Background and summary of Companies Bill 2009

Vishal Thakkar

Background

The Ministry of Corporate Affairs took up a comprehensive revision of the Companies Act, 1956 (the Act) in 2004 keeping in view that not only had the number of companies in India expanded from about 30,000 in 1956 to nearly 7 lakhs, Indian companies were also mobilizing resources at a scale unimaginable even a decade ago, continuously entering into and bringing new activities into the fold of the Indian economy as well as Internationally.

The Bill was introduced in Lok sabha on 3^rd August 2009 to replace The Companies Act, 1956. In the year 1993, 1997 and 2008 three attempts were made to change the existing Companies Act.

Highlights of the Companies Bill, 2009

• Harmonize corporate regulation with other sector regulators
• Ensure shareholder democracy with due rights to minority
• Introduce e-governance in all company processes
• Ensure liability of Board and senior management
• Bring new scheme for penalties and punishment for violations
• Specific framework for Merger and Acquisitions of companies
• Concept of One Person Company introduced.
• Company (except NBFC and Banks) prohibited from accepting   public deposits.
• One-third directors to be independent in all listed companies; for government to prescribe number of such directors
• Key managerial personnel (KMP) to include Managing Director (MD) or Executive Officer (CEO), Chief Financial Officer (CFO) and Company Secretary (CS). [Note: No Qualifications have been prescribed for the post of KMP in the case of CS]
• Make insider trading a criminal offense
• Make consolidation of financial statements of subsidiaries with holding companies mandatory
• Single forum for approval of mergers and acquisitions
• Framework for fair valuation in companies for various purposes
• Administration of Investor Education and Protection Fund through a statutory authority
• Revised framework for regulating insolvency
• Have special courts for offences under the Companies Law
• Create National Company Law Tribunal for matters like Merger and Acquisition, amalgamation, reduction of capital and winding up.

Important Provisions of the Companies Bill, 2009 in Brief

The Companies Bill, 2009, inter-alia, provides for:

(i)                The basic principles for all aspects of internal governance of corporate entities and a framework for their regulation, irrespective of their area of operation, from incorporation to liquidation and winding up, in a single, comprehensive, legal framework administered by the Central Government. In doing so, the Bill also harmonizes the Company law framework with the imperative of specialized sector wise regulation.

(ii)             Articulation of shareholders democracy with protection of the rights of minority stakeholders, responsible self-regulation with disclosures and accountability, substitution of government control over internal corporate processes and decisions by shareholder control. It also provides for shares with differential voting rights to be done away with and valuation of non-cash considerations for allotment of shares through independent valuers.

(iii)           Easy transition of companies operating under the Companies Act, 1956, to the new framework as also from one type of company to another.

(iv)           A new entity in the form of One-Person Company (OPC) while empowering Government to provide a simpler compliance regime for small companies. Retains the concept of Producer Companies, while providing a more stringent regime for not-for– profit companies to check misuse. No restriction proposed on the number of subsidiary companies that a company may have, subject to disclosure in respect of their relationship and transactions/dealings between them.

(v)             Application of the successful e-Governance initiative of the Ministry of Corporate Affairs (MCA-21) to all the processes involved in meeting compliance obligations. Company processes, also to be enabled to be carried out through electronic mode. The proposed e-Governance regime is intended to provide for ease of operation for filing and access to corporate data over the internet to all stakeholders, on round the clock basis.

(vi)           Speedy incorporation process, with detailed declarations/ disclosures about the promoters, directors etc. at the time of incorporation itself. Every company director would be required to acquire a unique Directors identification number.

(vii)        Facilitates joint ventures and relaxes restrictions limiting the number of partners in entities such as partnership firms, banking companies etc. to a maximum 100 with no ceiling as to professions regulated by Special Acts.

(viii)      Duties and liabilities of the directors and for every company to have at least one director resident in India. The Bill also provides for independent directors to be appointed on the Boards of such companies as may be prescribed, along with attributes determining independence. The requirement to appoint an independent director, where applicable, is a minimum of 33% of the total number of directors.

(ix)           Statutory recognition to audit, remuneration and stakeholders grievances committees of the Board and recognizes the Chief Executive Officer (CEO), the Chief Financial Officer (CFO) and the Company Secretary as Key Managerial Personnel (KMP).

(x)              Companies not to be allowed to raise deposits from the public except on the basis of permission available to them through other Special Acts. The Bill recognizes insider trading by company directors/KMPs as an offence with criminal liability.

