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Companies Bill 2011- At a glance

Aditi Jhunjhunwala Mumbai address: Vinod Kothari & Company 222, Ashoka Shopping Centre aditi@vinodkothari.com LT Road, Near GT Hospital 1012, Krishna 2nd Floor 224, AJC Bose Road Mumbai- 400 001 Kolkata- 700 017 Ph: 033- 2281 7715/3742/1276 Website: www.india-financing.com

Structure
Companies Act, 1956
13 parts More than 750

Companies Bill, 2011


29 Chapters 470 clauses 7 schedules

sections 15 schedules

Companies Bill 2011-At a glance Vinod Kothari & Company

January 2012

Quick snapshots
Rearrangement

of sections, chapters making the Act much more reader friendly and compacting the existing Act; however, Rules yet to be prescribed; framework on compromises and arrangements; proposes to introduce the concept of class action suits for the first time in India. That would empower investors to sue a company for 'oppression and mismanagement' and claim damages; of Company concept; One Person

Many new definitions have been

Regulatory It

introduced and existing ones been amended such as- accounting standards, auditing standards, associate company, charge, company limited by shares, control, CEO, CFO, books of accounts, deposit, promoter, postal ballot, related party, small company etc. Change in the definition of Company, employee stock option etc.;
Shareholders approval a must for

inter-corporate loans;
Introduction

to Revival and Rehabilitation of sick companies in Chapter XIX- SICA to be repealed every 4 years;

Introduction

Periodic rotation of Auditors after

Companies Bill 2011-At a glance Vinod Kothari & Company

January 2012

Snapshots.
Concept of Registered Valuer
The Bill also seeks to prohibit insider

introduced; Dissenting shareholders to be given exit option at the time of decision making of the company such as change in object clause, any new business proposal etc.; Among other things, it also proposes to tighten the laws for raising money from the public;

trading by company directors or key managerial personnel by treating such activities as a criminal offence;
The Bill proposes that companies

should earmark 2 per cent of the average profit of the preceding three years for corporate social responsibility (CSR) activities, and make a disclosure to shareholders about the policy adopted in the process; the same is not a mandatory requirement;
Company

definition Personnel;

Secretary included in of Key Managerial

Companies Bill 2011-At a glance Vinod Kothari & Company

January 2012

Snapshots.
Provisions regarding the name Concept of video conferencing in

approval now not in a separate section but clubbed together under incorporation
Additional documents to be filed

case of board meetings

and

general

Mandatory transfer to reserves

by a public/private company in case of commencement of business;


Share Transfer Agents, Registrars

for dividend declaration, done away with


Mandatory

rotation independent directors

of

to an issue, CFO also included within the meaning of officer in default;

More Powers to Serious Fraud

Investigation Office (SFIOs)

Companies Bill 2011-At a glance Vinod Kothari & Company

January 2012

Definitions- Chapter I Amendments and insertions


Analysis: On a plain reading of the definition on Interested Director, it would mean that even if a director is a shareholder in the company, he becomes interested

interested director means a director

who is in any way, whether by himself or through any of his relatives or firm, body corporate or other association of individuals in which he or any of his relatives is a partner, director or a member, interested in a contract or arrangement, or proposed contract or arrangement, entered into or to be entered into by or on behalf of a company;
January 2012

Companies Bill 2011-At a glance Vinod Kothari & Company

associate company, in relation to another company, means a company in which that other company has a significant influence, but which is not a subsidiary company of the company having such influence and includes a joint venture company; Explanation.For the purposes of this clause, significant influence means control of at least twenty per cent. of total share capital, or of business decisions under an agreement; ANALYSIS:
In case of a control, the essence of associate goes away

and it establishes a holding subsidiary relationship. Therefore, though the definition explicitly says that there is no holding-subsidiary relationship between the associates but the usage of control takes away the substance.

