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Tabular Comparison Between Old Versus New Provisions:

Sr. No.

Subject matter

Old provision in the Companies Act,1956

Corresponding new provision in the Companies Bill,2011



Contains 658 sections and 15 schedules

Contains 29 chapters with 470 clauses and with 7 schedules.



Section 2 Contains 67 definitions

Clause 2 of elephant size contains 95 definitions. The additional definitions not included in section 2 are:

Auditing Standards;

Associate Company;

Chief Executive Officer;

Chief Financial Officer;

Company Liquidator;

Called up capital;

Company limited by shares;

Company limited by guarantee;


Employees’ Stock Option;

Financial Statement;

Financial Year;

Global Depository Receipt;

Independent Director;

Interested Director;

Indian Depository Receipt;

Issued capital;

Financial statement;

Key Managerial Personnel ;( Whole-time director’ has been included in the definition of the term ‘key managerial personnel’)

One Person Company;



Small Company;

Sweat equity shares;

Unlimited company;



Definition of Private Company

Restricts the maximum number of members to 50

To restrict the maximum number of members to 200


Definition of Public Company.

Considers a private company which is a subsidiary of a public company as a public company.

Further enhanced to provide that a private subsidiary of a public company deemed to be a public company even though the subsidiary continues to be a private company in the articles.


Definition of Financial Year.

Financial year not defined in section 2

Defined in clause 2(41) as under: Financial year as defined in clause 2(41) requires Company or body corporate to adopt uniform financial year of 1st  April to 31st  March every year except in certain exceptional cases. Existing Companies not adopting 1 April to 31 March as financial year for Companies Act purposes to align themselves with 1 April-31 March within two years of commencement of the Companies Act, 2012.


Types of Company that can be formed

Public Company or Private Company which can be limited by shares/limited by guarantee or unlimited company.

Besides Public and Private Company, clause 3 also provides for One Person Company as a Private Company.


One Person Company(OPC)-clause 3

Such a concept was absent hitherto.

OPC can be formed.


Mandatory contents of the Memorandum

Five clauses were mandatory:

Name Clause; Registered office Clause;

Objects divisible into:

Main Objects;

Objects ancillary or incidental to the Main Objects;

Other Objects; Liability Clause; Capital Clause

Same except that no classification required for the object clause into Main objects, incidental/ancillary objects, other objects. As a result of the above, section 149(2A) and 149(2B) of the Companies Act is no longer applicable.


Reservation of name for proposed Company-procedural aspects-clause 4(4) and 4(5)  

Procedural aspects not covered.

Provides for making an application for reservation of new name or change of name of an existing company to the ROC on payment of prescribed fees.


Penalty for obtaining name by providing wrong or incorrect information

No recourse provided  

If company is not incorporated, reserved name shall be cancelled after imposing a penalty not exceeding Rs. 100,000; and If Company is incorporated the ROC may : Give direction to change name within 3 months by passing ordinary resolution or Make a petition for winding up of the company.


Entrenchment provisions in Articles. Clause 5

No such provision existed

Articles may provide for more stringent or restrictive procedure than passing of special resolution for altering certain provisions of the AoA (like a provision can be altered only if agreed to by all the members of the company in writing).


Formats of articles of association.

Table A - AoA of Company limited by shares.

Table B-MoA of Company limited by shares.

Table C-MAA of Company limited by Guarantee and not having a share capital Table D-MAA of Company limited by Guarantee and  having a share capital Table E-MAA of an Unlimited Company

Table F-Company limited by Shares. Table G-Company limited by Guarantee and having share capital. Table H-Company limited by Guarantee and not having share capital. Table I-Unlimited Company having share capital. Table J-Unlimited Company not having share capital.


Incorporation of a Company.-clause 7

Certificate of Incorporation to be conclusive evidence

Action can be taken even after incorporation if incorporation is on the basis of false or incorrect incorporation. Thus Certificate of Incorporation is not treated as conclusive evidence.


Formation of Companies with Charitable objects.-clause 8

Section 25 Company. Did not specifically provide for sports, education, research, social welfare and environment protection. Could be only by way of a public or private company. Max. action that can be taken by Central Government (CG) was revocation of license and that too only for violation of any terms of the license.

Specifically provides for all these words. Could be as a OPC or an Association of Persons (AOP). Action besides revocation can be direction for winding up of the Company or amalgamation with another company registered with same objects. Provides for additional grounds for revocation like affairs being conducted fraudulently or prejudicial to public interest.



Commencement of Business-clause 11

Applicable only to Public Companies. If not complied, no powers to the ROC to initiate action for the removal of the name of the Company from the Register of Companies.

Applicable to both public as well as private companies. –clause 11 Empowers ROC to remove the name of the Company from the Register of Companies if: Declaration is not filed within 180 days from the date of incorporation of the Company and ROC has reasonable cause to believe that the Company is not carrying on any business.


Name change of a Company during the last two years.-clause 12

No provision existed.

Company to paint or affix outside every office or place of business letters, bill heads, etc. along with its name, the former name or names changed during the last two years. Also company shall, on and from the 15th day of its incorporation and at all times have a registered office address. Not necessary to have a registered office at the time of incorporation.


New restrictions on alteration of objects clause where Co. has any unutilized proceeds from Public Issue (PI).-cl. 13.

Objects clause alteration required only special resolution of members and filing of Form 23 with the ROC.

