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" Companies Bill 2009 - Critical Analysis

 
 
" Companies Bill,2009 - What is New?"
 
 
2008 Bill Introduced in LokSabha on 23rd Oct. 2008
 
2009 Bill INTRODUCED IN LOK SABHA ON 3rd AUGUST 2009
 
The Bill proposes to have 426 Clauses and 28 CHAPTERS (against 658 section in the Companies Act,1956)
 
No. of welcome changes
 
Several New Concepts/Ideas Introduced
 
It will replace the Companies Act,1956
 
All Powers of High Court Transferred to Proposed NCLT
 
Penalties and Punishments are huge
 


Major Changes
 
1. All restrictions on Managerial remuneration removed
 
2. Related Party Disclosure - Disclosure Only . No need for Government approval.
 
3. OPC (One Person Company) introduced
 
4. Company prohibited to accept Deposits. However, the Company can accept deposit from the Members.
 
5. Concept of Key Management Personnel (KMP) Introduced
 
6. Company should have a Chief Financial  Officer ( CFO)
 
7. Registered Valuers
 
8. Secretarial Standards
 
9. Auditing Standards
 
10.  Duties of directors
 
11. Auditor cannot undertake certain services
 
12. Dormant Company
 
13. Independent Directors
 
14. Board meeting and Notices
 
15. Importance of Annual return
 
16. Revival and rehabilitation of sick companies  
 
17. Special Courts
 
18. Adjudication of Penalties
 
 
 
 
 
Few Important Definitions
 
 
 
Financial Year – 1st April to 31st March
 
“Chief Financial Officer” means a person appointed as the Chief Financial Officer of a company
 
“relative” with reference to any individual means the spouse, brother, sister and all lineal ascendants and descendants of such individual related to him either by marriage or adoption;
 
 
“small company” means a company, other than a public company,—
 (i) whose paid-up share capital does not exceed such amount as may be prescribed and the prescribed amount shall not be more than five crore rupees; or
 (ii) whose turnover as per its last profit and loss account does not exceed such amount as may be prescribed and the prescribed amount shall not be more than twenty crore rupees:
 
 
“key managerial personnel”, in relation to a company, means —
 
(i) the Managing Director, the Chief Executive Officer or the Manager and where there is no Managing Director or Manager, a whole-time director or directors;
 
(ii) the Company Secretary; and
 
(iii) the Chief Financial Officer;
 
 
 
 
 
 
CHAPTER II
INCORPORATION OF COMPANIES
(Clause 3 to 21)
 
1. One person company (OPC) - Clause 3
 
It has only one member. Memorandum of a One Person Company shall indicate the name of the person who shall, in the event of the subscriber’s death, disability or otherwise, become the member of the company.
 
It shall be the duty of the member of a One Person Company to intimate the Registrar the change, if any, in the name of the person.
 
It will have name of OPC Ltd at the end.
 
It gives corporate status for the single promoter
 
Once the Bill is enacted, the existing sole proprietor firms can convert themselves to OPCs with the benefits of limited liability and minimal compliance.
 
Separate corporate entity that recognizes a promoter to do the business in a big way.
 
Single entrepreneur can manage his business on his own. So, the key difference between OPC and sole proprietorship is the way liabilities are treated. For instance, in an OPC the promoter’s liability is limited in the event of a default or legal issues. On the other hand, in sole proprietorships, the liability has not been restricted and extends to the individual and his or her entire assets.
 
Decision
 
One person can take a decision without waiting for other director’s consent and can be avoided wasting time and energy convincing other directors.
 
So many other countries already having this kind of one Person Company.
 
This is one of the welcome changes proposed in the bill.
 
 
 
2. Incorporation of companies.
 
All monies payable by any member to the company under the memorandum or articles (By subscribing MOA &AOA at the time of incorporation) shall be a debt due from him to the company.
 
Subscribers of the MOA have to make the money within 180 days unless Registrar got the power to remove the company from the register.
 
Any person furnishes any false or incorrect particulars of any information or suppresses any material information, of which he is aware in any of the documents filed with the Registrar in relation to the registration of a company, he shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than five thousand rupees but which may extend to one lakh rupees, or with both.
 
