Newly implement sections in Companies Act 2013
MCA Notification dated June 1, 2016
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The Ministry of Corporate Affairs through its
notifications dated June 1, 2016 has notified the following sections:
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Sr No
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Notified
Sec (NS)
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Details
of notified Sec
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1
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Under Sec 7 –
Incorporation of Companies
NS.Sub-Sec (7) of Sec 7 [except clause (c) and (d)]
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Power of Tribunal:
In the event of any company being incorporated on
providing false/ incorrect information or on suppressing any material facts
or information, the tribunal on receiving an application and based on the
situation may:
a.
Pass such orders as it deems fit, in the public
interest and in the interest of the company
b.
To direct the liability of the members to be
unlimited or
c.
To remove the name of the company from the
register of companies
This Sec is being passed as a
relaxation to the provision of Sec 7 (6), which says, when a company has been
incorporated in the before said manner, then the promoters, the persons named
as the first directors are liable for action under Sec 447 (Punishment for
Fraud)
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2
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Sec 14 –
Alteration of Articles
NS. Second proviso to sub-Sec (1) of Sec 14
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While converting a company from private to public
or from public to private a special resolution has to be passed and the
articles has to be amended accordingly.
Pursuant to the second proviso to Sec 14 (1) the
conversion of a company from public to private shall not be effective unless
the approval of the Tribunal is obtained.
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3
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NS. Sub-Sec (2) of
Sec 14
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The
company has to file the respective form with the ROC within 15 days from the
date of receipt of the amended articles as required in Sec 14 (1) and on
receipt of the approval of the Tribunal for conversion of the company from
public to private.
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4
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Sec 55 – Issue and
Redemption of preference shares.
NS.Sub-Sec (3) of
Sec 55
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As per Sec 55 (1) A limited
company can issue only redeemable preference shares that are redeemed over a
period of time.
Sec 55 (3) – in the event of the
company being unable to redeem the share or pay dividend then, the company
with the approval of the shareholders and the tribunal can issue further
redeemable preference shares equal to the amount due (in respect of dividend)
and it shall be considered that the unredeemed preference shares had been
redeemed.
However, if any shareholder does
not give his/ her consent for further issue of redeemable preference shares
then the tribunal shall order the company to redeem their shares.
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5
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Sec 61 - Power of limited
company to alter its share capital.
NS. Proviso to Clause (b) of sub- Sec (1) of Sec 61
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If the articles of a limited company having share
capital permits the company to amend its memorandum with regard to
consolidation and division of share capital into shares of larger value than
the existing ones resulting in changes
in the voting rights of the shareholders then,
it can do so
only after obtaining the approval of the tribunal .
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6
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Sec 62 – Further issue of share capital
NS.Sub-Sec (4) to
(6) of Sec
62
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Pursuant to
Sec 62(4) In the public interest the government to whom the company had
issued debentures or from whom it has obtained loan, can direct the company
to convert such debentures or loan into shares of the company based on
certain terms and conditions.
In the event
of the company being dissatisfied with the terms, it can make an appeal to
the tribunal within 60 days from the date of communication of such order.
Although Sec
62 (4) provides a relief to the company to approach the tribunal in the event
of dissatisfaction, Sec 62 (6) clearly confiscates such relief stating that, if
the Tribunal does not prefer any appeal then the company shall be forced to
follow the given government orders.
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7
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Sec 71 – Debentures
NS.Sub-Sec (9) to
(11) of Sec
71
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Sec 71 (9) If
the debenture trustee concludes that the assets of the company are likely to
be insufficient to discharge the principal amount then it shall file a
petition with the Tribunal to restrict the company from incurring further
liability
Further, if
the company fails to redeem the debentures or pay interest on its maturity
then the tribunal shall order the company to pay the interest and redeem the
debentures. Sec 71 (10)
(Query: what will a company do if it is genuinely not in
a position to do either of it?)
On the company
failing to carry out the orders said by the tribunal every officer who is in
default shall be punishable with:
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imprisonment < 3 yrs or / and
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with fine 2 lac – 5 Lac
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8
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NS.Sec 75 – Damages for fraud
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If the company
fails to repay the deposits or part or interest said in Sec 74 (Repayment of deposits, etc., accepted before commencement of this Act.),
then every officer who is responsible for acceptance of such deposit shall be
personally liable without any limitation of liability.