A reading of the definition of associate company under AS-23 clearly brings out the difference between control and participation
Moreover, the said definition excludes joint venture to be considered a part of associate company unlike the present Bill
7 Companies Bill 2011-At a glance Vinod Kothari & Company January 2012

independent director means an independent director referred to in sub-section (5) of section 149;

Introduced for the first time


All listed Companies to appoint independent directors At least one third of BoD to comprise of independent directors Independent Directors to abide by Code provided in Schedule IV Only an independent director to be appointed as alternate director

In case on nominee directors by any institution/appointed by govt. representing shareholding not to be deemed as independent director
Cooling period introduced-Independent Dir to be appointed in same company after cooling period of 3years

Companies Bill 2011-At a glance Vinod Kothari & Company

January 2012

net worth means the aggregate value of the paid-up share capital and all reserves created out of the profits and securities premium account, after deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the audited balance sheet, but does not include reserves created out of revaluation of assets, write-back of depreciation and amalgamation;

Analysis: The entire definition may need a recast once IFRS gets applied, as companies are allowed to use revaluation model for assets whereby the concept of revaluation reserve disappears

Companies Bill 2011-At a glance Vinod Kothari & Company

January 2012

In case of class action by a member, the minimum number has been fixed to that of 100, and possibly one of the reasons to increase the number of members in case of private company is to get the same at par with the requirement under class action.

private company means a

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company having a minimum paid-up share capital of one lakh rupees or such higher paid-up share capital as may be prescribed, and which by its articles, (i) restricts the right to transfer its shares; (ii) except in case of One Person Company, limits the number of its members to two hundred; xxx Companies Bill 2011-At a glance Vinod Kothari &
Company

January 2012

relative, with reference to any

person, means anyone who is a related to another, if (i) they are members of a Hindu Undivided Family; (ii) they are husband and wife; or (iii) one person is related to the other in such manner as may be prescribed; The manner of ascertaining a person as related is yet to be prescribed unlike existing Schedule 1A of the existing Act.

Small companies have

been defined (maximum paid-up share capital not exceeding Rs. 50 lakh) and have been subjected to a less stringent regulatory framework [Clause 2(85)]

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Companies Bill 2011-At a glance Vinod Kothari & Company

January 2012

Contd.

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Companies Bill 2011-At a glance Vinod Kothari & Company

January 2012

Few new clauses inserted


Re-opening of books of accounts and recasting its financial statements on an order

by the competent court or Tribunal [Cl 130] if that earlier accounts were prepared in fraudulent manner or financial statements are not reliable due to mismanagement of affairs of the company.
The directors allowed to prepare revised financial statement or a revised Boards

report [Cl 131] if it appears to them that the companys financial statement or the Boards Report did not comply with the requirement of clause 129 or clause 134 after obtaining approval of the Tribunal
Constitution of Corporate Social Responsibility Committee [Cl 135] For every company having specified networth or turnover or net profit during

any financial year Committee to formulate policies and include activities as specified in Schedule VII BoD to disclose the content of the policy and display on its website
Prescribed Companies shall be required to conduct internal audit of functions and

activities of the company by internal auditor appointed by the company. [Cl 137] Manner of conducting internal audit shall be prescribed by the Central Government. Companies Bill 2011-At a glance
13 Vinod Kothari & Company January 2012

Contd.
Seeks to provides the ways in which a public company or a

private company may issue securities. [Cl 23] Member or members of a company, in consultation with Board of Directors, may offer a part of their holding of shares to the public. [Cl 28]
The document by which the offer of sale to the public is made shall

be treated as prospectus issued by company.


A suit may be filed or any other action may be taken by any

person, group of persons or any association of persons who have been affected by any misleading statement or the inclusion or omission of any matter in the prospectus. [Cl 37] A company may issue global depository receipts to be dealt with in a depository mode in any foreign country. [Cl 41]
14 Companies Bill 2011-At a glance Vinod Kothari & Company January 2012

Incorporation and incidental matters- Chapter II


Concept of One Person Company introduced
Memorandum to have another name too in the event

of death of the person


Dividing the objects into main, others and ancillary

is done away with Model Articles of association specified in First Schedule [clause 5] Provision of printing of the MoA u/s 15 (a) done away with
Companies Bill 2011-At a glance Vinod Kothari & Company

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January 2012

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 special resolution, are met or complied with. The provision to be made either on formation of a company
or by an amendment in the articles agreed to by all

the members of the company in the case of a private company by a special resolution in the case of a public company.
the company shall give notice to the Registrar of such

provisions in such form and manner as may be prescribed.