Even after incorporation, the company has been got incorporated by furnishing 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 promoters, the persons named as first directors of the company, the persons making declaration shall each be punishable with imprisonment for a term which may extend to one year and with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees.
 
3. Commencement of business - clause 10                     
 
No need to obtain Certificate of Commencement of Business. Declaration has to be filed with in 180 days.  Registrar may remove the name of the company from the register if the company is not carrying on business or operations and has not filed the declaration.
 
The company shall furnish to the Registrar verification of its registered office within fifteen days of its incorporation in such manner as may be prescribed.
 
 
 
 
 
4. Alteration of memorandum -clause 12
 
Change of registered office from one State to another State only requires Central Government's approval.
 
5. Alteration of articles - clause 13
 
Conversion
 
(a) a private company into a public company or a One Person Company, or
 
(b) a public company into a private company or a One Person Company, or
 
(c) a One Person Company into a public company or a private company:
 
any alteration having the effect of conversion of a public company into a private company or a One Person Company shall not take effect except with the approval of the Tribunal which shall make such order as it may deem fit.
 
 
CHAPTER III
PROSPECTUS AND ALLOTMENT OF SECURITIES
( Clause 22 to 36)
 
 
6. Action to be taken by affected persons - clause 32  
 
Class action is possible in case of misstatement in the prospectus.
 
A suit may be filed or any other action may be taken by any person, group of persons or any association of persons affected by any misleading statement or the inclusion or omission of any matter in the prospectus.
 
Penalties and punishments are huge in case of misstatement in the prospectus. Civil and criminal liabilities for the promoters.
 
 
 
 
 
7. Global Depository Receipt (GDR) - clause 36  
 
A company may, after passing a special resolution in its general meeting, issue depository receipts to be dealt with in depository mode in any foreign country in such manner, and subject to such conditions, as may be prescribed.
 
 
Private company need not file return of allotment – 34(5)
 
 
CHAPTER IV
SHARE CAPITAL AND DEBENTURES
Clause 37 to 65)
 
8. Kinds of share capital - clause 37  
 
Only Two kinds of Capital i.e Equity and Preference.
 
There is no equity shares with differential rights or non-voting equity shares allowed  under section 86 of  the companies Act,1956.  
 
9. Prohibition on issue of shares at a discount - clause 47 
 
A company shall not issue shares at a discount. Any share issued by a company at a discounted price shall be void. However, Sweat Equity shares can be issued at a discount subject to the rules.
 
 
10. Issue and redemption of preference shares - clause 49
 
This clause authorizes infrastructural projects to issue preference shares redeemable after a period exceeding 20 years.
 
11. Debentures - clause 64
 
 The clause provides that a company shall not issue prospectus to more than 500 persons without appointing a debenture trustee.  
 
 
 
 
 
 
CHAPTER V
ACCEPTANCE OF DEPOSITS BY COMPANIES
(Clause 66 to 68)
 
12. Prohibition on acceptance of public deposits - clause 66
 
Company prohibited accepting Deposits from the Public. However, the Company can accept deposit from the Members.
 
There is no restriction to invite and accept debentures including unsecured debetures.
 
Existing deposits shall be repaid within one year from the date commencement of this act or from the date on which such payments are due, whichever is earlier.
 
Default
 
In addition to the payment of the amount of deposit or part thereof and the interest due, be punishable with fine which shall not be less than one crore rupees but which may extend to ten crore rupees and every officer of the company who is in default shall be punishable with imprisonment which may extend to seven years or with fine which shall not be less than twenty-five lakh rupees but which may extend to two crore rupees, or with both.
 
CHAPTER VI
REGISTRATION OF CHARGES
(Clause 69 to 77)
 
13. Registration of Charges -clause 69 &70
 
Charge should be filed with in 30 days. It can be filed with in 300 days from the date of creation with an additional fee.
 
