds from Public Issue (PI).-cl. 13.	Objects clause alteration required only special resolution of members and filing of Form 23 with the ROC.	Where Company has any unutilized proceeds from Public Issue, it cannot change its objects unless a special resolution is passed by it and the details as may be prescribed, of the notice, shall be published in two newspapers and shall also be placed on the website of the company; Dissenting shareholders should be given an exit opportunity in accordance with SEBI regulations
18	Permissible mode of issuing securities.-clause 23	Companies could issue securities by way of public issue, private placement, rights issues or bonus issue.	Private companies under clause 23 can issue securities only through private placement after complying with part II of Chapter II. Thus private companies cannot issue rights shares or bonus shares. However clause 62 and 63 dealing with rights and bonus respectively contains no such prohibition. Bill needs to be amended for clarity.
19	Raising capital through public offer-Clause 28	No such provision existed	Only public companies can issue securities by making public offer and that too by complying Part I of chapter III of the bill. Clause 28 enables offer of sale of shares by certain members of the company.
20	Civil liability for misstatement in the prospectus	Section 62 provides that where prospectus invites persons to subscribe for shares in or debentures of a company, then the liability is only for payment of compensation to every person who relied on the prospectus and for loss and damage that they may suffer.	Clause 35 provides that where it is proved that the prospectus has been issued with intent to defraud, every person like directors, promoters, experts, etc. shall be personally responsible without any limitation of liability for all the loss or damages.
21	Criminal liability for misstatement in the prospectus.(no change)	Section 63	Clause 34
22	Punishment for fraudulently inducing persons to invest money.(no change)	Section 68	Clause 36-to also include punishment for falsely inducing a person to enter into any agreement with bank or financial institution, with a view to obtaining credit facilities.
23	Class action for misleading statement in prospectus and fraudulently inducing people to invest money.-clause 37	No such provision existed.	Any group of persons or any association of persons affected by any misleading statement or the inclusion or omission of any matter in the prospectus may take action against any guilty persons.
24	Allotment of securities and minimum subscripttion.	Section 69-Minimum subscripttion applicable only to shares.	Clause 39-minimum subscripttion to be extended to all securities.
25	Disgorgement provisions.-Clause 38(3)	Did not exist	Clause 38(3) provides that where a person has made applications in fictitious names for securities and has made multiple applications to company in different names for acquiring securities and he has been convicted of any of the offences, the Court may also order disgorgement of gain, if any, made by, and seizure and disposal of the securities still in possession of, such person and amount received through disgorgement or disposal of securities shall be credited to IEPF. Clause 38 applies only to public offers.
26	Issue of Global Depository Receipts (GDR).-clause 41	Did not exist	Company, may, after passing a special resolution in its general meeting, issue GDRs subject to conditions.
27	Raising of capital by private placement basis-clause42	Did not exist	Offer can be made to such number of persons as may be prescribed and for prescribed amount without issue of prospectus. If offer is made to more than prescribed no. of persons, the same shall be deemed to be an offer to the public. ‘private placement’ has been defined to bring clarity
28	Voting rights on preference shares – clause 47	Section 87-Different criteria for cumulative and non-cumulative preference shares for trigger of voting rights.	Clause 47-No such difference between cumulative and non-cumulative. Voting rights to arise if dividends payable are in arrears for a period of two years or more
29	When is dividend said to be payable for determination of voting rights as above.	Explanation to clause 87 provides for the same	Explanation omitted. May give rise to needless litigation.
30	Where variation in rights of one class of shareholders affects rights of other class of shareholders.-clause 48	Section 106-107 provides for variation in rights of shareholders by obtaining consent in writing of not less than 3/4^th of the issued shares of that class or with the sanction of the special resolution passed at a separate meeting of the holders of the issued shares of that class	Clause 48-if variation by one class of shareholders affects the rights of any other class of shareholders; the consent of at least 75% of such other class shall also be obtained.