16 Companies Bill 2011-At a glance Vinod Kothari & Company January 2012

REGISTERED OFFICE-Clause 12
A company shall, on and from the fifteenth

day of its incorporation and at all times thereafter, have a registered office capable of receiving and acknowledging all communications and notices as may be addressed to it. [Clause 12]
The present Act says that co. to have a

registered office as from the day on which company begins to carry business or from thirtieth day after incorporation, whichever is earlier (Section 146)
Notice of change in regd office to be given in

15 days to the Registrar [Clause 12 (4)]


Presently its 30 days
17 Companies Bill 2011-At a glance Vinod Kothari & Company January 2012

Rectification of NameClause 16
Section 22 of the Act re-casted CG to direct the company to

Change in objects
In case of change in objects by

change its name in case it is found that the name is identical, within 3months from the date of such direction In case the name resembles a registered trademark, CG to direct to change the name within 6months Such change to be notified to Registrar within 15days
Companies Bill 2011-At a glance Vinod Kothari & Company

a company raising money from public and has unutilised amount of such money raised, company to Pass a SR Give exit options to the dissenting shareholders [Cl 13 (8)]

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January 2012

E-Governance
E-Governance proposed for various company processes like maintenance and inspection of documents in electronic form, option of keeping of books of accounts in electronic form, financial statements to be placed on companys website, Service of documents- clause 20 vis a vis sections 51, 52, 53

Books of accounts- Clause 128 vis a vis sec 209 of the Act

Maintenance and inspection of documents- clause 120


Companies Bill 2011-At a glance Vinod Kothari & Company

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January 2012

Management and AdministrationChapter VII


Company shall keep and maintain the register of

members, register of debenture holders and register of any other security holders. [Clause 88] Closure of register of members, debenture holders and other security holders [Clause 91]
By giving minimum seven days notice or such lesser

period as may be specified by SEBI. Specifications in terms of tenure such as 30 days at a stretch and 45 days overall are missing in the Bill.

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Companies Bill 2011-At a glance Vinod Kothari & Company

January 2012

Annual General Meetings


Calling of first AGM [Clause 96]

First annual general meeting shall

be held within a period of nine months from the closing of first financial year and within a period of six months of closure of financial years in all other cases. The present sec 166 lays that 1st AGM to be held within 18months from the date of incorporation Meetings not to be held on national holidays unlike public holidays The clause also defines the term National Holiday.
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Quorum for AGM [Clause 103] In case of a public company the quorum shall depend on number of members as on the date of a meeting. If members not more than 1000, quorum is 5members personally present If such number is more than one thousand but upto five thousand, then quorum shall be fifteen members personally present. If such number exceeds five thousand, then thirty members personally present shall be the quorum. In case of a private company, two members personally present shall be the quorum for a meeting. The requirement of quorum now re-casted surely makes sense.
January 2012

Contd.
In case of adjournment or of change of day, time and place of meeting, the company

shall give not less than three days notice to the members. No such requirement in the Act
Right to vote by e-voting- Clause 108
Newly inserted

Any document, record, register or minute, etc., required to be kept or allowed to be inspected or copies given may be kept or inspected or copies given in the electronic form in the prescribed manner.[Clause 120] Newly inserted Every listed company to prepare a report on each annual general meeting including the confirmation to the effect that the meeting was convened, held and conducted as per the provision of the Act and the rules made thereunder. A copy of this report shall be filed with the Registrar. The clause also provide penalty if company fails to file the report under this clause before the expiry of the period specified under clause 403. [Clause 121]

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Companies Bill 2011-At a glance Vinod Kothari & Company

January 2012

Annual Return

Annual return of companies now to include addition data pertaining to: [Clause 92] Change in the promoters and KMPs alongwith directors Meetings of members, Board along with attendance details Remuneration of KMPs to be disclosed Penalty or punishment imposed on the company, directors and/or officers and details of compounding and appeals (slight change from Companies Bill 2009) Therefore, we expect change in the format of annual returns as well Annual return to be signed by a director and a company secretary in whole time employment/practice (in case where there is no CS in employment) In case of non-filing within due time, penalty is strict in comparison to the Act and now also includes imprisonment; In case of change in number of shares held by promoters and top ten shareholders in a listed company such company shall file a return with the Registrar about such change. [Cl 93] Newly inserted
Companies Bill 2011-At a glance Vinod Kothari & Company

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January 2012

Directors and Meetings-Chapter XI and XII


Appointment and rotation: [Clause 149] The manner and selection: [Clause 150]

Prescribed class or classes of companies shall have atleast one women director. That every company shall have at least one director who stays in India for a total period of not less than one hundred and eighty two days in the previous calendar year. Minimum no. of independent directors prescribed Rotation of Independent Directors Retirement of directors by rotation shall not be applicable to appointment of independent directors.
Companies Bill 2011-At a glance Vinod Kothari & Company

Independent directors to be selected from databank Maintenance of databank by any body, institute or association as may be notified by the Central Government. The responsibility of exercising due diligence before selecting a person from the databank shall lie with the company making such appointment.