(xi)           Recognition of both accounting and auditing standards. The role, rights and duties of the auditors defined as to maintain integrity and independence of the audit process. Consolidation of financial statements of subsidiaries with those of holding companies is proposed to be made mandatory.

(xii)         A single forum for approval of mergers and acquisitions, along with concept of deemed approval in certain situations.

(xiii)      A separate framework for enabling fair valuations in companies for various purposes. Appointment of valuers is proposed to be made by audit committees.

(xiv)      Claim of an investor over a dividend or a security not claimed for more than a period of seven years not being extinguished, and Investor Education and Protection Fund (IEPF) to be administered by a statutory Authority.

(xv)         Shareholders Associations/Group of Shareholders to be enabled to take legal action in case of any fraudulent action on the part of company and to take part in investor protection activities and ‘ Class Action Suits’.

(xvi)      A revised framework for regulation of insolvency, including rehabilitation, winding up and liquidation of companies with the process to be completed in a time bound manner. Incorporates international best practices based on the models suggested by the United Nations Commission on International Trade Law (UNCITRAL).

(xvii)    Consolidation of fora for dealing with rehabilitation of companies, their liquidation and winding up in the single forum of National Company Law Tribunal with appeal to National Company Law Appellate Tribunal. The nature of the Rehabilitation and Revival Fund proposed in the Companies (Second Amendment) Act, 2002 to be replaced by Insolvency Fund with voluntary contributions linked to entitlements to draw money in a situation of insolvency.

(xviii) A more effective regime for inspections and investigations of companies while laying down the maximum as well as minimum quantum of penalty for each offence with suitable deterrence for repeat offences. Company is identified as a separate entity for imposition of monetary penalties from the officers in default. In case of fraudulent activities/actions, provisions for recovery and disgorgement have been included.

(xix)       Levy of additional fee in a non-discretionary manner for procedural offences, such as late filing of statutory documents, to be enabled through rules. Defaults of procedural nature to be penalized by levy of monetary penalties by the Registrars of Companies. The appeals against such orders of Registrars of Companies to lie with suitably designated higher authorities.

(xx)         Special Courts to deal with offences under the Bill. Company matters such as mergers and amalgamations, reduction of capital, insolvency including rehabilitation, liquidations and winding up are proposed to be addressed by the National Company Law Tribunal/ National Company Law Appellate Tribunal.

One Person Company

For the first time, the concept of a “one-person company”, or OPC, has been introduced in the Bill, and the intent is apparently to permit entrepreneurship of a single individual to obtain the benefit of a corporate form of organization. For a reason of controlling by individual with limited liability without loosing the 100% ownership.

According to Sec.2(1)(zzk) of the Companies Bill, 2009 “ One Person Company ” means a company which has only one person as a member. It is a one shareholder corporate entity, where legal and financial liability is limited to the company only.

Some important features of the Bill in this regard are:

• One Person Company may be registered as a private Company with one member and also have at least one director. (Clause 132(1)(a) of the Companies Bill, 2009).
• The memorandum of a One Person Company has to prescribe the name of the person who will be member in the event of the death, disability or otherwise, of the one member of the company. (Clause 3(1)(c ) of the Companies Bill, 2009)
• It is also the duty of the member of a One Person company to intimate the Registrar, the change of name of the person mentioned in the memorandum and such change will not be deemed to be an alteration of the memorandum. (second proviso to clause 3(1)]
• Letters “ OPC Limited ” should be suffixed with the name of the company to distinguish it from other companies. (clause 5(1)(a)])
• Annual return of a One Person Company should be signed by the Company Secretary, or where there is no Company Secretary, by one director of the company. (proviso to Clause 82 (1) ))
• Provision of Annual General Meeting is not applicable for a One Person Company. (Clause 85(1))
• Where One person Company enters into a contract with the sole member of the company who is also a director, the company should, unless the contract is in writing, ensure that the terms of the contract or offer are contained in the memorandum or are recorded in the minutes of the first Board meeting held after entering into the contract and every such contract should be informed to the Registrar. (Clause 171)

Small Company

The concept of Small Company has also been introduced in the Companies Bill, 2009.

According to (Clause 2(1)(zzzg) of the Companies Bill, 2009, “ 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:

Provided that nothing in this clause shall apply to-

(A) A holding company or a subsidiary company;

(B) A company registered under Section 4; or

(C) A company or body corporate governed by any special Act.

