THE COMPANIES BILL,2011

GENERAL: An attempt has been made to

bring out the most important points into sharp relief through the new Companies Bill, 2011. The various mechanics involved like formation, management & administration, accounts, audits etc within the limits of a company will be analyzed and governed on the basis of the sections inscribed within the very bill.

INTRODUCTION; This is a new bill for the laws related to various company affairs of our nation. This new bill is to be enacted by the parliament in its 62nd year of republic after a notification of such is made by the Central Government.

A CLOSE STUDY OF THE FLEXIBILITIES MADE WITHIN THE PRESCRIBED BILL.

The Companies Act, 1956

1) Section 2 of the Act dealt with definitions whereby 50 terms were being defined including terms like Company law boards, financial year, public holiday, existing company etc .

The Companies Bill, 2011

1) The new Bill yet to be produced covers 94 terms and certain terms like public holiday , existing company etc are removed and a modest attempt has been taken in improvising the term’s list by inducing terms like associate company , chartered accountant , auditing standards , account standards and so on.

FORMATION OF COMPANY

2) Section 12 of the Act dealt with Formation of a company and was confined to seven or more persons for public companies & any 2 or more persons for private companies . No other criterions were included.

2) The new bill however highlights a new criterion whereby a private company may be formed by a single person that is to say an one person company.

FORM OF MEMORANDUM

3) Section 14 of the Act prescribed the use of forms B , C, D ,& E of schedule 1 as applicable for the memorandum.

3) The new bill however included the application of form A along with the forms B , C , D & E of schedule 1 for the similar purpose.

ALTERATION OF MEMORANDUM OR ARTICLES

4) Sections 18 & 19 of the Act dealt with alteration of memorandum or articles. Any alterations made shall be duly registered within 3 months from the date of alteration made & failing such would make the changes inoperative and void.

4) The amended Act of 2006 however reduced the time period to 30 days and a fine of Rs 500/day until the default continued but clause 15 of the new bill further reduced it to 15 days and a fine of Rs1000/day but not exceeding Rs100000/-.

PROSPECTUS AND ALLOTMENT

Part 3 of the Companies Act,1956 deals in prospectus & other related matters of allotment.It deals with the fundamentals of prospectus & the various other strategies relating to issue of shares & debentures.

The proposed bill of 2011 however emphasized mainly on issues related to allotment of securities.Clauses 23,30,25,28,32,33,37, 39,41 of chapter 3(part-1) of the bill deals with securities.Clause 32 of the bill highlights about the concept of Red Herring prospectus.& part 2 of chapter 3 initiates about the concept of private placement.

SHARE CAPITAL & DEBENTURES

Part 4 of the Act described about share capitals & debentures. Natures, kinds & other miscellaneous provisions regarding the same.

The proposed bill of 2011 modified the heading under chapter 4,Clauses 48,50,52,56,63,72 are the modified inserted versions.

REGISTRATION OF CHARGES

Part 5 of the Act of 1956 deals with registration of charges.