Chapter II of Companies Act, 2013

Companies Act, 2013
AT ‘YOU’ Institute for Professionals
By CS Mamta Binani
Past Chairperson (Year 2010), EIRC of ICSI
Practising Company Secretary
mamtab@mamtabinani.com
01.02.2014
Room No.6, 4th Floor, Commerce House
2A, Ganesh Chandra Avenue, Kolkata 700013
Connect me @ : (033) 3028 8955-57; (033) 3002 5630-33; 98310 99551
Visit me @ : www.mamtabinani.com

UNDER THE COMPANIES ACT, 2013
& Draft Companies Rules, 2013

Room No.6, 4th Floor, Commerce House
2A, Ganesh Chandra Avenue, Kolkata 700013
Connect me @ : (033) 3028 8955-57; (033) 3002 5630-33; 98310 99551
Visit me @ : www.mamtabinani.com

One Person
Company
concept has been
introduced for the
1st time.

Private

Companies

Company
Public
Company

Limited by Shares/
Guarantee
/Unlimited

Foreign Co. /
Part XXI Co. /
Section 8 Co.

One Person
Company

Small
Company

Private Company
COMPANIES ACT, 2013
Section: 2(68)
 Same as previous
minimum paid-up capital of one
lakh rupees or such higher paidup share capital as may be
prescribed and which by its
articles:

COMPANIES ACT, 1956
Section: 3 (1)(iii)
means a company which has a
minimum paid-up capital of one
lakh rupees or such higher paidup capital as may be prescribed
and which by its articles:

(a) restricts the right to transfer
 Same as previous

(i) It also restricts the right to
transfer its shares;

its shares, if any;

contd…… Private Company
COMPANIES ACT, 2013

COMPANIES ACT, 1956

(ii) except in case of One

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

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

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

(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
company ; and

of

the

COMPANIES ACT, 2013

Same as previous

COMPANIES ACT, 1956
(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

COMPANIES ACT, 2013

COMPANIES ACT, 1956

(iii) prohibits any invitation to:
 the public to subscribe for
any securities of
the
company;
(Mark the word ‘securities’)

(c) Prohibits
any invitation to the public
 to subscribe for any shares
in, or
 debentures of the company.

The point of prohibiting
invitation or acceptance of
deposits is not there
(Refer draft rules-Acceptance
of Deposits by Companies)

(d) Prohibits any invitation or
acceptance of deposits from
 persons other than its
members, directors or their
relatives

Public Company
COMPANIES ACT, 2013

Section 2(71)

COMPANIES ACT, 1956

Section: 3(1)(iv)

Means a company which—
(a) is not a private company
(no change)

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

(b) has a minimum paid-up
share capital of:
 Rs. 5 lakhs;
 or such higher paid-up
capital, as may be prescribed

contd….Public Company
COMPANIES ACT, 2013
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

COMPANIES ACT, 1956
(c) is a private company which
is a subsidiary of a company
which is not a private
company

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



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)
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

Conversion of OPC (Rule 2.4)









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;

 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 3
Formation 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 4
Memorandum
{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.

(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

(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 ways
2. Company, co., corporation written in different ways
3. Plural version
4. Type and case of letters, punctuation, spacing etc.
5. Joining words or separating the words
6. 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 not
9. 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 mark
3. Includes the name of a TM which is the subject matter
of application for registration
4. Includes any word which is offensive to any section of
people
5. 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



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 esteem
11. Is vague, e.g. ABC Limited
12.Is abbreviated, e.g. DJMO Limited etc.
13. Subsidiary/ Joint Venture/ Associate company can use
but shall carry the object of the Company



14. A period of 2 years have not elapsed from the date of
dissolution of the company
15. If company struck off, then only after an elapse of 20
years
16. 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.



19. If it only contains the name of a continent, country etc.
e.g. Germany Limited
20. The name is only a general one, like Cotton Textile Mills
21. Misleading impression regarding the scope/ scale
22. 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 country
24. 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 subsection (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;

(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 A
Table B
Table C
Table D
Table E
in 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 5
Articles
{corresponding Sections 26, 27, 28 & 29}

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

• 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 F
Table G
Table H
Table I
Table 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 6
Act to override Memorandum, Articles
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 7
Incorporation 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.

In the presence of at least one witness who shallattest 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’

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

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 corporateduly authorized in this behalf by a resolution of
the BOD of the body corporate.

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

4) Foreign national residing outside India (Rule
2.10(4)- :
(a) in a country in any part of the Commonwealthhis signatures
and address on the MoA/AoA
and proof of identity

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

(b) in a country which is a party to the Hague
Apostille Convention, 1961 his signatures
and 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.

(c) in a country outside the Commonwealth and
which is not a party to the Hague Apostille
Convention, 1961his signatures
and 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.

(d) If a foreign national visited in India and
intended to incorporate a company, in such case
the incorporation shall be allowed ifHe/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 name
Nationality
Date of birth
Place of birth (District and State)
Occupation
Income-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)


For Foreign nationals and Non Resident Indians :
 Passport
 Others
 Proof 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.

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.

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

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


 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

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

(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 names
 the Director Identification Number
 residential address
 nationality and such other particulars and
 proof 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/or
suppresses 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; or
Incorrect representation; or
by suppressing any material fact; or
by suppressing any information in any of the documents; or
the 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; or
made 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-

(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:

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.

Section 8
Formation of Companies with
Charitable Objects etc.
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.

In

contd…. Section 8

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 8
Documents 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 8
Conditions 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 8
Key modifications:

In the Act, activities like :
 sports
 education
 research
 social welfare
 protection 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 8
The 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 lakhs
which 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 9
Effect of Registration
• 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

Section 10
Effect of Memorandum & Articles
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 11
Commencement of Business
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 11

Where no declaration is filed by the Director within180 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; and
every officer who is in default shall be punishable with the
fine which
may extend to Rs.1000 for every day of
continuing default

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 12
Registered Office of Company
{corresponding Sections 17A, 146, 147}
New:Every company is required to print
CIN
Telephone no.
Fax no.
Email
Website address
On all its >business letters >billheads >letter paper and
>all its notices and >other official publications.

In 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 letters
Letter head
Letter 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”

Key Modifications
Under 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.

Instead 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 13
Alteration 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 language
And shall also be placed on the website of the Co.

ii.

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
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.

Key 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
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
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

In

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
Key Modifications:MoA/AoA to be sent within 7 days of request
Fees 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
New:Any company of any class registered under this Act, may
convert itself into a co. of other class under this Act byAlteration 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 reregistration.

APPLICABLE
Section 19
Subsidiary company not to
hold shares in its holding co.
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 or
by speed post or
by courier service or
by leaving it at its registered office or
by means of such electronic or
 other mode as may be prescribed


A document to Registrar

of Companies, and
members may be served by sending it to him
by
post or
registered post or
by speed post or
by courier service or
by leaving it his office or address or
by means of such electronic or
other 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
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
22(1): A bill of exchange, hundi or promissory note shall be
deemed to have beenmade, accepted
drawn 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

Chapter II of Companies Act, 2013

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Chapter II of Companies Act, 2013

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