Types of companies

The Companies Act, 1956 broadly classifies the companies into private and public companies and provides for regulatory environment on the basis of such classification. However, with the growth of the economy and increase in the complexity of business operation, the forms of corporate organizations keep on changing. Classification of Companies can therefore take many shapes and a multiple classification of companies can be made.

i)        On the basis of size:

1. Small companies
2. Other companies

ii)     On the basis of number of members:

1. One person company
2. Private companies
3. Public companies

iii)   On the basis of control:

1. Holding companies
2. Subsidiary companies
3. Associate Company

iv)  On the basis of liability

1. Limited

I)     by Shares

II)    by Guarantee (with or without share capital)

2. Unlimited

v)  On the basis of manner of access to capital

1. Listed companies
2. Un-listed companies

vi)              On the basis of nature of business

1. Dormant Company (Clause 414 of the Companies Bill 2009)
2. Government Companies (Chapter XXII of the Companies Bill 2009)
3. Companies incorporated outside India (Chapter XXI of the Companies Bill 2009)
4. Companies with charitable objects etc. (Clause 4 of the Companies Bill 2009)
5. Nidhi Companies (Chapter XXV of the Companies Bill 2009)

Minimum capital requirements

The provisions relating to minimum capital requirements for public and private companies have been dispensed with.

Commencement of Business

The provisions with regard to Certificate of Commencement of business have been dispensed with under the Companies Bill, 2009. Only declaration and verification is required by the Public Company under the Companies Bill, 2009.

Incorporation of company

• The number of documents to be submitted for registration has been increased under the Companies Bill, 2009 compared to the lesser number of documents to be submitted under the Companies Act, 1956.
• Clause 7(1) of Companies Bill, 2009 lists the documents and information for registration
• Documents to be filed at the time of incorporation should also contain name of first directors, their Director Identification Number (DIN), 29 address etc, along with their consent and particulars of interest. (Clause 7(f) of Companies Bill, 2009)
• The provision with regard to printing of Memorandum under Section 15 of the Companies Act, 1956 has been dispensed with under the Companies Bill, 2009.
• The registered office of a company should not be shifted outside city limits without a special resolution. No other permission is required in this regard. (Clause 11(5) of Companies Bill, 2009)
• If the registered office of the company is to be shifted outside the State, then approval of the Central Government will be required apart from the special resolution. (Clause 12(4) of Companies Bill, 2009)
• A company can re-register itself after effecting requisite changes in the Memorandum and Articles of Association. (Clause 17(1) of Companies Bill, 2009)

Share Capital and Debentures

• Issuing shares with differential voting rights is prohibited under the Companies Bill, 2009.

• A suit can be filed or any action can be taken by any person, group of persons or association of persons who have been affected by misleading statement or inclusion or omission of any matter in the prospectus. (Clause 32 of Companies Bill, 2009).

Acceptance of Deposits by companies

• Acceptance of deposits from public has been prohibited. Deposits can be accepted only from members subject to compliance of certain conditions. (Clause 66 (1) of Companies Bill, 2009)
• NBFC and Banking companies only are allowed to accept deposits from the public.[proviso to clause 66(1)] 30
• Deposits accepted before the Companies Bill, 2009 should be repaid within a period of one year. (Clause 67(1)(b) of Companies Bill, 2009)

Registration of Charges

Every company creating a charge within or outside India on its property or assets or any of its undertakings should register the particulars of the charge with the Registrar within thirty days of its creation. If the company fails to register the charge within the prescribed period, then the person in whose favour the charge is created can apply to the Registrar for registration of the charge along with the instrument created for the Charge. (Clause 70 of Companies Bill, 2009)

Management and Administration

• The register and index of beneficial owners maintained by a depository under Section 11 of the Depositories Act, 1996, will be deemed to be the corresponding register and index for the purposes of the Companies Bill. (Clause 78(3) of Companies Bill, 2009)
• Annual return prepared by the Company should form part of the Board ’ s report. (Clause 82(2) of Companies Bill, 2009)
• Annual General Meeting should not be held on a National Holiday. (Clause 85(2) of Companies Bill, 2009). In the Companies Act, 1956 it is mentioned as Public Holiday.
• If the explanatory statement to the general meeting does not disclose interest of director or manager or managerial personnel, he will be liable to compensate to company to the extent of benefit received by him, without prejudice to any other action that is taken against him under the Act. (Clause 91(4) of Companies Bill, 2009)
• In case of adjournment of meeting or change of day, time or place of meeting, the company should give not less than three day ’ s notice to the31 members either individually or by a press announcement. (Proviso to Clause 92 of Companies Bill, 2009)
• Voting by members through electronic means is permitted under Clause 97 of the Companies Bill, 2009.
• A company can transact the items of business notified by the Central Government by means of postal ballot. It can also transact any item of business other than ordinary business and any business in respect of which directors or auditors have a right to be heard at any meeting. This can be done by means of postal ballot instead of transacting such business at a general meeting. (Clause 99 (1) (b) of Companies Bill, 2009)
• Every listed public company should file a report on each annual general meeting with the Registrar of Companies within 30 days of the conclusion of the annual general meeting. (Clause 109 (2) of Companies Bill, 2009)