31	Utilization of securities premium account (SPA).clause 52(3)	Section 78-SPA can be utilized for writing off preliminary expenses or for providing premium payable on redemption of preference shares or debentures.	Clause 52(3)-prescribed class of companies whose financial statements comply with accounting standards prescribed for such class cannot utilize SPA for writing off preliminary expenses and premium on redemption of preference shares or debentures.
32	Prohibition on issue of shares at discount.-clause 53	Section 79-Issue of shares at discount permissible subject to conditions and Central Govt. approval	Clause 53-prohibits issue of shares at discount as void and not permissible except for Sweat Equity under clause 54
33	Preference shares beyond 20 yrs – clause 55	Section 80-Issue of irredeemable preference shares or redeemable beyond 20 yrs is prohibited	Clause 55-preference shares beyond 20 yrs may be issued by infrastructure companies subject to annual redemption of such percentage of preference shares as may be prescribed on an annual basis at the option of such preferential shareholders.
34	Redemption of unredeemed preference shares by issue of further shares.-clause 55(3)	No such provision existed	A Company may redeem unredeemed preference shares by issuing further redeemable preference shares equal to the amount due, including the dividend thereon with the consent of 75% holders in value for such pref. shares and approval of the Tribunal on a petition made to it in this behalf is obtained. Such issue or redemption shall not be deemed to be an increase or as the case may be reduction in the share capital of the Company.
35	Transfer of interest of a member in a company having no share capital-clause 56(1)	No such provision existed under the Companies Act, 1956. Was transferable only under the Transfer of Property Act.	Clause 56(1) provides for registration of transfer by company of such interest by delivery to the company by the transferor or the transferee of proper instrument of transfer within 60 days from the date of execution.
36	Alteration of share capital by consolidation or division of share capital into shares of larger amount.-clause 61(1)(b)_	Section 94(1) permitted the same if there was a provision for the same in the AoA treating it as a mere alteration not involving any reduction in the share capital. No approval of the Court or any other authority required.	Clause 61(1) (b) provides that such alteration shall be made only after making application to the Tribunal and obtaining the approval of the Tribunal. Approval of the Tribunal shall be required for consolidation and division of share capital only if the voting percentage of shareholders changes consequent on such consolidation
37	New enabling provision for issue of bonus shares-clause 63	No provision in the act. However Rules framed for public unlisted Company.	Clause 63 provides for issue of bonus shares. Private companies are not excluded in clause 63 for issue of bonus shares but apparently clause 23 does not permit private companies to issue bonus shares.
38	No reduction of capital if deposits not repaid.-clause 66	No such provision existed.	No reduction of capital shall be made by a company if the company is in arrears in the repayment of any deposits accepted by it or the interest payable thereon irrespective of the deposits being accepted before or after the commencement of this Act.
39	Special resolution required for issue of debentures with conversion option & other provisions clause 71	No such requirement existed	Needs special resolution of the members for the issue of debentures with conversion option, wholly or partly.
40	Appointment of Debenture Trustees (DT) compulsory for public issue of debentures through prospectus to more than 500 persons.	Section 117B-No such ceiling of 500 existed. Appt. of DT compulsory for company issuing prospectus or a letter of offer to the public for subscripttion of its debentures	Clause 71-Appointment of Debenture Trustees compulsory for public issue of debentures through prospectus to more than 500 persons.
41	Public Deposits( PD): (a) Prohibition on acceptance of PD ( clause 73-76)	Section 58A-General prohibition existed. Section 58AA_ concept of small depositors done away with in the new Bill	Clause 73 Specifically provides that only banking companies, NBFCs, Notified Companies and Public Company having such net worth as may be prescribed. Companies other than above can accept PD only from its members, only if certain conditions like resolution at GM, compliance with rules and regulations of the RBI, provision of security for the repayment, filing a copy of circular with the ROC, issuance of circular to its members, creation of Deposit Repayment Reserve Account, providing Deposit Insurance,etc, are met. For acceptance of PDs from persons other than members, specific conditions have to be met, like, prescribed net worth or turnover, credit rating from a credit rating agency, creation of charge
42	Definition of charge.	Section 124-definition is an inclusive definition to include mortgage.	Clause 2(16) defines charge to cover the following: An interest or lien created on the property of the Company or its assets or any of its undertakings or both as security. A mortgage.
43	Registration of pledges.	Pledge of movable property does not require registration with the ROC	Registration of pledges of movable property with the ROC, proposed.
44	Types of charges requiring registration.	Section 125(4)-only 9 types of charges require registration	To cover all the charges on the company’s assets, properties or any of its undertakings.
45	Power of Registrar to make entries of satisfaction and release in absence of intimation from company.-clause 83	Such a provision did not exist	Provided for in clause 88.
46	Annual Return (AR).-clause 92	Section 159 provided for only 7 details to be specified in the AR.	Clause 92 provides for the additional details to be mentioned in the AR like, (i) Details of principal business activities, particulars of holding, subsidiary and associate companies; (ii) Promoters, directors, key managerial personnel along with changes since last year; (iii) Meetings of members or a class thereof, Board and its various committees along with the attendance details; (iv) Remuneration of directors and KMP; (v) Penalties or punishments imposed on the Company, its directors or officers and details of compounding of offences and appeals made against penalties or punishments; (vi) Matters related to certification of compliances, disclosures as may be prescribed; (vii) Details of shares held on behalf of FIIs (viii) Such other matter as may be prescribed.
47	Certification of Annual Return:	Section 161 provides for AR to be signed by a Director and by the manager or secretary, and where there is no manager or secretary, by Two Directors, one of whom shall be the Managing Director (MD), where there is one. In case of a listed company, such AR to be also signed by a Practicing Company Secretary (PCS).	Clause 92-in case of an OPC and small company, AR to be signed by a CS or where there is no Company Secretary (CS), by a PCS; For listed company and companies having such turnover and paid up capital as may be prescribed-by a Director and a CS, where there is no CS by a PCS. In addition to this, it shall also be certified by a PCS that the AR discloses the facts correctly and adequately and that the Co. has complied with all the provisions of the Act. Other companies-by a Director and a CS, where there is no CS by a PCS.
48	Time limit for filing of the AR with the ROC	Section 159-within 60 days from the day on which the AGM is held.	Clause 92(3)-where AGM is held-within 30 days from the date of the AGM. Where AGM is not held-within 30 days of the due date of the AGM along with the reasons for not holding the AGM.
49	Consequences for default in filing the AR	Section 162-company and every officer of the company who is in default, shall be punishable with fine which may extend to 500 Rs for every day of default.	Where the Company fails to file within 30 days but files it within 300 days, additional filing fees as prescribed in clause 403; Where Company fails to file within 270 days from expiry of 30 days timeline, the Company shall be punishable with fine not less than 50000 but which may extend upto 500000 and every officer of the company who is in default shall be punishable with imprisonment for 6 months or with fine which shall not be less than Rs.50000 but which may extend upto Rs. 500000/-, or with both.
50	Return to be filed by listed company in case of changes in promoters.-clause 93	No such provision existed	Clause 93 provides listed company to file a return with the ROC in case of changes in promoters or top ten shareholders of the company within 15 days of such change.

Tabular comparison between old versus new provisions:

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