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9
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NS.Sec 97 - Power of
Tribunal to call annual general meeting.
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In the event of any default in holding the AGM of
the company, the Tribunal on receipt of an application from a member for
calling or directing the calling of an AGM, shall direct the company to hold
the AGM.
In such a scenario it may even direct that one
member of the company present in person or proxy shall be deemed to
constitute a meeting.
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10
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NS.Sec 98 - Power of
Tribunal to call meetings of members, etc.
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The Tribunal either suo moto or on receipt of an
application from any director or member shall call for a meeting giving such
directions as it thinks expedient in calling and conducting the meeting.
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11
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NS. Sec 99 Punishment
for default in complying with provisions
Of Sec 96 to 98.
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The company and every officer of the company who is in default shall
be punishable with:
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fine < = 1 Lac and
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Rs. 5000 every day (if
the default continues)
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12
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Sec 119 –
Inspection of minute-books of general meeting.
NS.Sub-Sec (4) of
Sec 119
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If the company refuses to furnish the minutes
books for inspection then the Tribunal on receipt of an application may order
to send a copy of the minutes book immediately to the person who is requiring
it.
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13
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NS. Sec 130 - Re-opening
of accounts on court’s or Tribunal’s orders.
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A company in generally shall not re-open its books of account and
shall not recast its financial statements.
However, they shall be re-opened if the court or tribunal orders for
the same based on receipt of an application from any statutory regulatory
body, if it is satisfied that :
(i) the accounts were prepared in a fraudulent manner; or
(ii) the affairs of the company were mismanaged during the
relevant period, casting a doubt on the reliability of financial statements.
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14
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NS.Sec 131 - Voluntary
revision of financial statements or Board’s report.
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If the directors
feel that the accounts and the directors report is not prepared in compliance
with the provisions of act then on obtaining Tribunal’s approval the
financials can be revised for the 3 preceding financial years and the reasons
for the revision to be specified in the board’s report.
A copy of the
Tribunal’s approval/ order to be filed with the registrar.
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15
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Sec 140 - Removal,
resignation of auditor and giving of
special notice.
NS. Second proviso to sub-Sec (4) and sub-Sec (5) of Sec
140
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Pursuant to Sec 140 the auditors of the company
shall be removed from his office before the expiry of his term only on
passing a special resolution after obtain prior approval of the C. Government
in the prescribed format.
Pursuant to Sec 140 (4) while appointing an
auditor the company shall send a copy of the representation to every member.
In the event of any delay in the company in
sending the representation then:
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The company shall file a copy of the same with
the registrar.
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The auditor may ask for reading out the
representation at the meeting.
However if the tribunal on
receiving an application is satisfied that the auditor has abused his powers
under this Sub Sec then a copy of the representation need not be sent nor
read at the meeting.
Pursuant to Sec 140 (5) if the
tribunal is satisfied that the auditor has acted in a fraudulent manner then:
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The tribunal may direct the company to change the
auditor
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The auditor who has acted fraudulently shall not
be eligible from being appointed as an auditor of any company for a period of
5 yrs from the date of passing the order
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16
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Sec 169 – Removal of directors.
NS.Sub-Sec (4) of
Sec 169
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While giving a
notice for passing a resolution for removal of a director, the company shall
if time permit:
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State the facts of representation in the notice
and
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To send a copy of the representation to every
member.
In the event
of any delay in the company in sending the representation then the director
may ask for reading out the representation at the meeting.
However, if
the tribunal is satisfied that the director has abused his right to secure
needless publicity from defamatory matters then it may order the director to
pay the company’s cost on application.
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17
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NS.Sec 213 – Investigation
into company’s affairs in other cases.
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Proceedings
of Tribunal Investigation into the affairs of the Company
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18
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Sec 216 - Investigation
of ownership of company.
NS.Sub-Sec (2) of
Sec 216
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The
central government shall appoint one or more inspectors to investigate into
the affairs of the Company if the
Tribunal in the course of the proceedings order for the same.
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19
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NS. Sec 218 - Protection
of
Employees during investigation.