If the company fails to register the charge within the period , charge holder may apply to the Registrar for registration of the charge along with the instrument created for the charge, in such form and manner as may be prescribed and the Registrar may, on such application, within fourteen days after giving notice to the company, allow such registration on payment of such fee and additional fee as may be prescribed:
 
Provided that where registration is effected on application of the person in whose favour the charge is created, that person shall be entitled to recover from the company the amount of any fee or additional fee paid by him to the Registrar for the purpose of registration of charge.
 
CHAPTER VII
MANAGEMENT AND ADMINISTRATION
( Clause 78 – 109)
 
14. Annual return – Clause 82
 
Scope of Annual return widened.
 
It includes meetings of members or Board and its various committees along with attendance details; remuneration of directors and key managerial personnel; penalties or punishment imposed on the company, its directors or officers and details of compounding of offences; matters related to certification of compliances, disclosures; and such other matters as may be prescribed.
 
It should be signed both by a director and the Company Secretary, or where there is no Company Secretary, by a Company Secretary in whole-time practice:
 
If the company having such paid-up capital and turnover as may be prescribed, or a company whose shares are listed on a recognised stock exchange, shall also be signed by a Company Secretary in whole-time practice .
 
One Person Company and small company, the annual return shall be signed by the Company Secretary, or where there is no Company Secretary, by one director of the company.
 
An extract of the annual return in such form as may be prescribed shall form part of the Board’s Report.
 
Where a Company Secretary in whole-time practice certifies the annual return otherwise than in conformity with the requirements of this section or the rules made thereunder, such Company Secretary shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.
 
 
15. Annual General Meeting - Clause 85
 
OPC need not hold an annual general meeting.
 
First AGM Should be within 9 months from the close of financial year and subsequent AGM should be within 6 months from the close of financial year.
 
AGM cannot be held on National Holiday. ( Public Holiday in 1956 Act)
 
Notice of meeting 21 clear days
 
Notice should be given to the director also
 
Explanatory statement required for all special business
 
No Statutory meeting and statutory report required
 
16. Voting through electronic means - clause 97
 
Unless the articles provide otherwise, a member may exercise his vote at a general meeting by electronic means subject to rules.
 
17. Postal ballot - clause 99
 
Presently, postal ballot procedures only for listed company and specified purpose.
 
Now, it has been proposed to be extended under the Bill to every company for businesses as may be notified by the Central Government to be transacted only by postal ballot.
 
 
18. Report on Annual General Meeting -  clause 109
 
Every Listed companies are  required to prepare and file a report on convening, holding and conducting annual general meeting every year within 30 days of its conclusion.
 
 
 
 
 
CHAPTER VIII
DECLARATION AND PAYMENT OF DIVIDEND
Clause 110-115)
 
19 Declaration of Dividend
 
Dividend can be declared only from the current year profits
 
Inadequacy or absence of profits in any financial year, the company proposes to declare dividend out of the accumulated profits earned by it in the previous financial year or years and transferred by it to the reserves, such declaration shall be made by a resolution passed at a meeting of the Board with the consent of all the directors and the approval of the financial institutions whose term loans are subsisting, and thereafter in accordance with a special resolution passed by the shareholders at an annual general meeting.
 
 
Unpaid dividend can be claimed any time from the IEPF
 
CHAPTER IX
ACCOUNTS OF COMPANIES
(Clauses 116 to 122)
 
20. Books of account, etc, to be kept by company - Clause 116
 
Keeping books of account in electronic mode is authorized. The persons responsible are the CEO/ CFO/ Whole-time director in charge of finance, or any other officer charged by the Board to see to the keeping of the said books. Preservation of such books is 8 years.
 
21. Annual report -  Clause 120
 
Annual reports including Board's report and its contents have been enlarged. The Board's report should contain following new items like
 
1. Annual return
2.  number of board's meetings held
3. Declaration by independent directors
4. Particulars of inter-corporate loans and investments made
5.  Particulars of related party transactions etc
 
 
CHAPTER X
AUDIT AND AUDITORS
Clauses 123 to 131
 
 
22. Appointments of Auditors - 123
 
First Auditor should appointed by the Board with one month from the date of incorporation Company unless shareholders have appoint. The company shall inform the auditor concerned of his appointment, and also file a notice of such appointment with the Registrar within fifteen days of the meeting in which the auditor is appointed.
 
