Highlights of Companies Bill ( Passed in Lok Sabha on 18th Dec 2012)

Chapter I- Preliminary

A substantial part of the law will be in the form of Rules, to be prescribed separately in due course. The Government of India empowered to notify different provisions of the Act at different points of time. The Bill prescribes 33 new definitions. Major new definitions introduced include: Associate Company Small Company Employee Stock Option Promoter Related Party Turnover Chief Executive Officer Chief Financial Officer Global Depository Receipt Uniform financial year (April-March) for all companies. Exception to be made with the approval of the National Company Law Tribunal for companies complying with certain specified conditions. No such restrictions in the Companies Act, 1956. A private company can have a maximum of 200 members, up from 50 in the Companies Act, 1956. The scope of ‘Officer in Default’ broadened to include Share Transfer Agents, Registrars and Merchant Bankers to the issue or transfer of shares. Chief Financial Officer also included. Directors who are aware of the default by way of participation in Board Meeting or receiving the minutes without objecting to the same will also be included in this category even if the Company has a Managing Director /Whole Time Director / other Key Managerial Personnel..

Chapter II- Incorporation of Company and Matters Incidental Thereto

The concept of One Person Company introduced. It can be formed as a private limited company. Objects clause in the Memorandum of Association of a company not required to be divided into main, ancillary and other objects. Only the objects for which the company is incorporated along with matters considered necessary for its furtherance to be mentioned. The company cannot provide for other object clause. The Articles of Association of the company may contain provisions for entrenchment whereby specified provisions of the Articles can be altered only if conditions or procedures that are more restrictive than those applicable in case of special resolution have been met with. To commence business, a public/private company needs to file the following with the Registrar of Companies: A declaration by a director in prescribed form stating that the subscribers to the memorandum have paid the value of shares agreed to be taken by them, and A confirmation that the company has filed a verification of its registered office with the Registrar. A company that has raised money from public through prospectus and has not fully utilised the money so raised, shall not change the objects for which money was raised unless it has passed a special resolution, widely publicised the proposal by way of an advertisement and provided an exit opportunity to dissenting shareholders. There is no such requirement under the Companies Act, 1956.

