A No to Companies Act, 2013

Dear Friends,

As we all know, the provisions of Companies Act,2013 has hampered the survival of the small & medium Pvt.Ltd.  companies, we would like you all to share and forward this message amongst the C.A. community as the issue is of utmost importance to the C.A. community & public at large & would like you to comment on the draft notification issued by MCA on or before 30.06.2014 so as to ensure the survival of small sized companies.

The following points in the new Companies Act,2013 to be opposed are as follows:

• Survival of Small Sized Pvt. Ltd. Companies is endangered & the provisions of the new law should be withdrawn as the new law is worse than the BLACK LAW.

• The Indian Revenue System has made half hearted efforts to withdraw few of the provisions of the Companies Act,2013 applicable to Pvt.Co. by the issue of draft notification. The hardships faced by the Pvt. Ltd. Companies due to the new provisions is tremendous & hence the remaining harsh provisions should be withdrawn applicable to Pvt Ltd Co.

• The conditions relating to acceptance & repayment of deposits  as mentioned in Chapter V (Ranging from Section 73 to 76) should be withdrawn. The question arises here is that HOW WILL THE SMALL PVT. LTD. Co. be able to finance its operations with only DIRECTOR’s own fund. Eg. In case of Real Estate business, huge funds are needed. Due to the nature of the business, bank loans are nt available easily. How will a company finance its operations?

• Also, it is practically impossible to repay the deposits within a year as referred in Section 74 upto 31.03.15 as the funds will be already blocked in the business. For eg. In case of REAL ESTATE business, the funds are blocked in the property. As per the new provisions of the Act, in order to repay the loan, the property needs to be liquidated to pay the deposits.

• The new provisions will create hardships for the Pvt.Ltd. companies to carry out its operations effectively.

This way, no one would form companies & everyone would prefer forming a partnership firm or proprietorship firm & also the existing companies would dissolve. Hence, strong opposition is needed against the BLACK LAW & co-operation from the C.A. Community will help us to withdraw the harsh provisions of the new law, thereby reducing hardships.