Where at any annual general meeting, no auditor is appointed or re-appointed, the existing auditor shall continue to be the auditor of the company.
 
23. Auditors  - Remuneration to be fixed in the AGM
 
Every auditor shall comply with the Auditing Standards to be notified by the Central Government. In the meanwhile until such notification, standards specified by ICAI shall be deemed to be the Auditing Standards to be complied with.
 
24. Disqualifications of auditors – 124(3)
 
None of the following persons shall be eligible for appointment as an auditor of a company, namely:—
 
(a) a body corporate;
 
(b) an officer or employee of the company;
 
(c) a person who is a partner, or who is in the employment, of an officer or employee of the company;
 
(d) a person who, or his relative or partner—
 
(i) is holding any security of the company or its subsidiary, or of its holding or associate company or a subsidiary of such holding company, of value in terms of such percentage as may be prescribed;
 
(ii) is indebted to the company, or its subsidiary, or its holding or associate company or a subsidiary of such holding company; or
 
(iii) has given a guarantee or provided any security in connection with the indebtedness of any third person to the company, or its subsidiary, or its holding or associate company or a subsidiary of such holding company, for such amount as may be prescribed;
 
(e) a person or a firm who has business relationship with the company, or its subsidiary, or its holding or associate company or subsidiary of such holding company or associate company of such nature as may be prescribed;
 
(f) a person whose relative is in the employment of the company as a director or key managerial personnel;
 
(g) a person who is in employment elsewhere or a person or firm who holds appointment as an auditor in companies exceeding such number as may be prescribed on the date of his appointment.
 
 
25. Auditor not to render certain services - clause 127
 
• accounting and book-keeping services;
 
• internal audit;
 
• designing and implementation of any financial information system;
 
• actuarial services;
 
• investment advisory services;
 
• investment banking services;
 
• rendering of outsourced financial services; and
 
• management services.
 
If the auditor renders any of the above services, he shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees:
 
Provided that where it is proved that an auditor has knowingly or wilfully contravened any of the provisions of the aforesaid sections, he shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees, or with both.
 
CHAPTER 11
APPOINTMENT AND QUALIFICATIONS OF DIRECTORS
Clauses 132 to 153
 
26. Company to have Board of directors· clause 132
 
Every company shall have a Board of directors. Only individuals can become directors
 
At least one of the directors should be a person ordinarily resident in India, that is, one who stayed in India for a total of 182 days in a calendar year.
 
 
27. Independent director - clause 132
 
Every listed public company having such amount of paid-up share capital as may be prescribed shall have at the least one-third of the total number of directors as independent directors. The Central Government may prescribe the minimum number of independent directors in case of other public companies and subsidiaries of any public company.
 
 
28. Duties of Directors - clause147
 
New provision in the Bill
 
1. A director of a company shall act in accordance with the articles.
2. He shall act in good faith in order to promote the objects of the company for the benefit of members as a whole ,and in best interests of the company
3. He shall exercise his duties with due and reasonable care, skill and diligence.
4. He shall not involve in a situation in which he may be have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company.
 
5. He shall not achieve or attempt to achieve any undue gain or advantage either to himself or his relatives ,partners or associates
 
6. He shall not assign his office and any assignment so made shall be void.
 
 
Still it can be clearly specified.
 
Government is also thinking to introduce knowledge test for the directors like KRA, KPA
 
           
29. Resignation of director - clause 149
 
As compared to the existing companies act, this is absolutely makes clarity.
 
 A director may resign from his office by giving a notice in writing to the company and the Board shall on receipt of such notice take note of the same and intimate the Registrar in such manner and in such form as may be prescribed and shall also place the fact of such resignation in the subsequent general meeting held by the company:
 
Provided that a director may also forward a copy of his resignation to the Registrar in the manner as may be prescribed.
 
