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C OMPANIES ACT,2013 CA. Arun Saxena Saxena & Saxena Chartered Accountants 811, Ansal Bhawan 16, Kasturba Gandhi Marg, New Delhi – 110 001. Mob.: 9810037364.

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Presentation on theme: "C OMPANIES ACT,2013 CA. Arun Saxena Saxena & Saxena Chartered Accountants 811, Ansal Bhawan 16, Kasturba Gandhi Marg, New Delhi – 110 001. Mob.: 9810037364."— Presentation transcript:

1 C OMPANIES ACT,2013 CA. Arun Saxena Saxena & Saxena Chartered Accountants 811, Ansal Bhawan 16, Kasturba Gandhi Marg, New Delhi – Mob.:

2 INCORPORATION, MEMORANDUM AND ARTICLES OF ASSOCIATION

3 Incorporation, Management & Administration I.MEMORANDUM OF ASSOCIATION {Section 4(1)}  New Companies Act, 2013 does not require the object clause in the Memorandum to be classified into:-  Main objects of the company  Objects incidental or ancillary to the attainment of main object & other object.  Only objects for which company is proposed to be incorporated and any matter considered necessary in furtherance thereof be mentioned in MOA. 3 SAXENA & SAXENA

4 Incorporation, Management & Administration II.RESERVATION OF NAME FOR PROPOSED COMPANY {Section 4(4) & 4(5)} 1. A Promoter may, on application, get reserve the name of the proposed company. 2. ROC on its satisfaction reserve the name for the period of 60 days from the date of application. 3. Similarly, existing company may apply for the reservation of name for the change of its existing name. ROC may, after satisfaction, reserve the name for 60 days. 4 SAXENA & SAXENA

5 Incorporation, Management & Administration 4. In case after reservation of the name, it is found that name was got reserved by furnishing the incorrect information then: a) If company has not been incorporated, the reserved name will be cancelled and person making application shall be liable to the penalty not exceeding Rs.1.00 lac. b) If company has already been incorporated, ROC may, after giving the opportunity being heard, direct the company to change the name within three months; or c) Make petition for winding up of company. 5 SAXENA & SAXENA

6 Incorporation, Management & Administration III.SPEEDY INCORPORATION OF COMPANY (Section 7) The new companies Act, 2013 provide for the speedy incorporation process, with detailed declarations and disclosures about the promoter, directors etc. at the time of incorporation. Where it is found that the company got incorporated by :- 6 SAXENA & SAXENA

7 Incorporation, Management & Administration 1. Furnishing false or incorrect information or; 2. Representation or suppressing any material fact or the company is incorporated by fraudulent action, the Tribunal may, on an application made to it, on being satisfied. a) Pass such order as it may think fit for the regulation of the management of the company including changes, if any in public interest; or b) Direct that liability of the members shall be unlimited; or 7 SAXENA & SAXENA

8 Incorporation, Management & Administration c) Direct removal of the name of the company from the register; or d) Pass an order for the winding up of the company; or e) Pass such orders as it may deem fit. However, reasonable opportunity will be given to the company before passing any one of above orders. 8 SAXENA & SAXENA

9 Incorporation, Management & Administration IV. FORMATION OF COMPANIES WITH CHARITABLE OBJECTS (Section 8)  The scope of this section extends to a person or association of persons since new kind of the company OPC is introduced in the new Companies Act,  Firm can be a member of company under this section. 9 SAXENA & SAXENA

10 Incorporation, Management & Administration IV. FORMATION OF COMPANIES WITH CHARITABLE OBJECTS (Section8) In the allowable objects following objects have been included in addition to the existing objects a) sports, b) education, c) research, d) social welfare, e) environment protection. 10 SAXENA & SAXENA

11 Incorporation, Management & Administration Central Government, while revoking license, may order (in the interest of the public) to wound up the company or to amalgamate with other companies having some objects on the terms and conditions as may be specified. 11 SAXENA & SAXENA

12 Incorporation, Management & Administration (Only Selected Clauses) B. COMMENCEMENT OF BUSINESS (section11) Section 11 provides that the company having share capital shall not commence any business or exercise any borrowing powers unless: a) A declaration is filed by director with the Registrar that every subscriber to the Memorandum and has paid the value of the share agreed to be taken by him and the paid up capital of the company is not less than Rs.5.00 lacs or Rs.1.00 lac as the case may be as on the date of declaration; b) The company has filed with the Registrar a verification of its registered office in the manner as may be prescribed 12 SAXENA & SAXENA

13 COMMENCEMENT OF BUSINESS (Section11) c) In case of default in compliance company shall be liable to a penalty which may extend to Rs.25,000 and every officer in default shall be punishable with fine upto Rs.1000/- per day during which default continues. d) ROC is empowered to initiate action for the removal of name of the company from register, if such declaration has not been filed with the Registrar within 180 days from the date of incorporation and e) This section applicable to all kind of companies having share capital. 13 SAXENA & SAXENA

14 Incorporation, Management & Administration VI. RESTRICTIONS ON ALTERATION OF OBJECT CLAUSE (Section 13)  As per Companies Act, 1956 object clause can be altered by passing special resolution and filing prescribed Form-23 with Registrar of Companies and no other approval is required.  New Companies Act, 2013 provides in Section 13 where company has raised the money from public through prospectus and still has unutilized amount out of the money so raised, such company 14 SAXENA & SAXENA