Where Company has any unutilized proceeds from Public Issue, it cannot change its objects unless a special resolution is passed by it and the details as may be prescribed, of the notice, shall be published in two newspapers and shall also be placed on the website of the company; Dissenting shareholders should be given an exit opportunity in accordance with SEBI regulations.


Permissible mode of issuing securities.-clause 23

Companies could issue securities by way of public issue, private placement, rights issues or bonus issue.

Private companies under clause 23 can issue securities only through private placement after complying with part II of Chapter II. Thus private companies cannot issue rights shares or bonus shares. However clause 62 and 63 dealing with rights and bonus respectively contains no such prohibition. Bill needs to be amended for clarity.


Raising capital through public offer-Clause 28

No such provision existed.

Only public companies can issue securities by making public offer and that too by complying Part I of chapter III of the bill. Clause 28 enables offer of sale of shares by certain members of the company.


Civil liability for misstatement in the prospectus.

Section 62 provides that where prospectus invites persons to subscribe for shares in or debentures of a company, then the liability is only for payment of compensation to every person who relied on the prospectus and for loss and damage that they may suffer.

Clause 35 provides that where it is proved that the prospectus has been issued with intent to defraud, every person like directors, promoters, experts, etc. shall be personally responsible without any limitation of liability for all the loss or damages.


Criminal liability for misstatement in the prospectus.(no change)

Section 63

Clause 34


Punishment for fraudulently inducing persons to invest money.(no change)

Section 68

Clause 36-to also include punishment for falsely inducing a person to enter into any agreement with bank or financial institution, with a view to obtaining credit facilities.


Class action for misleading statement in prospectus and fraudulently inducing people to invest money.-clause 37

No such provision existed.

Any group of persons or any association of persons affected by any misleading statement or the inclusion or omission of any matter in the prospectus may take action against any guilty persons.


Allotment of securities and minimum subscription.

Section 69-Minimum subscription applicable only to shares.

Clause 39-minimum subscription to be extended to all securities.


Disgorgement provisions.-Clause 38(3)

Did not exist

Clause 38(3) provides that where a person has made applications in fictitious names for securities and has made multiple applications to company in different names for acquiring securities and he has been convicted of any of the offences, the Court may also order disgorgement of gain, if any, made by, and seizure and disposal of the securities still in possession of, such person and amount received through disgorgement or disposal of securities shall be credited to IEPF. Clause 38 applies only to public offers.


Issue of Global Depository Receipts (GDR).-clause 41

Did not exist

Company, may, after passing a special resolution in its general meeting, issue GDRs subject to conditions.


Raising of capital by private placement basis-clause42

Did not exist

Offer can be made to such number of persons as may be prescribed and for prescribed amount without issue of prospectus. If offer is made to more than prescribed no. of persons, the same shall be deemed to be an offer to the public. ‘private placement’ has been defined to bring clarity.


Voting rights on preference  shares – clause 47

Section 87-Different criteria for cumulative and non-cumulative preference shares for trigger of voting rights.

Clause 47-No such difference between cumulative and non-cumulative. Voting rights to arise if dividends payable are in arrears for a period of two years or more.


When is dividend said to be payable for determination of voting rights as above.

Explanation to clause 87 provides for the same.

Explanation omitted. May give rise to needless litigation.


Where variation in rights of one class of shareholders affects rights of other class of shareholders.-clause 48

Section 106-107 provides for variation in rights of shareholders by obtaining consent in writing of not less than 3/4th of the issued shares of that class or with the sanction of the special resolution passed at a separate meeting of the holders of the issued shares of that class.

Clause 48-if variation by one class of shareholders affects the rights of any other class of shareholders; the consent of at least 75% of such other class shall also be obtained.


Utilization of securities premium account (SPA).clause 52(3)

Section 78-SPA can be utilized for writing off preliminary expenses or for providing premium payable on redemption of preference shares or debentures.

Clause 52(3)-prescribed class of companies whose financial statements comply with accounting standards prescribed for such class cannot utilize SPA for writing off preliminary expenses and premium on redemption of preference shares or debentures.


Prohibition on issue of shares at discount.-clause 53

Section 79-Issue of shares at discount permissible subject to conditions and Central Govt. approval

Clause 53-prohibits issue of shares at discount as void and not permissible except for Sweat Equity under clause 54


Preference shares beyond 20 yrs – clause 55

Section 80-Issue of irredeemable preference shares or redeemable beyond 20 yrs is prohibited.

Clause 55-preference shares beyond 20 yrs may be issued by infrastructure companies subject to annual redemption of such percentage of preference shares as may be prescribed on an annual basis at the option of such preferential shareholders.


Redemption of unredeemed preference shares by issue of further shares.-clause 55(3)

No such provision existed.

A Company may redeem unredeemed preference shares by issuing further redeemable preference shares equal to the amount due, including the dividend thereon with the consent of 75% holders in value for such pref. shares and approval of the Tribunal on a petition made to it in this behalf is obtained. Such issue or redemption shall not be deemed to be an increase or as the case may be reduction in the share capital of the Company.


Transfer of interest of a member in a company having no share capital-clause 56(1)

No such provision existed under the Companies Act, 1956. Was transferable only under the Transfer of Property Act.

Clause 56(1) provides for registration of transfer by company of such interest by delivery to the company by the transferor or the transferee of proper instrument of transfer within 60 days from the date of execution.


