Comparison Between Company Act 1956 and Company Act 2013
Comparison Between Company Act 1956 and Company Act 2013
Sr. No. Subject matter Old provision in the Companies Act,1956 Corresponding new provision in the Companies Bill,2011 1. Composition Contains 658 sections and 15 schedules
Contains 29 chapters with 470 clauses and with 7 schedules. 2. Definitions 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; Control; 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; Promoter; Remuneration; Small Company;
Sweat equity shares; Unlimited company;
Turnover. 3.
Definition of Private Company
Restricts the maximum number of members to 50 To restrict the maximum number of members to 200 4. 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. 5. 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.
6. 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. 7. One Person Company(OPC)-clause 3 Such a concept was absent hitherto. OPC can be formed. 8. 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. 9. 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. 10. 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. 11. 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).
12. 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. 13. 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.
14. 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.
| Sr. No. | Subject matter | Old provision in the Companies Act,1956 | Corresponding new provision in the Companies Bill,2011 | |||
| 1. | Composition | Contains 658 sections and 15 schedules | Contains 29 chapters with 470 clauses and with 7 schedules. | |||
| 2. | Definitions | 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; Control; 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; Promoter; Remuneration; Small Company; Sweat equity shares; | |||
| Unlimited company; Turnover. | ||||||
| 3. | Definition of Private Company | Restricts the maximum number of members to 50 | To restrict the maximum number of members to 200 | |||
| 4. | 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. | |||
| 5. | 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. | |||
| 6. | 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. | |||
| 7. | One Person Company(OPC)-clause 3 | Such a concept was absent hitherto. | OPC can be formed. | |||
| 8. | 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. | |||
| 9. | 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. | |||
| 10. | 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. | ||||
| 11. | 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). | ||||
| 12. | 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. | ||||
| 13. | 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. | ||||
| 14. | 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. | ||||
