1. The Companies Bill 2009, contains 426 sections as against the existing 658 sections. The reduction of 232 sections in the Bill has been made possible by the power to make more than 200 Rules. IN UK the Companies Act has 1,300 sections and 16 schedules. The obsession with cutting down on the size at the cost of substance in unfortunate.
2. Clause 2(zq) introduces uniform financial year for all the companies with power to the Company Law Tribunal to allow a different financial year. To impose a uniform financial year irrespective of the nature of business , in this globalised era, is not desirable.
3. Under sub-clause(zzzk) ‘total voting power’ means the total number of votes cast at a meeting of the company if all the members thereof cast their votes either personally or by means of postal ballots. When a member votes personally he votes only by show of hands and has only one vote irrespective of the shares held by him and that is why S 2(48) of the Companies Act,1956 mentions voting on a poll which gives as many votes as the number of shares a member hold. This discrepancy must be removed
4. Sub-clause (zzz) says that says that “relative” with reference to any individual means the spouse, brother, sister and all lineal ascendants and descendants of such individual related to him either by marriage or adoption. Strangely relationship by birth has been left out..
5. In clause 52 and 53 the important provision in S.111A (3) that the rectification of members’s register is only possible when there is a violation of statute law has been omitted.
6. Under clause 66, companies can get deposit only from their share holders. This provision can be easily abused by giving only one share each to members of public and then getting deposits from them.
7. Equity shares with different voting rights have been abolished.
8. Clause 229 says that on demand by the secured creditors of a company representing 50% or more of its outstanding amount of debt, if the company fails to pay the debt within 30 days, such company can be declared as a sick company. This is a dangerous provisions if it is not provided that such a demand can by made only on due dates.
9. S.383 A of the present act makes it compulsory to have company secretary under certain circumstances. No similar provision is in the bill.
10. S.349 which deals with the basis for calculation of Net Profit for payment of managerial remuneration has been omitted. In the absence of such condition, what happened in USA may also happen in India regarding managerial remuneration. Regulation of Top managerial remuneration through Rules under the Bill is not desirable.
11. Clause 2(zz) defines ‘Issued Capital’ as the capital subscribed by the public. Clause 37 defines equity share capital and preference share capital as being part of issued share capital, which means equity share capital and preference share capital can be subscribed only by the public.
12. In clause 2(zzl) paid up share capital can only be shares issued against cash. This leads to a question as to what will happen to shares issued against consideration other than cash , bonus issue, shares issued during mergers etc.
13. Clause 103 contemplates about voting by postal ballot when it comes to an ordinary resolution; but in case of special resolution voting by ballot has been omitted.
14. Clause 118 read with clause 126 has introduced auditing standard, which is welcome.