Alteration of share capital by consolidation or division of share capital into shares of larger amount.-clause 61(1)(b)_

Section 94(1) permitted the same if there was a provision for the same in the AoA treating it as a mere alteration not involving any reduction in the share capital. No approval of the Court or any other authority required.

Clause 61(1) (b) provides that such alteration shall be made only after making application to the Tribunal and obtaining the approval of the Tribunal. Approval of the Tribunal shall be required for consolidation and division of share capital only if the voting percentage of shareholders changes consequent on such consolidation


New enabling provision for issue of bonus shares-clause 63

No provision in the act. However Rules framed for public unlisted Company.

Clause 63 provides for issue of bonus shares. Private companies are not excluded in clause 63 for issue of bonus shares but apparently clause 23 does not permit private companies to issue bonus shares.


No reduction of capital if deposits not repaid.-clause 66

No such provision existed.

No reduction of capital shall be made by a company if the company is in arrears in the repayment of any deposits accepted by it or the interest payable thereon irrespective of the deposits being accepted before or after the commencement of this Act.


Special resolution required for issue of debentures with conversion option & other provisions clause 71

No such requirement existed.

Needs special resolution of the members for the issue of debentures with conversion option, wholly or partly.


Appointment of Debenture Trustees (DT) compulsory for public issue of debentures through prospectus to more than 500 persons.

Section 117B-No such ceiling of 500 existed. Appt. of DT compulsory for company issuing prospectus or a letter of offer to the public for subscription of its debentures

Clause 71-Appointment of Debenture Trustees compulsory for public issue of debentures through prospectus to more than 500 persons.


Public Deposits( PD): (a) Prohibition on acceptance of PD ( clause 73-76)

Section 58A-General prohibition existed. Section 58AA_ concept of small depositors done away with in the new Bill.

Clause 73 Specifically provides that only banking companies, NBFCs, Notified Companies and Public Company having such net worth as may be prescribed. Companies other than above can accept PD only from its members, only if certain conditions like resolution at GM, compliance with rules and regulations of the RBI, provision of security for the repayment, filing a copy of circular with the ROC, issuance of circular to its members, creation of Deposit Repayment Reserve Account, providing Deposit Insurance,etc, are met. For acceptance of PDs from persons other than members, specific conditions have to be met, like, prescribed net worth or turnover, credit rating from a credit rating agency, creation of charge


Definition of charge.

Section 124-definition is an inclusive definition to include mortgage.

Clause 2(16) defines charge to cover the following: An interest or lien created on the property of the Company or its assets or any of its undertakings or both as security. A mortgage.


Registration of pledges.

Pledge of movable property does not require registration with the ROC

Registration of pledges of movable property with the ROC, proposed.


Types of charges requiring registration.

Section 125(4)-only 9 types of charges require registration.

To cover all the charges on the company’s assets, properties or any of its undertakings.


Power of Registrar to make entries of satisfaction and release in absence of intimation from company.-clause 83

Such a provision did not exist.

Provided for in clause 88.


Annual Return (AR).-clause 92

Section 159 provided for only 7 details to be specified in the AR.

Clause 92 provides for the additional details to be mentioned in the AR like,

(i) Details of principal business activities, particulars of holding, subsidiary and associate companies;

(ii) Promoters, directors, key managerial personnel along with changes since last year;

(iii) Meetings of members or a class thereof, Board and its various committees along with the attendance details;

(iv) Remuneration of directors and KMP;

(v) Penalties or punishments imposed on the Company, its directors or officers and details of compounding of offences and appeals made against penalties or punishments;

(vi) Matters related to certification of compliances, disclosures as may be prescribed;

(vii) Details of shares held on behalf of FIIs (viii) Such other matter as may be prescribed.


Certification of Annual Return:

Section 161 provides for AR to be signed by a Director and by the manager or secretary, and where there is no manager or secretary, by Two Directors, one of whom shall be the Managing Director (MD), where there is one. In case of a listed company, such AR to be also signed by a Practicing Company Secretary (PCS).

Clause 92-in case of an OPC and small company, AR to be signed by a CS or where there is no Company Secretary (CS), by a PCS; For listed company and companies having such turnover and paid up capital as may be prescribed-by a Director and a CS, where there is no CS by a PCS. In addition to this, it shall also be certified by a PCS that the AR discloses the facts correctly and adequately and that the Co. has complied with all the provisions of the Act. Other companies-by a Director and a CS, where there is no CS by a PCS.


Time limit for filing of the AR with the ROC

Section 159-within 60 days from the day on which the AGM is held.

Clause 92(3)-where AGM is held-within 30 days from the date of the AGM. Where AGM is not held-within 30 days of the due date of the AGM along with the reasons for not holding the AGM.


Consequences for default in filing the AR.

Section 162-company and every officer of the company who is in default, shall be punishable with fine which may extend to 500 Rs for every day of default.

Where the Company fails to file within 30 days but files it within 300 days, additional filing fees as prescribed in clause 403; Where Company fails to file within 270 days from expiry of 30 days timeline, the Company shall be punishable with fine not less than 50000 but which may extend upto 500000 and every officer of the company who is in default shall be punishable with imprisonment for 6 months or with fine which shall not be less than Rs.50000 but which may extend upto Rs. 500000/-, or with both.


Return to be filed by listed company in case of changes in promoters.-clause 93

No such provision existed.

Clause 93 provides listed company to file a return with the ROC in case of changes in promoters or top ten shareholders of the company within 15 days of such change.