15 Incorporation, Management & Administration  shall not change its object unless : a) Special Resolution is passed b) Details, as may be prescribed, shall also be published in news paper of English and of vernacular language in the city where registered office is situated. c) Also, details will be placed on the website of the company clearly mentioning the justification of such alteration.  The dissenting shareholders shall be given an opportunity to exit by the promoters and shareholders having control in accordance with the regulations specified by SEBI. 15 SAXENA & SAXENA

16 Incorporation, Management & Administration VII. Other provisions for incorporation. a) Provision for entrenchment in articles. b) Correspondence address till the registered office is established. c) The registered office shall be established within 15 days from its incorporation. d) Affidavit of each subscriber is required. e) Company has to maintain original record or document till its winding up. f) CIN no. is mandatory to be printed on the letter head, bills and on correspondence material. 16 SAXENA & SAXENA

17 OTHER PROVISIONS Prospectus:- a) No variation in terms of contracts referred in prospectus/ objects without the approval of shareholders by Special Resolution. (Section 27). (Dissenting shareholders to be given exit route) b) No use of fund of public issue for the purchase or buying trading or otherwise dealing in equity shares of any other listed company. (Section 27) c) A company making any offer or invitation of securities under private placement has to allot the securities within 60 days of receipt of application money (Section 42(6)) 17 SAXENA & SAXENA

18 OTHER PROVISIONS PENALTY FOR MIS-LEADING INFORMATION IN PROSPECTUS (Section 34) Where the prospectus issued, circulated or distributed includes any statement which is untrue or mis-leading and Where any inclusion or omission of any matter is likely to mislead, every person, who authorises the issue of such prospectus, shall be liable under Section SAXENA & SAXENA

19 OTHER PROVISIONS CIVIL LIABILITY FOR MIS-STATEMENTS IN PROSPECTUS (PERSONAL LIABILITIES IN CASE OF MIS-LEADING INFORMATION) (Section 35) Where the person has subscribed for security of a company acting on any statement included in any manner in the prospectus which is mis-leading and such person has sustained any loss or damage. Company and or any person who is director, authorize himself to be named in the prospectus as the Director, as the Promoter, as an expert, to be liable for compensation to every such person who sustain such loss. However, no person shall be liable if he satisfied that he has withdrawn his consent before the issue of prospects and prospects is issued without his consent. 19 SAXENA & SAXENA

20 OTHER PROVISIONS ACTION TO BE TAKEN BY AFFECTED PERSONS (section 37) Suit can be filed or any other action may be taken by affected person by misleading prospectus for any untrue and misleading statement, inclusion and non-inclusion of which is likely to mislead any person. 20 SAXENA & SAXENA

21 CLASS ACTION SUIT (Section 245) Such number of member(s), depositor(s) or any class of them, if they are of the opinion that the management or conduct of company are being conducted in the manner pre-judicial in the interest of the company they can file the application before tribunal for following orders:- 1. To restrain company from any act which ultra wires the articles and memorandum of Assocition. SAXENA & SAXENA 21

22 CLASS ACTION SUIT (Section 245) 2. To restrain company for committing breach of any provision of Memorandum and Articles of Association. 3. To declare resolution for alteration of Memorandum and Articles of Association as void if the resolution is passed by supression of fact or obtained by mis- statement to the members or depositor. 4. To restrain company from taking action contrary to any resolution passed by members. 5. To claim damages or compensation against company or its directors or auditor or from any expert or advisor. SAXENA & SAXENA 22

23 ELIGIBILITY FOR CLASS ACTION SUIT (Section 245) A) Company having Share Capital i) Not less than 100 members OR ii) Not less than 10% of total number as may be prescribed B) Company not having Share Capital i) Not less than 1/5 of total number of members C) In case of Depositors i) Not less than 100 depositors ii) Not less than 10% of total number as may be prescribed 23 SAXENA & SAXENA

24 SPECIAL COURTS (Section 435) The Central Government may for the purpose of providing speedy trial of offences under this Act by notification, establish or designate as many as special courts as may be necessary. The Special Court shall consist of single judge appointed by Central Government with concurrence of Chief Justice of High Court within the jurisdiction the judge be appointed as working. Before the appointment the person appointed as judge should be holding office of session judge or additional session judge. SAXENA & SAXENA 24

25 Offences Trialable by Special Courts  All offences under this Act.  Where person accused of, or suspected of commission of an offence under this Act is forwarded to Magistrate under this section or under section 2A of code of criminal procedure 1973, such court may  Authorise detention of such person in such custody for not exceeding 15 days (Judicial Magistrate).  For 7 days, if Magistrate is Executive Magistrate. SAXENA & SAXENA 25

26 Offences Trialable by Special Courts  In addition to the offence under this act:  Special Court may also try offence other than under this Act.  With which accused may be charged under CRFC, 1973 for such trial.  May try in a summary for an offence which is punishable with imprisonment upto 3 years. Provided no sentence of imprisonment is passed for more than 1 year.  All appeal against the order of Special Court shall be before High Court.  Provisions of CRPC shall apply to proceedings before Special Court. SAXENA & SAXENA 26

27 THANK YOU 27 SAXENA & SAXENA


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