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During
the course of any investigation of the affairs of the body corporate or
during the pendency of any proceedings against any person, the company shall
obtain prior approval of the tribunal before proceeding against any employee.
If
the tribunal has not responded within 30 days of receipt of application then
the body corporate shall proceed to take action against any employee.
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20
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NS. Sec 221 - Freezing
of
assets of company on inquiry and investigation.
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The tribunal on having a reasonable ground to
believe either in connection with an inquiry or investigation into the
affairs of the company or on a compliant made by a member shall, freeze the
removal, transfer or disposal of funds, assets or property of the company for
a maximum period of 3 year.
In the event of any violation of this Sec the
company and the officers shall be punishable as follows:
Company:
Fine - 1 lac to 25 lac
Officer
in default :
Imprisonment
>= 3 yrs or/ and
Fine
– 50k – 5 lac
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21
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NS. Sec 222 - Imposition
of
restrictions upon Securities.
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When
relevant facts about the Securities issued are not found the tribunal shall
impose certain restrictions as it deems fit for a maximum period of 3 yrs as
may be specified in the order.
In
the event of any violation of this Sec the company and the officers shall be
punishable as follows:
Company:
Fine - 1 lac to 25 lac
Officer
in default :
Imprisonment
>= 6 months or/ and
Fine
– 25k – 5 lac
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22
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Sec 224 - Actions to be
taken in pursuance of inspector’s report.
NS. Sub-Sec (5) of
Sec 224
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The C.
government on receipt of a report from the inspector detailing the fraud taken place in the
company and the undue advantage enjoyed by the director, key managerial
persons and other officers of the company shall, file an application with the
tribunal for taking appropriate orders.
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23
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Sec 241 - Application
to Tribunal for relief in cases of
oppression, etc.
Sec 242 - Powers of Tribunal.
Sec 243 - Consequence
of termination or modification of certain
agreements.
Sec 244 - Right to apply under
Sec 241.
Sec 245 - Class action.
NS. Sec 241, 242
[except clause
(b) of sub-Sec
(1), clause (c) & (g) of subSec
(2)], 243, 244,245
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Almost all the
Sec relevant to prevention of oppression and mismanagement has been notified.
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24
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Sec
399 - Inspection,
Production and evidence of documents kept by
Registrar.
NS.Reference of word
‘Tribunal’ in sub-Sec (2) of Sec 399
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No process for compelling the production of any document kept by the
Registrar shall issue from any court or the Tribunal except with the leave of
that court or the Tribunal and any such process, if issued, shall bear
thereon a statement that it is issued with the leave of the court or the
Tribunal
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25
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NS. Sec 415 to Sec. 433
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Provisions relating to NCLT- Constitution,
appointment, resignation, removal
of members, salary, Benches of Tribunal, Appeal, to NCLAT & Supreme Court, Procedure before Tribunal, etc
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26
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Sec 434 - Transfer of
certain pending proceedings.
NS. Sub-Sec (1)(a) and (b) of Sec 434 & Sub-Sec
(2) of Sec 434
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Transfer
of Proceedings from CLB to NCLT
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27
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NS. Sec 441 - Compounding
of certain offences.
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Compounding
of certain offences punishable
under this act either before or after institution of any prosecution
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28
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NS. Sec 466 - Dissolution
of Company Law Board and
consequential provisions.
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Dissolution of
Company Law Board on constitution of the Tribunal and the Appellate Tribunal
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National Company Law Tribunal and National Company Law
Appellate Tribunal
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The Ministry of Corporate Affairs through its
notifications dated June 1, 2016 has also constituted the following tribunals
as said above:
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National Company Law Tribunal to exercise and
discharge its powers and functions as may be conferred on it by or under the
act w.e.f June 1, 2016 and
o
The National Company Law Appellate Tribunal for
hearing the appeals as against the National Company Law Tribunal w.e.f June 1,
2016
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has constituted certain benches of National Company
Law Tribunal (NCLT) at various places to exercise jurisdiction over certain
areas.
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Further, w.e.f June 1, 2016 all the pending
matters, proceedings or cases of Company Law Administration (Company Law Board)
had been transferred to the National Company Law Tribunal.
The
Tribunal shall dispose of the pending matters, proceedings or cases in
accordance with the provisions of Companies Act 2013 or the Companies Act 1956.