Holding of first Annual General Meeting (AGM)-clause 96

To be held within 9 months from the financial year ending or within 18 m from the date of incorporation whichever is earlier.

To do away with the 18 months timeline in case of the 1st AGM.


AGM to be called during business hours-business hours defined.

Section 166 merely mandated calling of AGM during business hours without defining business hours

Business hours would mean between 9.00 am and 6 p.m.


AGM cannot be called on which days.

Section 166 provided that AGM cannot be held on a public holiday.

Bill allows AGM to be called on a public holiday but not on a national holiday. National holiday means and includes a day declared as such by the Central Govt.


Explanatory statement in respect of material facts.-clause 102

Section 173 does not define ‘material facts’.

Clause 102 defines ‘material facts’ to be set out in the Explanatory statement, namely, the nature of the concern or interest, financial or otherwise, if any, in respect of each item of every director and manager, every other KMP and relatives of all the above and such other information and facts that may enable members to understand the meaning, scope and implications of the items of business and to take decision thereon.


Consequences for non-disclosure or insufficient disclosure in the explanatory statement.-clause 102

Not provided

If any benefits accrue due to non-disclosure, all the aforesaid persons shall hold such benefit in trust for the company and shall be liable to compensate the company to the extent of the benefit received by them.


Quorum for public companies having more than 1000 members-clause 103

Section 174-Quorum was 5 members personally present unless AoA provides for a bigger quorum.

Clause 103-If members on the date of the meeting does not exceed 1000-5 members personally present; If members on the date of the AGM exceeds 1000 but not more than 5000-15 members personally present. If members as on the date of the AGM exceed 5000-30 members personally present.


Voting through electronic means.-clause 108

No such provision existed.

Clause 108-Central Government may provide for class of companies which can provide for voting through electronic means.


Resolutions requiring special notice.-clause 115

Section 190-no criteria for voting power or shares.

Clause 115-such a notice can be given by such number of members holding not less than 1% of the total voting power or holding shares on which an aggregate sum of not less than Rs.100000 has been paid up.


Statutory recognition to Secretarial Standards (SS)-clause 118(10)

SS were recommendatory.

Clause 118 provides that every company shall follow SS with respect to General and Board Meetings and approved by the  Cent. Govt. Clause 205 provides that functions of a CS, shall, inter-alia include ensuring compliance with the applicable SS.


Penalty for tampering with minutes.-clause 118(12)

No such provision existed.

Clause 118 –any person found guilty of tampering any minutes of the proceeding of any meeting shall be punishable with imprisonment which may extend upto two years and with fine which shall not be less than Rs.25000 but which may extend to Rs.100000.


Maintenance and inspection of documents in electronic form.-clause 120

No such provision existed.

Clause 120 provides for any document, record, register, minutes etc may be kept or inspected or copies given, as the case may be, in electronic form in such form and manner as may be prescribed.


Report on AGM required to be submitted by listed company-clause 121

No such provision existed.

Clause 121 provides that every listed company shall prepare a report on each AGM and file a copy of the same with the ROC within 30 days from the AGM.


Applicability of certain provisions to OPC-clause 122


Clause 98 and clause 100-111 (both inclusive) shall not apply to an OPC. cl. 98-power of Tribunal to call meetings of members, etc. cl. 100-calling of EOGM cl. 101-notice of meeting cl. 102-statement to be annexed to notice. Cl. 103-quorum for meetings cl. 104-chairman of meetings cl. 105-proxies cl. 106-restriction on voting rights cl. 107-voting by show of hands cl. 108-voting through electronic means cl. 109-demand for poll cl. 110-postal ballot & cl. 111-circulation of members’ resolution.


Transfer of specified % of profits not exceeding 10% to Reserves-clause 123

Section 205-company could not transfer more than 10% profits except in accordance with the rules.

Company to use its wisdom to decide % of profits to be transferred to reserves. Its no longer mandatory for companies to transfer its profits to Reserves.


Restriction on interim Dividend introduced-clause 123(3)

No such restriction existed.

BOD to declare interim dividend out of the surplus in the P&L ac as well as the profits for the financial year in which the interim dividend is sought to be declared. In case of loss, interim dividend rate not to exceed average dividends declared during preceding three financial years.


Transfer of shares to Investor Education & Protection Fund (IEPF)-clause 124

Only unclaimed dividend to be transferred to IEPF

Along with the unclaimed dividend, the shares on which dividend is unclaimed, also to be transferred to the IEPF.


Claim from IEPF after 7 yrs.

No claim lied against the Fund or the Company in respect of individual amounts which were unclaimed or unpaid for a period of seven years.

Claim of an investor over a dividend not claimed for more than a period of 7 years not to be extinguished and shall be entitled to refund in accordance with the rules.


Maintenance of books of account in electronic mode-clause 128(1)

Not permitted

Provides for electronic maintenance of the same.


Preservation period of books of account.

Section 209-books and vouchers for 8 yrs period.

Clause 128(5) where investigation is ordered, CG may direct books to be preserved for longer period.


Compulsory consolidation of accounts of holding company and its subsidiaries including associate companies and JVs.

Section 212 provided for attachment of accounts of subsidiaries along with the holding company accounts. No provision for consolidation.

Clause 129 provides for consolidation of financial statements of company and all its subsidiaries.


Re-opening of accounts/recasting of financial statements –clause 130

No such provision existed.