Declaration and payment of dividend

Unpaid dividend can be claimed any time and the time limit of seven years will not apply. ((Clause 112(9) of Companies Bill, 2009)

Audit and Auditors

Appointment of Auditors Clause 123

• Corresponding Section in Companies Act,1956- Sec 224- Appointment and remuneration of auditors; Sec 619- Application of Sec 224 to 233 to Government companies
• The appointed Auditor has to give a written consent and a certificate that his appointment will be in accordance with the conditions as may be prescribed – [Proviso to clause 123(1)]
• The Company must notify ROC for every appointment/ reappointment within 15 days [ Second Proviso to clause 123(1)]
• In the case of a Government company or any other company owned and controlled, directly or indirectly, by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, the Comptroller and Auditor-General of India shall, in respect of a financial year, appoint an auditor duly qualified to be appointed as an auditor of companies under this Act, within a period of one hundred and eighty days from the commencement of the financial year, who shall hold office till the adoption of accounts of that financial year.[ Clause 123(2)]
• The first auditor shall be appointed by the Board of Directors within thirty days of registration of the company. In the case of a Government company, the first auditor shall be appointed by the Comptroller and Auditor-General of India within thirty days of registration of the company [ Clause 123(3) and (4)]
• Any casual vacancy in the office of an auditor shall,—

( i ) in the case of a company other than a company whose accounts are subject to audit by an auditor appointed by the Comptroller and Auditor- General of India, be filled by the Board of Directors, but if such casual vacancy is as a result of the resignation of an auditor, such appointment shall also be approved by the company at a general meeting convened within three months of the approval of the Board;

( ii ) in case of a company whose accounts are subject to audit by an auditor appointed by the Comptroller and Auditor-General of India, be filled within thirty days, failing which by the Board.[ Clause 123(5)] A retiring auditor may be re-appointed subject to certain conditions. [Clause 123(6)]

If at any annual general meeting, no auditor is appointed or re-appointed, the existing auditor shall continue to be the auditor of the company [ Clause 123(7)]

If the company constitutes an Audit Committee, all appointments, including the filling of a casual vacancy of an auditor under this section shall be made after taking into account the recommendations of such committee and the auditor so appointed may be removed from his office before the expiry of his term only by a special resolution of the company.[ Clause 123(8) and (9)].

The Tribunal, if it is satisfied that the auditor of a company has acted in a fraudulent manner or abetted or colluded in any fraud by, or in relation to, the company or its directors or officers, it may, by order, direct the company tohange its auditors[ Clause 123(10)]

Eligibility, Qualifications Disqualifications Of Auditors and Remuneration of Auditors are covered under Clause 124 and 125 which are same as  Corresponding Section in existing Companies Act,1956 – Sec 224(IB).

Auditor Not To Render Certain Services – Clause 127

New clause

The auditor of a company should provide only the services that have been approved by the Board of Directors or the Audit committee and should not include any of the following services :-

• accounting and book keeping services;

• internal audit;

• design and implementation of any financial information  system;

• actuarial services;

• investment advisory services;

• investment banking services;

• rendering of outsourced financial services; and

• Management services.

Appointment and Qualifications of Directors

• Maximum number of directors in a company should be twelve, excluding the directors nominated by the lending institutions. (Clause 132(b) of Companies Bill, 2009)
• Atleast one director of the company should be a person ordinarily resident in India. “ Ordinarily resident in India ” means a person who stays in India for a total period of not less than one hundred and eighty-two days in a calendar year. (Clause 132(2) of Companies Bill, 2009).
• A listed public company having the prescribed paid up share capital should have atleast one-third of the total number of directors as independent directors. (Clause 132(3) of Companies Bill, 2009).
• Every person intending to be a director of a company should obtain a Director Identification Number (DIN) from the Central Government. (Clause 134, 135, 136 of Companies Bill, 2009).
• No person should be a director of more than fifteen companies. (Clause 146 of Companies Bill, 2009) Under the Companies Act, 1956, the limit of directorships is twenty.
• The duties of the director have been enumerated in Clause 147 of the Companies Bill, 2009.
• The office of the director will become vacant in case he absents himself from all the meetings of the Board of Directors held during a period of twelve months with or without seeking leave of absence of the Board. (Clause 148(1)(b) of Companies Bill, 2009) Under the Companies Act, 1956, it is prescribed as three meetings or meetings held within a period of three months.
• The director ’ s resignation becomes effective when his resignation is received or the date specified in his resignation letter, whichever is later. Further the director can send the details of his resignation to the Registrar of Companies. (Clause 149 of Companies Bill, 2009)