The resignation of a director shall take effect from the date on which the notice is received by the company or the date, if any, specified by the director in the notice, whichever is later.
 
CHAPTER 12I
MEETINGS OF BOARD AND ITS POWERS
(Clauses 154 to 173)
 
30. Board Meetings - clause 154
 
After the Incorporation,  every company shall hold its first Board meeting within 30 days.
 
In year 4 Board meetings and time cap between two board meetings should not exceed 120 days.
 
 Participation through video-conferencing or such other electronic means, is possible subject to rules.
 
Every Board meeting requires a 7 day notice in writing or by electronic means.
 
To transact urgent business, a Board meeting may be called  
at shorter notice subject to the condition that at least one independent director, if any, is present at the meeting.
 
If such an independent director is absent, the decisions taken at such a Board meeting become effective only on their circulation to all the directors and ratification by at least one independent director.
 
Circular resolutions passed should be noted at a subsequent Board meeting and thus made part of the minutes of such a meeting.
 
 
31. Restrictions on Board’s Power - clause 160
 
The restrictions contained in section 293 of the Companies Act1956 retained. But the consent of general meeting required is by special resolution and not ordinary resolution.  It is for all the Companies.
 
 
32. Loan to directors -clause 163
 
Exempted for MD/ WD
 
Subject to applicability of all employees or Scheme approved by the members by passing special resolution.
 
Need some more restrictions.
 
33. Related party transactions - clause 166
 
Surely, this one of the welcome step. Shareholders are authorized to decide related party transactions.
 
The contracts and arrangements with the related party:
 
- sale, purchase or supply of any goods and services
 
- selling or otherwise disposing of or buying  property of any kind
                                                  
- leasing property of any kind
 
- availing or rendering of any services
 
- appointment of any agents for purchase or  sale of goods, materials or services or property
 
- appointment to any office or place of profit in the company or its subsidiary
 
underwriting the subscription of any securities or derivatives thereof of the company.
 
companies having the prescribed paid up capital should obtain prior members' approval by a special resolution.
 
This clause will not apply if the transaction made on arms’ length basis.
 
 
 
34. Prohibition of insider trading of securities by the directors or KMP - 172
    
 
CHAPTER 13
APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL
Clauses 174 to 178)
 
 
Appointment of managing director, whole-time director or manager
 
No company shall appoint or continue the employment of any person as its key managerial personnel who is below the age of twenty-one years or has attained the age of seventy years:
 
Provided that appointment of a person who has attained the age of seventy years may be made by passing a special resolution;
 
Board can appoint MD with the consent of all the directors present tat the meeting subject the approval of the members at the ensuing general meeting
 
 
35. Remuneration of managerial personnel – Clause 175
 
There is no restriction for Remuneration. Shareholders should approve the remuneration recommended by the Board of directors.
 
 A managing or whole-time director or a manager of a company may be paid remuneration either by way of a monthly payment or at a specified percentage of the net profits of the company or partly by monthly payment and partly by the percentage of net profits.
 
Shareholders can decide the remuneration. Government will not interfere in this matter.
 
This is also one of the welcome changes proposed in the bill.
 
Clause 176
 
A director who is neither a whole-time director nor a managing director of a company may be paid remuneration in the form of —
 
(a) fee for attending meetings of the Board or committees thereof in accordance with the articles; and
 
(b) profit-related commission with the prior approval of members by a special resolution
 
36. Appointment of key managerial personnel -  Clause 178
 
Every company belonging to such class or description of companies as may be prescribed shall have whole-time key managerial personnel.
 
 “key managerial personnel”, in relation to a company, means —
 
(i) the Managing Director, the Chief Executive Officer or the Manager and where there is no Managing Director or Manager, a whole-time director or directors;
 
(ii) the Company Secretary; and
 
(iii) the Chief Financial Officer;
 
 
A Company Secretary is a KMP along with the Managing Director, the Chief Executive Officer and the Chief Financial Officer.
 
 Whole-time key managerial personnel shall not hold office in more than one company at the same time
 
37. Application to Tribunal of relief in cases of the oppression and mismanagement - clause 212    
 
Section 397 of 1956 Act has been retained in the Bill.  
 