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January 2012

Contd.
Act/Duties of Directors: [Clause 166] Newly inserted Provides that a director of a company shall act in accordance with the companys articles. It further seeks to provide for various duties of directors. In case of contravention, director is punishable with fine and if a director is found guilty of making any undue gain either to himself or to his relatives, partners or associates, he shall also be liable to pay an amount, equal to that gain, to the company. The clause further provides penalty for director of a company if he contravenes provisions of this clause.
25 Companies Bill 2011-At a glance Vinod Kothari & Company January 2012

Contd.
Participation in Board Meetings: [Clause 173]

Permitted both in person or through Video Conferencing/other audio-visual modes Meetings to be recorded and stored The meeting of the Board may be called at shorter notice to transact urgent business where at least one independent director, if any, shall be present Directors participating through Videoconferencing/audio-visual means to be counted for quorum [Cl 174]
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Contd.
Resignation of Directors: [Clause 168]

A director may resign from his office


by giving a notice in writing and the Board shall, on receipt of such notice take note of the same and the company shall intimate the Registrar and place such resignation in the subsequent general meeting of the company. The director shall also forward copy of resignation with reasons to Registrar. The clause further provides for the date on which the notice of resignation shall take effect. The director shall be liable for the offences occurred during his tenure.

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Companies Bill 2011-At a glance Vinod Kothari & Company

January 2012

Contd.

CONSTITUTION OF NOMINATION AND REMUNERATION COMMITTEE [CLAUSE 178]


Inserted Newly in the Bill (earlier part of Listing Agreement) Provides requirement and manner of constituting nomination

and Remuneration committee and Stakeholders Relationship Committees of the Board. Nomination and Remuneration Committee shall consist of
of which not less than one half shall be an independent director.

three or more non-executive directors as appointed by the Board out

Such Nomination and Remuneration Committee shall determine

the companys policies relating to the nomination and evaluation of every directors performance. It shall also determine companys policies relating to remuneration of the directors, key managerial personnel and other employees.
28 Companies Bill 2011-At a glance Vinod Kothari & Company January 2012

Contd.

Constitution of a Stakeholders Relationship Committee where There is combined membership of the shareholders, debenture holders, deposit holders and other security holders of more than one thousand at any time during a financial year Committee to consist of a chairman who is a non-executive director and such other members of the Board as decided by the Board. Committee to consider and resolve the grievances of securities holders. The clause further provides punishment for company and every officer of the company in case of contravention of provisions of clause 173 and this clause.
For every company having specified networth or turnover or net profit

Constitution of Corporate Social Responsibility Committee [Cl 135]

during any financial year Committee to formulate policies and include activities as specified in Schedule VII BoD to disclose the content of the policy and display on its website
Companies Bill 2011-At a glance Vinod Kothari & Company January 2012

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Managerial remuneration- Clause 197


Provisions relating to limits on remuneration provided in the existing

Act with maximum limit of 11% (of net profits) retained. Companies with no profits or inadequate profits
remuneration shall be payable in accordance with new Schedule of

Remuneration and in case a company is not able to comply with such Schedule, approval of Central Govt would be necessary.
Remuneration payable by companies having profits (Section I of Part II

of Schedule V):
Subject to the provisions of clause 197, a company having profits in a

financial year may pay remuneration to a managerial person or persons not exceeding the limits specified in such clause.

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Companies Bill 2011-At a glance Vinod Kothari & Company

January 2012

Remuneration payable by companies having no profit or inadequate profit without Central Government approval (Section II of Part II of Schedule V):
Where in any financial year during the currency of tenure of a managerial person,

a company has no profits or its profits are inadequate, it may, without Central Government approval, pay remuneration to the managerial person not exceeding the higher of the limits under (A) and (B) given below:
Where the effective capital is Negative or less than 5 crores 5 crores and above but less than 100 crores 100 crores and above but less than 250 crores 250 crores and above Limit of yearly remuneration payable shall not exceed (Rupees) 30 lakh 42 lakh 60 lakh 60 lakh plus 0.01% of the effective capital in excess of Rs. 250 crores

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Companies Bill 2011-At a glance Vinod Kothari & Company

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Contd.
In case of a managerial person who was not a

shareholder, employee or a director of the company at any time during the two years prior to his appointment as a managerial person 2.5% of the current relevant profit.
Provided that the above limits shall be doubled if the

resolution passed by the shareholders is a special resolution.