Can be done if there is an order in this regard made by the court or tribunal to the effect that the relevant earlier accounts were prepared in fraudulent manner or the affairs were mismanaged during the relevant period, casting a doubt on the reliability of the financial statements. Court or Tribunal shall give notice to the CG and the Income Tax and shall take into consideration, representation, if any, made by them. The accounts so revised or re-casted shall be final.


Voluntary revision of financial statement or board report with tribunal’s consent.-clause 131

No such provision existed.

If the Board feels that the financials or the Report do not comply with the applicable provisions of clause 129 or 134, they may revise the aforesaid in respect of any of the three preceding financial years after obtaining approval of the Tribunal.. Cannot be revised for more than once in one financial year. CG may make separate rules for this.


Additional disclosures in the Board Report (BR)-Clause 134

Section 217

Clause 134(1) has stipulated new disclosures in BR like:

Number of meetings of Board;

Statement of declaration by independent directors;

Company’s policy on director appt/remuneration;

Explanation on every qualification made by PCS in his report;

Particulars of loans, guarantee, investment;

Related party contracts;

Implementation of risk management policy;

Policy developed on Corporate Social Responsibility;

Statement of formal evaluation of the performance of the board and its committees in case of listed and public companies, as may be prescribed.


Directors’ responsibility statement.-clause 134(5)

217(2AA) ; Disclosures required on four fronts: Applicable accounting standards followed; True and fair view of the financials; Detecting and preventing fraud; Accounts on a going concern basis.

Clause 134(5) provides for additional disclosures: In case of a listed company, Directors have laid down internal financial controls and they have been complied with; Directors have devised proper systems to ensure compliance with the provisions of this Act, rules, and that such systems were adequate and operating effectively.


CSR Obligations.-clause 135

Did not exist.

Clause 135-co. having net worth of 500 cr or turnover of 1000 cr or net profit of 5 cr or more during any financial year shall constitute a CSR Committee. Co to ensure that at least two percent of average net profits of the company during the 3 preceding financial years is spent in every financial year on CSR. Company shall give preference to local areas where it operates, for spending amount earmarked for Corporate Social Responsibility (CSR) activities If the Company fails to spend such amount, the Board to report the reasons for the same in its Report.


Compulsory Internal Audit (IA).-clause 138

No such provision existed.

Clause 138-prescribed companies to have an Internal Auditor to conduct IA, who can be a CA or ICWA or such other professional as may be decided by the Board. CG may prescribe rules for conduct and report of IA.


Rotation of Statutory Auditors.-clause 139(2)

No such provision existed.

Listed and other prescribed companies not to appoint or re-appoint an individual auditor for more than one term of five years and an audit firm for more than two terms of five consecutive years.

Members of a company may resolve to rotate the audit partner every year to resolve to conduct audit by more than one auditor.

Provisions relating to voluntary rotation of auditing partner (in case of an audit firm) modified to provide that members may rotate the partner ‘at such interval as may be resolved by members’ instead of ‘every year’ proposed in the clause earlier.

The limit in respect of maximum number of companies in which a person may be appointed as auditor has been proposed as twenty companies.


Re-appointment of statutory auditors.

Board recommended the re-appointment of retiring auditors and retiring auditors could be re-appointed at the AGM.

After the expiry of term mentioned at point 75 above, there has to be a gap of 5 yrs for re-appointment after every cessation. Further in case of an Audit firm, no other firm which has a common partner to the other audit firm can be appointed as Stat Auditors. Members can approve rotation of audit partners and also appointment of joint auditors.


5 years tenure for auditors.

Sec 224-Auditors could be appointed to hold office only upto the date of the next AGM and could be re-appointed thereat.

Clause 139(1)-Audit firm or an individual including an LLP to be appointed for 5 yrs. i.e. to hold office upto the date of the sixth AGM. Appointment of auditors for five years shall be subject to ratification by members at every Annual General Meeting.


Automatic re-appointment of existing Auditors, when not appointed/re-appointed at the AGM-clause 139(10)

Section 224(3) provided that if no Auditor was appointed/re-appointed at the AGM, the Central Government could fill up the vacancy.

Clause 139(10) -existing auditors continue to be the auditors of the company in such a scenario.


Time bound filling up of Casual vacancy in the office of Auditors.-clause 139(8)

Section 224(6) -Casual vacancy to be filled up by the Board. If due to resignation, then by the members in their meeting.

Clause 139(8)-Casual vacancy to be filled up by the Board within 30 days. If due to resignation, then by the Company in its meeting within 3 m from the date of recommendation of the Board and such auditor to hold office only upto the date of the next AGM.


Recommendations of Audit Committee for appointment of auditors.-clause 139(11)

No such provision existed.

Clause 139(1) –all the appointment of statutory auditors including in case of casual vacancy shall be made after considering the recommendations of the Audit Committee, where there is one.


Auditor’s duties when they resign.-clause 140(2)/(3)

No such provision or requirement existed.

Retiring auditor to file a statement with the ROC as well as the Company, within 30 days of resignation, indicating reasons and other facts that may be relevant with regard to his resignation


Tribunal may direct company to change its auditors.-clause 140(5)

Section 224(7) provided for removal of auditors before the expiry of their term, only with the prior approval of the Central Government.

Clause 140(5) provides that the Tribunal may, by order, direct the company to change its auditors on being satisfied that the auditors has acted in a fraudulent manner or abetted or colluded in any fraud.