 
CHAPTER XV
COMPROMISES, ARRANGEMENTS AND AMALGAMATIONS
Clauses 201 to 211)
 
38. Merger or amalgamation of certain companies. – 204
 
Merger or Amalgamation of Two Small Companies or between a holding company and its wholly-owned subsidiary company is made easier.
 
-          Scheme to be prepared
-          Notice for any objections
-          Scheme should be approved by the members by a special resolution
-          Scheme should be approved by three-fourths in value of the creditors
-          transferee company shall file a copy of the scheme with the Registrar and the Official Liquidator.
-          if the Registrar or the Official Liquidator has no objections or comments to the scheme, the Registrar shall register the same and issue a confirmation thereof to the companies.
-          If the Official Liquidator has any objections or comments, he may communicate the same in writing to the Registrar within a period of thirty day
-          If scheme is not in public interest or in interest of the creditors or any objections received, registrar   may file an application before the Tribunal.
-          Tribunal Order and order shall be communicated to the Registrar
 
 
A foreign company may merge or amalgamate into a company registered under this Act or vice versa


 
39. Class Action - clause 216
 
According to this clause, one   or more members or class of members or creditors may file an application before the Tribunal on behalf of the whole of their class alleging that the affairs of a company are being conducted in a manner prejudicial to its interests or the interests of the members or creditors, and to seek necessary remedies
 
 
CHAPTER 17I
REGISTERED VALUERS
Clause 218 to 223)
 
40. Registered valuers
 
New clauses in the Bill and also new opportunity for the professional.
 
Valuation is required to be made in respect of any property, stocks, shares, debentures, securities or goodwill or net worth of a company or its assets, it shall be valued by a person registered as a valuer under this chapter.
 
Any Chartered Accountant, Cost and Works Accountant, Company Secretary or other persons possessing such qualifications as may be prescribed may apply to the Central Government in the prescribed form for being registered as a valuer under this section
 
Provided that no company or body corporate shall be eligible to apply.
 
 
CHAPTER 18
REMOVAL OF NAMES OF COMPANIES FROM THE REGISTER
Clauses 224 to 228)
 
41. Power of Registrar to remove name of a company from register.
 
-          If the company has failed to commence its business within one year of its incorporation
-          If the subscribers have not paid money with in 180 days or if the company has not filed declaration within 180 days
-          If the company is not carrying on any business or operation for a period of one year and has not made any application within such period for obtaining the status of a dormant company
 
 
Registrar will send the notice to all the directors of his intention to remove the name of the company from the register.
 
Company can voluntarily by passing a special resolution or consent of seventy-five per cent of the members in terms of share capital may also file an application Registrar for removing the name of the company from the register.
 
However, application cannot be made certain circumstances like
 
in the previous three months, the company—
 
(a) has changed its name;
 
(b) has traded or otherwise carried on business;
 
(c) has made a disposal of any properties
 
(d) has engaged in any other activity
 
(e) has made an application to the Tribunal for the sanctioning of a compromise or arrangement
 
CHAPTER 19
REVIVAL AND REHABILITATION OF SICK COMPANIES
(Clauses 229 to 244)
 
42. Revival and rehabilitation of sick companies   - clause 229
 
1. Application to Tribunal to declare as Sick Company
 
Where on a demand by the secured creditors of a company representing fifty per cent. or more of its outstanding amount of debt, the company has failed to pay the debt within thirty days of the service of the notice of demand or to secure or compound it to the reasonable satisfaction of the creditors, any secured creditor may file an application to the Tribunal in the prescribed manner along with the relevant evidence for such default, non-repayment or failure to offer security or compound it, for a determination that the company be declared as a sick company..
 
 
 
 
 
2. Tribunal Decision
 
Within 60 days of filing such an application, the Tribunal is bound to determine whether the company is sick or not. The Tribunal's order against the said application of the creditors will hold good for 120 days.  
 
3. Application for revival and rehabilitation
 
Upon determination of sick company , any secured creditor of the company may file a third application before the Tribunal for company's revival and rehabilitation measures.
 
