COMPANIES ACT, 2013 : A FRESH BREEZE
The new Companies Act, 2013 which was long awaited finally replaced old Companies Act, 1956 last year. With the emergence of new thing the centuries old paradigm of comparison also started with this. This act includes fixing corporate responsibility, more members, strengthening position of women and one person company etc. Some of the basic points of comparison between new and old Companies Act, 2013 are as follows:
1. Composition: Old companies act included 658 sections and 15 schedules on the other hand this new act includes 29 chapters with 470 clauses and 7 schedules. Hence, this act is covering larger ground.
2. Definition: Clause 2 of the new Companies act contains 95 definitions. The new definitions includes definitions of Auditing standards, Chief Executive Officer, Chief Financial Officer, Company liquidation, Called up Capital, Company limited by shares, Company limited by guarantee, Control, Small company, One person company etc. The old act contained only 67 definitions in section 2.
3. Members: While old act restricted maximum number of members for a private company to 50, the new act extends it to 200 with the changing time.
4. Public Company: The Companies act, 1956 considered a private company which is a subsidiary of public company as a public company, the new act has been further enhanced to provide that private company of public company deemed to be a public company even though the subsidiary continues to be a private company.
5. One Person Company: The new act of 2013 introduced the concept of One Person Company which was not in the old act.
6. Mandatory contents of Memorandum of Association: Old companies act gave five mandatory contents i.e. Name clause, registered office clause, Object clause into main, ancillary to main, other objective, liability clause and capital clause. The new act on the other hand made no classification of object clause and hence sections 149(2A) & 149(2B) will not operate.
7. Penalty for providing wrong or incorrect information for name: In case of wrong information for name, as a penalty name will be cancelled and fine not exceeding Rs 100,000 will be imposed. The old act contained no recourse for such situation.
8. Format of Articles of Association: The old act included table A,B,C,D and E while this act added table F,G,H,I,J for companies limited by share, guarantee and company limited by share capital etc.
9. Criminal liability: Section 63 of old act deals with criminal liability in case if misstatement in prospectus while in the new act clause 34 deals with the same.
10. Allotment of securities and subscription: Section 69 of old act gave provision of minimum subscription only to shares; on the other hand new act in its clause 39 has extended the scope of minimum subscription to all securities.
With the changing time society and law also changes as a general rule of jurisprudence. The new Companies act, 2013 truly manifests broader company legislation and is truly suitable for current era.