Duties of auditor/secretarial auditor/cost auditor to report fraud to the CG.-clause 143(12)-(14)

No such provision existed.

Auditors/CWA/CS to inform the fraud to the CG within prescribed time and manner and the same shall not be construed as breach of duty.


Limited Liability Partnership (LLP) can act as an Auditor.-Clause 141

Section 226(3) –LLP was not to be treated as a Body Corporate for the limited purpose of this section and hence could be appointed as an Auditor.

Where a firm including an LLP is appointed as an auditor of a company, only the partners who are chartered accountants shall be authorized to act and sign on behalf of the firm.


Auditor not to render certain services.-clause 144

No such provision existed.

Clause 144-auditor not to render directly or indirectly the following services to the company, its holding company or its subsidiaries, or associate company: Accounting and book keeping service; Internal audit; Design and implementation of any financial information system; Actuarial services; Investment advisory services; Investment banking services; Rendering of outsourced financial services; Management services; and Any other kind of consultancy services. Provisions relating to restrictions on non-audit services modified to provide that such restrictions shall not apply to associate companies and further to provide for transitional period for complying with such provisions.


Auditors’ attendance at AGM proposed to be made obligatory.-clause 146

Section 231-provides for all notices of and other communication relating to general meeting of a company to be forwarded to the Auditor. The Auditor was thus entitled to but not obliged to attend any general meeting.

Clause 146-provides that auditor shall, unless otherwise exempted by the Company, attend any general meeting, either by himself or through his Authorized representative who is qualified to be an auditor.


Increased accountability of auditors.-clause 147

Penalties were provided for violation of section 227 (dealing with powers and duties of auditors) and section 229 (dealing with signature of audit report). Meager penalties of fine upto Rs. 10000.

Penalties significantly enhanced-fine not less than 25000 but extendable to Rs. 5 lakhs.

Imprisonment upto one year and fine in case there is an intention to deceive the company, its shareholders or creditors.

Provisions relating to extent of criminal liability of auditors particularly in case of partners of an audit firm reviewed to bring clarity.

Further, to ensure that the liability in respect of damages paid by auditor, as per the order of the Court, (in case of conviction under Clause 147) is promptly used for payment to affected parties including tax authorities, Central Government has been empowered to specify any statutory body/authority for such purpose.


Woman Director mandatory for certain class of companies-clause 149(1) Resident Director

No such provision existed.

No such provision existed

Such class/es of companies as may be prescribed shall have a woman Director.

Every company shall have at least one Director who has stayed in India for a total period of not less than 182 days in the previous calendar year.


Maximum number of Directors.

Section 259 provided for max. 12 and beyond 12 required prior Central Govt. approval.

Clause 149(1) provides for max 15 and beyond 15 by passing a special resolution.


Independent Directors.-clause 149

No such provision existed.

Every listed company to have 1/3rd of total no. of Directors as independent directors.

Tenure of such directors-not exceeding two consecutive term of 5 years.

Can be reappointed after a gap of 3 yrs.

Not to be associated with the company directly or indirectly in this gap of 3 yrs.

Such Director is not liable to retire by rotation. The Company and the ID shall abide by the Code of Conduct in schedule IV to the Bill.

Independent Directors’ shall be excluded for the purpose of computing ‘one third of retiring Directors’


Right of person other than retiring directors to stand for directorship – clause 160

Section 257 provides that such a person has to deposit Rs. 500 which would be refunded in case he is appointed as Director.

Clause 160-has increased this amount to Rs. 100,000 which is refundable when he is appointed or even when he gets more than 25% of the total valid votes cast either on show of hands or on poll on such resolution.


Alternate Director-clause 161

Section 313-Absence for 3 m from the ‘state where the Board Meetings are ordinarily held’, is the criteria.

Clause 161-has been modified to include ‘India’, instead of the ‘state where the board meetings are ordinarily held’, to be the criteria.


Duties of Director-clause 166

Not specifically provided.

Clause 166 provides for the following duties: To act in accordance with co’s AoA; Act in good faith; Exercise his duties with due care and diligence. A director shall not: Involve in any conflicting interest with the co.; Achieve or attempt to achieve any undue advantage; Assign his office.


Resignation of directors. Clause 168

No such provision specifically existed.

Clause 168 contains provision for director to resign by tendering his resignation letter, which the Board has to note and place before the members in the next general meeting. Date of resignation will be date mentioned in the letter or the date of receipt of the resignation by the company, whichever is later.

Director who has resigned shall be liable even after his resignation for offences which occurred during his tenure.


Gap between two board meetings. Clause 173 (1)

Section 285 provided for one meeting to be held in every calendar quarter. So one board meeting could be held in the first month of the quarter and the next could be held in the last month of the next quarter, thereby a gap of almost 6 months.

Clause 173(1) provides that the gap between any two board meetings should not exceed 120 days. For OPC: If OPC has more than one director, then at least one meeting in each half of the calendar year and gap should not be less than 90 days between such meetings. If OPC has only ONE director, no need to hold any board meetings.


Directors’ participation by audio-visual means or video conferencing.-clause 173/174

No such provision specifically existed. Companies used to resort to such mechanism for administrative convenience however the director participating through audio/video conferencing could not be counted for quorum

Clause 173(2) and 174(1) specifically provides for directors attending the meetings even by way of video conferencing/audio-visual conferencing.

Such director to be counted for the purpose of quorum. Central Govt. may notify such matters which shall not be dealt with in a meeting through video conferencing or other audio-visual means.