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Related Party Transactions- Clause 188-vis a vis sec 297


Now also includes selling/disposing or buying of any property Leasing of property of any kind

Every contract or arrangement entered into with a related party shall be referred to in the Boards Report along with the justification for entering into such contract or arrangement [Clause 188(2)].

Prior approval of shareholders in case the paid-up capital or transaction exceeds the prescribed amount

PERSONS WITH WHOM CONTRACTS ARE COVERED: (newly inserted ones) KMP or his relative Public company in which director or manager is a director or holds along with relatives, more than 2% of its paid up capital Presently transaction between two public companies are excluded Any body corporate whose BoD, MD or manager is accustomed to act in accordance with advice, directions
33 Companies Bill 2011-At a glance Vinod Kothari & Company January 2012

Contd.
Consent/approval requirements In Act
Prior consent of BoD Prior consent of RD for paid up cap exceeding rs. 1

crore
In Bill
Prior consent of BoD Prior consent of shareholders in case paid up

capital/transaction amount exceeds prescribed limit


In line with MCA circular no. 52/2011 introduced on 25th July,

2011, not yet effective yet


34 Companies Bill 2011-At a glance Vinod Kothari & Company January 2012

Restrictions on non-cash transactions- Clause 192


Any arrangement between a company and its

directors in respect of acquisition of assets for consideration other than cash shall require prior approval by a resolution in general meeting and if the director or connected person is a director of its holding company, approval is required to be obtained by passing a resolution in general meeting of the holding company [Clause 192].

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Inter corporate loan/security/guarantee/invtand exemptions-Clause 186


Without prejudice to the provisions contained in this Act, a

company shall unless otherwise prescribed, make investment through not more than two layers of investment companies: Provided that the provisions of this sub-section shall not affect, (i) a company from acquiring any other company incorporated in a country outside India if such other company has investment subsidiaries beyond two layers as per the laws of such country; (ii) a subsidiary company from having any investment subsidiary for the purposes of meeting the requirements under any law or under any rule or regulation framed under any law for the time being in force.

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January 2012

Introduction of class action under Oppression and MismanagementChapter XVI- Clause 245

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Rearrangements of provisions of existing sections 397,

398, 402 as 241 onwards in relation to oppression and mismanagement Companies Bill 2009 drew the minimum number of member/creditor to be one in case of a class action.
This was certainly a threat to the Indian Companies where

even a single shareholder could affect the day to day affairs of the company. The Bill amends such minimum number from 1 to minimum of 100 members and/or depositors or such percentage of paid up capital/no. of depositors as may be prescribed, whichever is less;
in case of a company having share capital whereas in case of a

company not having share capital, one fifth of its total no. of members; it excludes the term creditors and instead includes depositors. Companies Bill 2011-At a glance
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Conditions precedent to consideration of an application under

class action are set out (earlier missing in Companies Bill 2009):

whether the member or depositor is acting in good faith in making the

application for seeking an order; any evidence before it as to the involvement of any person other than directors or officers of the company on any of the matters provided in clauses (a) to (f) of subsection (1); whether the cause of action is one which the member or depositor could pursue in his own right rather than through an order under this section; any evidence before it as to the views of the members or depositors of the company who have no personal interest, direct or indirect, in the matter being proceeded under this section; where the cause of action is an act or omission that is yet to occur, whether the act or omission could be, and in the circumstances would be likely to be (i) authorised by the company before it occurs; or (ii) ratified by the company after it occurs; where the cause of action is an act or omission that has already occurred, whether the act or omission could be, and in the circumstances would be likely to be, ratified by the company Companies Bill 2011-At a glance
39 Vinod Kothari & Company January 2012

Contd.
Two class action applications for the same cause of action shall not

be allowed; inserted newly and is sensible enough The cost or expenses connected with the application for class action shall be defrayed by the company or any other person responsible for any oppressive act; inserted newly. Provisions for also safeguarding the interests of the Company in case the application is found to be frivolous and vexatious in nature; Tribunal has the power to reject the application and impose cost of not exceeding rupees one lakh. This is certainly a boon regulation to companies in cases where such applications may practically be mischievous in nature.
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Though the minimum number of member/depositor for the

application is 100, it may further be brought down as the number of members in case of a private company is 50 under the existing Act. The present Bill increases the number from 50 to 200, but not sure what is the rationale behind the same. Inclusion of depositors in case of class action is not justified. Depositors cannot be put on the same footing as the shareholders. If at all depositors are included, the same has to be restricted to the deposits and has to have a separate recovery process. However, specifications are needed in case of what will amount to act of mismanagement and/or how to ensure that members/depositors have acted in good faith.