4. Appointment of interim administrator
 
Thereupon follow the appointment of interim Company Administrator / Company Administrator from the panel kept by the Central Government for preparation of a scheme of revival and rehabilitation of the company for Tribunal's sanction.
 
5. Committee of Creditors
 
The interim administrator shall appoint a committee of creditors with such number of members as he may determine, but not exceeding seven, and as far as possible a representative each of every class of creditors should be represented in that committee
 
6. Order of Tribunal.
 
If the Tribunal sanctions the scheme, it will be implemented or if it is not approved the company is ordered to be wound up.
           
CHAPTER 20
WINDING UP
 
( Clauses 245 to 340)
 
43. Company liquidators and their appointments - clause 250
 
The provisional liquidator or the Company Liquidator, as the case may be, shall be appointed from a panel maintained by the Central Government consisting of the names of chartered accountants, advocates, company secretaries, cost and works accountants or firms or bodies corporate having such chartered accountants, advocates, company secretaries, cost and works accountants and such other professionals as may be notified by the Central Government or from a firm or a body corporate of persons having a combination of such professionals as may be prescribed and having at least ten years’ experience in company matters and such other qualifications as may be prescribed.
 
44. Appointment of Official Liquidator – Clause – 334
 
Winding up of companies by the Tribunal, the Central Government may appoint as many Official Liquidators as it may consider necessary and may also appoint Joint, Deputy orAssistant Official Liquidators to assist him in discharge of his functions.
 
CHAPTER 27
 
45. Special Courts - clause 396
 
All offences under this Act shall be triable only by the special court .
 
 For the purpose of providing speedy trial of offences under this Act, by notification, establish as many special courts as may be necessary by the Central Government.
 
 A special court shall consist of a single judge who shall be appointed by the Central Government with the concurrence of the Chief Justice of the High Court
 
46. Punishment in case of repeated default -Clause 410
 
In case of repeated defaults , fine will be twice but prison term remains same.
 
47 . Adjudication of penalties – 413
 
The Central Government will appoint adjudicating officers for adjudging penalty under the provisions of this Act.
 
Registrar may be authorized or some person can be appointed not below the rank of registrar as adjudicating officers
 
The Adjudicating Officer may, by an order impose the penalty on the company and the officer who is in default stating any non-compliance or any default under the relevant provision of the Act.
 
The Adjudicating Officer shall, before imposing any penalty, give a reasonable opportunity of being heard to such company and the officer who is in default
Any person aggrieved by an order made by the adjudicating officer may prefer an appeal to the Regional Director.
 
Appeal shall be filed within sixty days from the date on which the copy of the order made by the adjudicating officer is received by the aggrieved person.
 
48. Dormant company – clause 414
 
New provision in the Bill
 
If there is No significant accounting transaction or an inactive company may make an application to the Registrar to obtain the status of Dormant Company.
 
The Registrar shall maintain a register of dormant companies
 
In case of a company which has not filed financial statements or annual returns for two financial years consecutively, the Registrar shall issue a notice to that company and enter the name of such company in the register maintained for dormant companies.
 
A dormant company shall have such minimum number of directors, file such documents and pay such annual fee as may be prescribed to the Registrar to retain its dormant status in the register and may become an active company on an application made in this behalf
 
The Registrar shall strike off the name of a dormant company from the register of dormant companies, which has failed to comply with the requirements of this section
 
Conclusion
 
As compared to the existing companies act, positively there are some new concepts have been proposed. Central government’s intentions to strengthen shareholder democracy are welcome step. Need some corrections.

By

CS.P.Eswaramoorthy, B.sc., Acs.,
Company Secretary in Practice,
7/25, Sri Sakthi Complex,
Nanjundapuram Road,
Ramanathapuram,'
Coimbatore - 641045
91 422 4216903
91 9443419246
91 99655 19246
E.Mail: eswaracs@gmail.com
eswaracs@airtelmail.in

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P ESWARAMOORTHY
(PRACTICE)
Category Corporate Law   Report

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