Notice for board meetings (BM).-clause 173(3)

Section 286 merely provided for notice of BMs to be given to directors in writing but did not specify the length of such notice.

Clause 173(3) provides for 7 days notice for BM.(can be electronic also) Shorter consent possible if at least one independent director is present at such meeting.


Withdrawal of Resolution by circulation-clause 175

Section 289 provided for passing of board resolutions by circulation with no provision of withdrawal.

Clause 175 provides that if a demand is made by not less than 1/3rd of Board of Directors (BOD) that resolution under circulation be decided at a BM the chairman shall withdraw the resolution from circulation and have the question decided at a BM.


Nomination & Remuneration Committee and Stakeholders’ Relationship Committee.-clause 178

A mention of Remuneration committee was made only in the Schedule XIII.

Clause 178-Provides for mandatory constitution of Nomination and Remuneration Committee and Stakeholders’ Relationship Committee for prescribed companies.


Limit on political contribution by a non-government company-clause 182

Section 293A –upto 5 % of the average net profits for preceding three financial years on authority of a Board Resolution.

Clause 182-limit enhanced to 7.5% from 5%. Political party defined as political party registered under section 29A of the Representation of the People Act, 1951.


Loan to Directors-Clause 185

sec 295-not applicable to private companies and prior approval of the CG required.

Clause 185-CG approval done away with and applicable to private companies as well.


Inter-corporate investments not to be made through more than 2 layers of investment companies-clause 186

No such provision existed in section 372A of the companies act, which dealt with inter corporate loans and investments.

Clause 186 provides that investments not to be made through more than 2 layers of investment companies. The rate of interest on inter corporate loans will be the prevailing rate of interest on dated Government Securities.


Related party transactions.-clause 188

Section 297 covered only sale and purchase of goods, rendering of services , underwriting the subscription of any shares or debentures. Where paid up share capital of the company exceeds Rs. 1 crore, prior approval of the Central Govt. required. Not applicable to contracts between two public companies.

Also covers leasing of property, appointment of agent for the sale or purchase, related party’s appointment to any office or place of profit in the company, its subsidiary or associate company. Prior CG approval done away it and only Members approval required by way of a special resolution.

Applicable to contracts between two public companies as well.


New restrictions on non-cash transactions by directors.-clause 192

No such provision existed.

Clause 192-A company shall NOT, subsidiary or associate, enter into specified non cash transactions with its director or a director of its holding company or person connected with him unless approved by the company in its general meeting. Such transactions to be treated voidable.


Contract by OPC-clause 193

No OPC concept existed.

Clause 193-Where OPC limited by shares or by guarantee enters into a contract with its sole member, who is also a Director; the company should preferably enter into a written contract. If not the above, the OPC will have to record the contract in the board minutes book and file a return with the ROC within 15 days of the date of approval by the BOD, with prescribed fees.


Prohibition on forward dealings in securities of company by a Key Managerial Personnel (KMP)-clause 194

No such provision existed.

Clause 194 prohibits a Director of a Company or a KMP to buy a right to call for delivery at a specified price and within a specified time, of a specified number of relevant shares or debentures, right to make delivery at a specified price and within a specified time, of a specified number of relevant shares or debentures


Prohibition on Insider Trading of Securities.-clause 195

No such provision existed.

Clause 195-makes insider trading by a Director or a KMP, a criminal offence. Communication in the ordinary course of business, profession or employment will not be treated as Insider Trading.


Remuneration of managerial personnel in case of no profits or inadequate profits.

Governed by Schedule XIII

To be governed by schedule V. IDs not to get stock option but may get payment of fees and profit linked commission subject to limits. CG may prescribe amount of fees under the rules.


Appointment of Whole Time Director.-clause 203

Section 269-every public company having capital of more than Rs 5 cr. To have a managing director/WTD/Manager.

Clause 203-every company belonging to such class or description of companies as may be prescribed shall have MD or CEO or Manager and in their absence, a WTD and a Company Secretary. Individual not to be the Chairman of the Co. as well as the MD or CEO of the Co. at the same time (AoA can provide for this); Every whole time KMP to be appointed by a resolution at BOD meeting; A WTKMP not to hold office in more than one company at the same time.

Any vacancy in the office of any KMP to be filled up by the BOD within 6 m. Provisions relating to separation of office of Chairman and Managing Director (MD) modified to allow, in certain cases, a class of companies having multiple business and separate divisional MDs to appoint same person as ‘chairman as well as MD’


Secretarial audit compliance report from PCS to be attached to Directors’ report-clause 204

Section 383A provided only for secretarial audit by companies having paid up capital between Rs. 10 lakh to Rs. 5crores. Did not specifically provide for attachment of such report to the Directors’ report.

Clause 204-every listed company and other prescribed companies shall annex with its Board’s Report, a Secretarial Audit Report. Directors shall explain in full in their DR, qualification/observation/remarks in the secretarial audit report.


Functions of the CS.-clause 205

No such provision existed.

Clause 205-to report to the BOD, compliance with the Act, rules made there under; To ensure that the company complies with the applicable SS; To discharge such other duties, as may be prescribed.


Serious Fraud Investigating Office (SFIO) –clause 211

No such provision existed.

Clause 211-statutory status to SFIO proposed in the Bill.


Freezing of assets of company on inquiry and investigation. Clause 221-

No such provision existed

Clause 221 provides for the same.