Meetings of Board

• The Bill allows company directors to participate in the board meeting through video conferencing or any other electronic means. (Clause 154(2) of Companies Bill, 2009)
• Atleast seven days prior notice should be given to the directors for a Board Meeting. But a Board meeting can be called at a shorter notice to transact urgent business if at least one independent director is present at the meeting. (Clause 154(3) of Companies Bill, 2009)
• Detailed provisions with regard to Composition of Audit Committee, Remuneration Committee and Stakeholders Grievance Committee have been mentioned in Clause 158 of Companies Bill, 2009.
• Stakeholders ’ grievance committee should be formed to resolve grievances of shareholder, debenture holders and other security holders, if the combined membership is more than 1,000. (Clause 158(12) of Companies Bill, 2009)
• Restrictions have been imposed on non-cash transactions involving directors. (Clause 170 of Companies Bill, 2009)
• Directors and key managerial personnel of a company are prohibited on forward dealings in securities of the company. (Clause 172 of Companies Bill, 2009)
• Directors and key managerial personnel of a company are prohibited from dealing in securities of the company or counseling, procuring or communicating any non-public price-sensitive information to any person. (Clause 173 of Companies Bill, 2009)

Appointment and remuneration of managerial personnel

• Appointment of key managerial personnel who is above the age of seventy years should be made by passing a special resolution. (Clause 174(4)(a) of Companies Bill, 2009)
• A managing director, whole-time director or manager should be appointed by the Board of Directors at a meeting with the consent of all the directors present at such meeting. The same is subject to approval by a special resolution at the next general meeting of the company. (Clause 174(5) of Companies Bill, 2009)
• Whole-time key managerial personnel of a company can be appointed by a Board resolution. Such Whole-time key managerial personnel should not hold office in more than one company at the same time. (Clause 178 of44 Companies Bill, 2009) “ Key managerial personnel ” in relation to a company, means –
  • The Managing Director, the Chief Executive officer or the Manager or where there is not managing director or manager, a whole time director or directors;
  • The Company Secretary; and
  • The Chief Financial officer. (Clause 2(1)(zza))

Inspection, Inquiry and Investigation

• The Tribunal can freeze the assets for a period not exceeding three years, on an inquiry and investigation of a company, if transfer or disposal of funds, properties or assets is likely to take place which is pre-judicial to the interest of the company. (Clause 191 of Companies Bill, 2009)
• No suit or proceeding will lie in respect of any action initiated by the Central Government for making an investigation or for appointment of an inspector and no proceedings of an inspector can be called in question or stayed by any Court, Tribunal or other authority till the submission of final report by the inspector. (Clause 194 of Companies Bill, 2009)
• The provisions of inspection or investigation as applicable to Indian companies will be applicable to foreign companies also. (Clause 199 of Companies Bill, 2009)

Compromises, Arrangements And Amalgamations

• Merger and amalgamation of companies will be handled by the National Law Tribunal. (Clause 203 of Companies Bill, 2009) Presently this is handled by the respective High Courts.
• Provisions have been made for merger or amalgamation between two small companies or between a holding company and its wholly-owned subsidiary company. (Clause 204 of Companies Bill, 2009) 45
• Provision has been made for merger or amalgamation between registered Indian companies and companies incorporated in the jurisdiction of countries notified by the Central Government. (Clause 205 of Companies Bill, 2009)
• Every offer of schemes or contract involving the transfer of shares in the transferor company to the transferee company should be presented to the Registrar for registration. (Clause 209 of Companies Bill, 2009)
• Liability in respect of offences committed by the officers in default, of the transferor company prior to its merger, amalgamation or acquisition will continue after such acquisition, merger or amalgamation. (Clause 211 of Companies Bill, 2009)