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Companies Bill 2011-At a glance Vinod Kothari & Company

January 2012

Removal of names of companies from the Register of Companieschapter XVIII- Clause 248

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Companies Bill 2011-At a glance Vinod Kothari & Company

January 2012

Earlier the heading was- Power of Registrar to strike

defunct company off register (section 560) The provisions have been completely changed. The period for in-operation of the company set out as one year from incorporation or two years immediately preceding financial years (the same was one year in case of Companies Bill 2009); also to keep in mind whether the company has suo moto applied for status of a dormant company within the time prescribed; The provisions also include case where the subscribers to the MoA have not paid the subscription within 180 days from the incorporation of the company;
Companies Bill 2011-At a glance Vinod Kothari & Company January 2012

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Contd.
A company may also, after extinguishment of all its

liabilities, with a consent of atleast 75% of the members (of the paid-up share capital) vide special resolution file an application to the Registrar for removal of name of the company from the Register of Companies; Restrictions laid down in case of making application Cl 248 such as company not to make an application in case of change of its registered office in the previous three months; (these vary in comparison to Companies Bill 2009)
44 Companies Bill 2011-At a glance Vinod Kothari & Company January 2012

Regulations on Mergers and Acquisitions- Chapter XV- Clause 230

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Companies Bill 2011-At a glance Vinod Kothari & Company

January 2012

The existing heading reads as Arbitrations,

Compromises, Arrangements and Reconstructions whereas, the chapter in the Bill reads as Compromises, Arrangements and Amalgamation; The existing section 390 applies to companies liable to be wound up. The existing section 390 being excluded and part of it becomes part of explanation to section 230; Reduction of capital and corporate debt restructuring are also part of compromise and arrangements To be (consented by atleast 75% of the unsecured creditors) to be disclosed by the applicant(s) vide an affidavit at the time of making the application;
Companies Bill 2011-At a glance Vinod Kothari & Company

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January 2012

Contd.
Consolidation of provisions of section 393 into sub-

section (3) of section 230.


at one go;

Thus, much more reader friendly and easy to understand

Sub-section (4) imposes restrictions on objections to be

raised by creditor.

A creditor not holding less than 10% of the shareholding

or 5% of the total outstanding debt as per last audited financial statements shall not be liable to raise any objection to the arrangement. It is the same as in Companies Bill 2009. This does sound a little absurd. Surely it could have been framed in a phased manner;
47 Companies Bill 2011-At a glance Vinod Kothari & Company January 2012

Compromise or arrangement now also includes buy back

subject to fulfillment of conditions specified. Compromise or arrangement now also to include takeover offers; Clause (f) of sub-section (3) of section 232 deals with investment of NRIs and treatment thereof in case of an mergers/amalgamations.
Where the share capital is held by any non-resident

shareholder under the foreign direct investment norms or guidelines specified by the Central Government or in accordance with any law for the time being in force, the allotment of shares of the transferee company to such shareholder shall be in the manner specified in the order of the Tribunal;

Under the existing Act, all the powers in relation to a

scheme of arrangement lies with the High Court which shall now vest with the Tribunal.
Companies Bill 2011-At a glance Vinod Kothari & Company January 2012

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Restrictions on non-cash transactions- Clause 192


Any arrangement between a company and its

directors in respect of acquisition of assets for consideration other than cash shall require prior approval by a resolution in general meeting and if the director or connected person is a director of its holding company, approval is required to be obtained by passing a resolution in general meeting of the holding company [Clause 192].

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Companies Bill 2011-At a glance Vinod Kothari & Company

January 2012

Some more amendments


Transfer of shares Shares of public company are freely transferable but contract of arrangement between two or more persons, enforceable as a contract Shares of public company freely transferable under the existing Act

Holding Subsidiary relation:


Class or class of holding companies not to have layer of subsidiaries beyond a prescribed number, unlike the present Act

Provision for Registered Valuer- newly inserted Chapter xvii


50 Companies Bill 2011-At a glance Vinod Kothari & Company January 2012

Declaration on dividend/interim dividend- No

restriction in the Act whereas if company ahs incurred loss upto the preceding quarter of the current financial year then the interim dividend shall not be declared at a rate higher than the average dividends declared by the company during immediately 3preceding financial years

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