The Companies Act 1956 was supplanted by a new company bill passed as Companies Bill 2011, passed in Lok Sabha on Dec 18, 2012 at 10:46 PM. The new Company Bill was formed to meet demand of globalizations. It is an effort to enable the companies to compete with the change in the global avenues on the legal and technical fronts. The new law that is organized in 29 chapters, 470 sections, and 7 schedules is assuring towards investors democracy. It has industry affable provisions and emphasizes public concern over corporate responsibility and accountability.
The new bill introduced 33 new definitions and the major part of the new law shall be in structure of Rules.
Hereunder are a few highlights pertaining to Incorporation of the Company and for Raising Capital.
- The new concept of a One Person Company has been introduced and it shall be recognized as a Private Limited Company
- The bar of maximum number of members that a private limited company can incorporate was raised from 50 members to 200 members.
- A new concept of a dormant company has been coined as well. A dormant company can be incorporated to launch a project in future or to retain assets including property of intellectual nature.
- The financial year for all the companies shall remain as through April to March and the only exceptions to that would be for a few companied who have the sanction from NCLT.
- Each category of securities shall continue to be administered through the Bill
- The prospectus for raising money must be much more comprehensive and exhaustive. The money brought up through a particular prospectus is not be employed to get equity holdings of any other company.
- In case of revision of terms mentioned in the original prospectus, or the objective to utilize the money brought up through a particular prospectus is altered, the shareholders who do not agree to the new or changed terms will be entitled to exit.
- The bill carries comprehensive provision and defines appointment of employee for a Company
- As and when the Company offers to raise its subscribed base of capital through further issue of shares, the issue of such new shares may be presented to the present staff through ESOP, as per the consent of Shareholders (obtained through passing a Special Resolution)
- The Non Banking Financial Companies that are not governed through provisions pertaining to deposit acceptance shall be rules of RBI.
- The only deposits that companies are entitled to accept, are the deposits made by the members of the company only after seeking approval from its shareholders to do so. The acceptance of such deposits is dependent on compliance of a few conditions. The public limited companies are entitled to acknowledge deposits from general public subject to compliance of a few stipulations such as the credit ratings.