Simplified procedure for compromise between small companies or between Holding/subsidiary cos. – clause 233

No such provision existed.

Clause 233-provides for the same.


Cross Border Mergers-clause 234

No such provision existed.

Clause 234 provides for cross border mergers where a foreign company may with prior approval of RBI, merge or amalgamate in to a co. registered under this Act or vice-versa. Payment of consideration to the shareholders of the merged company in cash, or in DRs or partly by cash and DRs.


Squeeze out provisions-clause 236

No such provision existed.

Squeeze out provision means provisions which confer the acquirer with a statutory right to squeeze out the minority, i.e. acquire minority shareholders on the same terms when the acquirer’s shareholding crosses a certain high percentage of the voting capital of the target company.


Relief for past concluded acts of oppression-clause 241

This was not possible under section 397 of the Companies Act, 1956, as the same provided only for the current affairs of the company.

Clause 241 uses the phraseology-“affairs of the company have been or are being conducted/’’. Thus relief for past acts is possible.


Class action by member/s, depositor/s or any class of them. –clause 245

No such provision existed.

Provided for. Provisions relating to extent of criminal liability of auditors particularly in case of partners of an audit firm reviewed to bring clarity. Further, to ensure that the liability in respect of damages paid by auditor, as per the order of the Court, (in case of conviction under Clause 147) is promptly used for payment to affected parties including tax authorities, Central Government has been empowered to specify any statutory body/authority for such purpose.


Registered valuers.-clause 247

No such provision existed.

Clause 247-wherever valuation is to be done of any property, stocks, shares, debentures, securities or goodwill or net worth of a company or of its assets, such valuation shall be done by a person who is a registered valuer under this chapter and appointed by the Audit Committee or in its absence by the BOD.


Power of Registrar to remove name of a company from Register. –clause 248

Section 560 provided for the ROC to suo motu strike off the company as a defunct company if it has reasonable cause to believe that a Co. is not carrying on its business or in operation.

Clause 247-give suo-motu powers to the ROC and also power to members holding 75% of the paid up share capital of the company to apply to the ROC for striking off the name of a company as a defunct company. Grounds for name removal specified. Clause 8 companies not included.


Bar on company making application to the ROC for removal of its name from register-clause 248(2)

No such provision existed.

Provides for situations ( in the previous 3 months) where such an applications cannot be made:

- Name change/registered office change;

- Disposal for value of property;

- Engagement in any other activity;

- Made an application to the Tribunal for compromise/arrangement;

- Is being wound up


Fraudulent application by company for removal of name. clause 248(2)

No such provision existed.

Provides for management being responsible, jointly and severally, in such a scenario to any person/s who incurred loss or damage and shall also be liable to penal action. ROC may recommend prosecution of persons responsible for filing of application for removal of name, fraudulently.


Sick Industrial Companies-clause 253-269

Treatment meted out under SICA,1985 Coverage limited only to Industrial companies. SICA determines sickness based on negative net worth criteria.

Treatment meted out under chapter XIX of the Bill: Covers revival and rehabilitation of all companies irrespective of the industry they are in. Sickness of company to be determined on the basis of whether co is able to pay its debts or not.


Modes of winding up. Clause 270-365

By court, under supervision of court and voluntary winding up. Voluntary could be members’ or creditors’.

By the Tribunal and Voluntary. No such classification exists. Additional grounds for winding up by Tribunal provided.


Limits for determining inability to pay debts.

Section 434-Any creditor indebted for more than Rs. 500/-

Limit raised to Rs. 100,000/


Conversion of LLPs into companies.-clause 371

Not permitted under the present regime-Part IX

Clause 371 provides for conversion of LLPs into companies.


Nidhi Companies.-clause 406

Section 620A-Necessary for Cent. Govt. to notify a company as a Nidhi for it to qualify as such.

Clause 406-no such notification required. Nidhi defined in this clause.


Special Courts. Clause 435446

No such provision existed.

The Bill aims at setting up of special courts to try offences under the Bill.


Punishment for fraud.-clause 447

Fraud not defined. Punishment for fraud not quantified or provided.

Fraud has been defined and penalty provided.


Dormant Company-clause 455

Not defined.

Clause 455 defines inactive company as a company which:

(i) Has not been carrying on any business or operation or has not made any significant accounting transaction during the last two financial years, or

(ii) Has not filed financial statements and annual returns during the last two financial years.


Prohibition of association or partnership of persons exceeding a certain number.-clause 464

Section 11-no company, association or partnership consisting of more than 10 persons shall be formed for banking purpose and for non-banking, it cannot exceed 20

Clause 464 provides for increasing the number to 100 in case of persons in associations or partnerships, with no ceiling as to association or partnerships, formed by professionals regulated by special acts. If Association or partnership is formed for acquisition of gain by professionals (CA, CS, CWA, Doctors, Architects, Lawyers, etc) then there is no need to get the same registered either under the Companies Act or the LLP Act. In other cases, registration is required. HUF is not covered under this.


Power to remove difficulties.


Provisions in respect of removal of difficulty modified to provide that the power to remove difficulties may be exercised by the Central Government upto ‘five years’ (after enactment of the legislation) instead of earlier upto ‘three years’. This is considered necessary to avoid serious hardship and dislocation since many provisions of the Bill involve transition from pre-existing arrangements to new systems.


Published by

Rajat Poddar
(Qualified CS and CA Finalist)
Category Corporate Law   Report

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