What are the salient features of Companies Act, 2013?
- Blog|Company Law|
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- 3 Min Read
- By Taxmann
- Last Updated on 1 March, 2022
Key Features of Companies Act 2013
- The act has launched all-new class action suits that keep the shareholders as well as the stakeholders more aware and informed regarding their major rights.
- The act lends more power to shareholders wherein their approvals are required for numerous important transactions.
- It insists on appointing a minimum of 1 female director on the company’s board (for companies in a specific class).
- The act requires companies in a specific class to spend a specified amount on initiatives or activities that reflect CSR (Corporate Social Responsibility) on an annual basis.
- It has launched the National Company Law Tribunal as well as the National Company Law Appellate Tribunal for replacing the Company Law Board in addition to the Board for Industrial and Financial Reconstruction.
- The act has proposed a simple and fast track process for mergers as well as amalgamations of companies in specific class like the subsidiary and holding, as well as small organizations after they have obtained the government’s approval.
- It also gives permission to international mergers, either way i.e. a foreign organization merging into an Indian Company, and vice versa. However, such mergers would take place only after permission has been duly obtained by the RBI.
- The act prohibits insider trading and forward dealings. It places a prohibition on the directors as well as the key management members from buying the call as well as the put options of the company’s shares, in cases where the individual is capable of accessing any information that is price sensitive.
- The Act lays down that a private ltd. company can now have a maximum of 200 shareholders as opposed to 50 that was permitted in the Companies Act, 1956.
- An association or partnership may have the maximum partners/person as prescribed but it should not exceed 100. However, the above restriction is not applicable to a partnership or association constituted by the Chartered Accountants, Lawyers and Company Secretaries, etc. as they need to follow their specific laws.
- The Act has also introduced a new type of Pvt. Company – One Person Company. Such a company can have just 1 director as well as 1 shareholder. The previous act required a minimum of 2 shareholders as well as 2 directors for establishing a Pvt. Company.
- The Companies Act 2013 has provided for entrenchment in the articles of association.
- The Act has given a proposal for E-Governance in case of numerous company procedures such as maintenance as well as electronic inspection of documents, keeping the books of accounts in electronic format, placement of company’s financial statements on their website, etc.
- Each company must have a minimum of 1 director who must have stayed in the country (India) for at least 182 days and not less.
- The Act also states that at least 1/3rd of the company’s board should consist of independently operating directors in the case of all the listed organizations. Similar other classes or class of public organizations must also appoint independently operating directors. No independently operating director may hold the office for over 2 terms of 5 years consecutively.
- The Act states that the companies must give a prior 7 days’ notice before calling a board meeting. Companies may send the notice electronically to every single director at his/her registered address.
- The Act also defines all the specific duties of a company director.
- It doesn’t place any restriction on a company in India to indemnify (compensation for loss or harm) its officers and directors, which was earlier applicable in the previous act.
- The Act insists on the rotation of auditors as well as auditing firms in the case of a public company.
- The Act places a prohibition on auditors for the performance of non-auditing services for the organization where they have been appointed as auditors for the purpose of ensuring accountability and independence of auditors.
- The liquidation and rehabilitation procedure of the organizations dealing with financial problems have become time-bound as per the new act.
Companies Act with Rules is the most authentic and comprehensive book on the Companies Act, 2013. It covers the Amended, Updated & Annotated text of the Companies Act, 2013 [as amended by the Companies (Amendment) Act 2020], and 60+ Rules framed thereunder along with Circulars & Notifications, Amended Schedules, ICSI Guidance Note on CSR. This book is updated till 10th December 2021.
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