Prevention Of Oppression And Mismanagement

Any one or more members or class of members or one or more creditors or any class of creditors may, if they are of the opinion that the management or control of the affairs of the company are being conducted in a manner prejudicial to the interests of the company or its members or creditors, may file an application before the Tribunal to restrain the company from oppression and mismanagement. Order passed by the Tribunal will be binding on the company and all its members and creditors. (Clause 216 of Companies Bill, 2009)

Registered Valuers

• Procedure has been prescribed for registration of Valuers. (Clause 219 of Companies Bill, 2009)
• If 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 should be valued by a person registered as a valuer and appointed by the Audit Committee or in its absence by the Board of Directors of that company. (Clause 218 of Companies Bill, 2009) 46

Revival and Rehabilitation of Sick Companies

• Provision has been made for determination of sickness of a company. (Clause 229 of Companies Bill, 2009)
• Interim administrator can be appointed by the Tribunal for management of the company. (Clause 231 of Companies Bill, 2009)
• Appointment of Committee of Creditors. (Clause 232 of Companies Bill, 2009)
• Powers and duties of company administrator have been enumerated in Clause 235 of Companies Bill, 2009.
• Scheme of revival and rehabilitation should be prepared by the company administrator. (Clause 236 of Companies Bill, 2009)
• If the Scheme is not approved by the creditors of the company, then the Tribunal can order winding up of the company upon submission of report by the company administrator. (Clause 240 of Companies Bill, 2009)

Winding up

• Company Liquidator will be a person appointed from a panel of professional firms or bodies corporate or may be a body corporate consisting of such professionals and having at least ten year ’ s experience in company matters. (Clause 232 of Companies Bill, 2009) It does not include a whole-time or a part-time officer appointed by the Central Government as the liquidator.
• The Tribunal is empowered to recover any loss or damage from the liquidator for loss or damage caused to the company due to fraud or misfeasance or failure to exercise due care and diligence in the performance of his powers and functions. (Clause 251(3) of Companies Bill, 2009)
• The jurisdiction of the Tribunal with regard to winding up of a company has been given under Clause 255 of Companies Bill, 2009.
• Submission of report by Company Liquidator to the Tribunal. (Clause 256 of Companies Bill, 2009)
• The promoters, directors, officers and employees, past and present, of the company should extend full co-operation to the Company Liquidator. Failure to do so will result in imprisonment/fine. (Clause 259 of Companies Bill, 2009)
• Provision has been made for obligations of directors and managers in case of limited company, whose liability is unlimited. (Clause 261 of Companies Bill, 2009)
• The Company liquidator should submit quarterly reports to the Tribunal with regard to the progress of the winding up of the company. (Clause 263 of Companies Bill, 2009)
• Apart from company liquidators, provision has been made for appointment of Official Liquidators. (Clause 334 of Companies Bill, 2009)
• Winding up of company having assets of book value not exceeding one crore rupees may be done through summary procedure. (Clause 336 of Companies Bill, 2009)

Companies incorporated outside India

The Central Government may make rules for the offer of Indian Depository Receipts, requirement of disclosures in prospectus or letter of offer issued in connection with Indian Depository Receipts, the manner in which the Indian Depository Receipts should be dealt with in a depository mode and by custodian and underwriters and the manner of sale, transfer or transmission of Indian Depository Receipts, by a company incorporated or to be incorporated outside India, and whether or not it has established a place of business in India. (Clause 352 of Companies Bill, 2009)

Other provisions

• Provision has been made for expeditious disposal by the National Company Law Tribunal and Appellate Tribunal. (Clause 383 of Companies Bill, 2009)
• Provision has been made for establishment of Special Courts for speedy trial of offences. (Clause 396, 397 of Companies Bill, 2009)
• Compensation will be provided for accusation without reasonable cause before the Special Court or the Court of Session. (Clause 405 of Companies Bill, 2009)
• New concept of dormant company has been introduced in the Companies Bill. A dormant company is a company that is formed and registered under the Companies Act for a future project or to hold an asset or intellectual property and has no significant accounting transaction. (Clause 414 of Companies Bill, 2009)
• Association of persons or partnership consisting of more than 100 persons has been prohibited. (Clause 422 of Companies Bill, 2009)
• The provisions of Part IX A of the Companies Act, 1956 will be applicable mutatis mutandis to a producer company in a manner as if the Companies Act, 1956 has not been repealed.
• Till the formation of National Company Law Tribunal and Appellate Tribunal, the provisions of Companies Act, 1956 with regard to Company Law Board will continue to apply.

Authored by: Vishal M. Thakkar