Chapter III- Prospectus and Allotment of Securities The Bill governs the issue of all types of securities, as opposed to only shares and debentures in the Companies Act, 1956. The Bill clearly provides the manner in which securities can be issued by both public and private company . A public company can issue securities through a public offer or a private placement or by way of bonus or rights issue. A private company may issue securities on rights basis or by way of bonus issue or by way of private placement in accordance with part II of this Chapter related to Private Placement. The power of SEBI to administer the sections of the Companies Act related to a listed company and a company intending to get itself listed, extended to include the provisions related to share capital, which is not provided in the Companies Act, 1956. The prospectus has to be more detailed. A Company shall not vary the terms of contract referred to in Prospectus or objects for which it is issued without the approval of shareholders by way of special resolution and providing exit opportunity to the dissenting shareholders. Moreover it shall not use the amount raised by way of issue of Prospectus for buying, trading or otherwise dealing in Equity shares of any other listed Company. ; The said requirement is not there under the Companies Act 1956. Terms and conditions for offer sale by existing shareholders prescribed. SEBI to prescribe class/classes of companies that can file shelf prospectus with the Registrar. The Companies Act, 1956 allows only public financial institutions, public sector banks and scheduled banks to issue shelf prospectus. Any person (including group or association) affected by any misleading statement or inclusion or omission of any matter in the prospectus can file any suit or take any action under clause 34 (Criminal liability for misstatement in prospectus), clause 35 (Civil liability for misstatement in prospectus) and clause 36 (Punishment for fraudulently inducing persons to invest money). Action to be taken against any person making or abetting making of applications under fictitious names, different names or in different combinations of names and surnames for acquiring or subscribing to the securities of the company. In addition to shares, return of allotment is required to be filed for all type of securities. Companies may now issue Global Depository Receipts by passing a Special Resolution and subject to such conditions as may be prescribed. The number of persons to which a company may make an offer or invitation of securities to a section of the public otherwise than through issue of a prospectus, by way of private placement basis is 50 or such higher number as may be prescribed. Under the Companies Act, 1956 the maximum number of persons prescribed is 50. Qualified Institutional Buyers (QIB) not be counted for the purpose of calculating number of persons offered underprivate placement If a Company, listed or unlisted, makes an offer to allot or invites subscription, or allots, or enters into an agreement to allot, securities to 50 or such higher number as may be prescribed, whether the payment for the securities has been received or not or whether the Company intends to list its securities or not on any recognized stock exchange in or outside India, the same shall be deemed to be an offer to the public and shall accordingly be governed by the provisions provided in this regard by the Securities And Exchange Board of India(SEBI). Companies making private placement have to allot the securities within 60 days of receipt of the application money. Chapter IV- Share Capital and Debentures Voting rights of preference shareholders on resolutions placed at a shareholders meeting modified. Now where dividend are in arrears for 2 years or more, preference shareholders can vote on all resolutions of the company. Shares, other than sweat equity, cannot be issued at a discount.. No provision has been provided for issue of share at discount after approval as compared to the Companies Act 1956. Preference shares have to be redeemed within 20 years of issue. However, for companies to be allowed to issue preference shares redeemable after 20 years for prescribed infrastructure projects,, provided a certain percentage of shares are redeemed annually at the option of the shareholder. Infrastructure projects is defined in Schedule VI. The scope of section related to transfer and transmission of securities widened to deal with all types of securities. The provisions of clause related to further issue of capital will now be applicable to all type of companies. Apart from existing shareholders, if the Company having share capital at any time proposes to increase its subscribed capital by issue of further shares, such shares may also be offered to employees by way of ESOP, subject to the approval of shareholders by way of Special Resolution. The provisions relating to further issue of shares shall now be applicable to Companies whenever it plan to increase the subscribed paid up capital. The requirement of application of such provision only after 2 years from the date of allotment or 1 year from the allotment of shares for first time under the Companies Act 1956 has been discontinued. The Companies Act, 1956 provides for issue of bonus shares but the Bill provides more detailed provisions to deal with bonus issue. No reduction of capital to be allowed if a company is in arrears for payment of deposits, accepted either before or after this Bill is enacted. No such condition under the Companies Act, 1956. Buyback provisions eased. Companies can buy back its shares even if it has defaulted in repayment of deposit or interest payable thereon, redemption of debentures or preference shares or payment of dividend to any shareholder or repayment of any term loan or interest payable thereon to any financial institution or bank, provided that such default has been remedied and three years have lapsed after such default ceased to subsist. This was not the case in the Companies Act, 1956. Debenture trustee to be appointed only when a company issues prospectus or makes an offer or invitation to the public or to its members exceeding five hundred for subscription to its debentures. Chapter V- Acceptance of Deposit by Companies NBFCs not to be covered by the provisions relating to acceptance of deposits. They will be governed by the Reserve Bank of India rules on acceptance of deposits. Companies cannot accept deposit from public. It can do so only from its members after seeking permission of its shareholders at a general meeting. No such approval was required under the Companies Act, 1956. Such deposit can only be accepted subject to complying with necessary conditions. Certain public companies, as prescribed, can accept deposits from persons other than its members, subject to conditions such as credit rating. No provision for suo-moto action by the Tribunal to issue directions for repayment of the deposits or interest thereon in case of default in such repayments, though such provision exists under the Companies Act, 1956. Chapter VI- Registration of Charges All types of charges would be required to be registered. Companies Act, 1956 provided a specific list of cases in which it is necessary to register the charge. Chapter VII- Management and Administration Companies required to disclose additional information in its Annual Return. These include particulars of its holding, subsidiary and associate companies; certification of compliances, remuneration of directors and key managerial personnel etc. Certification of Annual Return by practicing company secretary mandatory in case of companies with prescribed paid up capital and turnover. Annual Return to provide information up to the date of closure of financial year and not up to the Annual General Meeting as required under the Companies Act, 1956. Listed companies required to file a Return in the prescribed form with the Registrar regarding change in the number of shares held by promoters and top ten shareholders of the company, within 15 days of such change. First annual general meeting of a company shall be held within nine months from the closure of its first financial year instead of 18 months from the date of the incorporation, as provided in the Companies Act, 1956. Quorum of general meeting for a public company will now depend upon the number of members of the Company. For companies with more than 5,000 members, at least 30 should be present personally. The Companies Act, 1956 prescribes a fixed quorum of 5 persons. The Central Government may prescribe the class or classes of companies and the manner in which a member may exercise his right to vote electronically. Eligibility for demand of poll by the members in the general meeting changed from what provided in the Companies Act, 1956. Provisions of the postal ballot shall be applicable to all the Companies, whether listed or unlisted. Eligibility for making requisition for circulation of resolution modified. Special notice to move a resolution can be moved by such number of members holding not less than 1% of total voting power or holding shares on which such aggregate sum of not less than Rs 5 lakh has been paid-up. This is not required under the Companies Act, 1956. Every company has to follow the Secretarial Standards while preparing the minutes of board and general meeting. Listed public companies to prepare a report, in the manner as may be prescribed, on each annual general meeting including the confirmation that meeting was convened, held and conducted as per the Act and the Rules made thereunder. Chapter VIII- Declaration and Payment of Dividend   The Board of Directors may declare interim dividend during any financial year out of the surplus in the Profit and Loss Account and out of profits of the financial year in which such interim dividend is sought to be declared. A company cannot declare interim dividend at a rate higher than the average dividends declared by it during the immediately preceding three financial years, if it has incurred loss during the current financial year up to the end of the quarter immediately preceding the date of declaration of interim dividend. No such requirement is there under the Companies Act, 1956. Instead of transferring a fixed percentage of profits to reserve before declaring dividend every year as required under the Companies Act, 1956, a company can transfer such percentage of profit to the reserve before declaring dividend as it deems necessary. Such transfer is also not mandatory. Alongwith unpaid or unclaimed dividend, companies wil also have to transfer all the shares on which dividend has remained unpaid or unclaimed to the Investor Education and Protection Fund (IEPF) along with a statement containing such details as may be prescribed. Funds in IEPF can be utilised for distribution of any disgorged amount among eligible and identifiable applicants for shares or debentures, shareholders, debenture-holders or depositors who suffered losses due to wrong actions by any person, in accordance with the orders made by the Court which had ordered disgorgement. Chapter IX- Accounts of Companies The books of accounts may be kept in electronic form. The Balance Sheet, the Profit & Loss Account and the cash flow statement have been collectively defined as the financial statements. Along with the financial statement, consolidated financial statements of all subsidiaries and the company are to be prepared and laid before the annual general meeting. Subsidiary for the purpose of this requirement shall include associate company and joint venture. The Bill does not state whether a financial year can be extended. The requirement of attaching the Balance Sheet, the Profit & Loss account, the Directors’ Report, the Auditors’ Report, a statement of the holding company’s interest in the subsidiary and other reports as required by section 212 of the Companies Act, 1956 has been dispensed with. The Bill provides for provisions relating to re-opening or re-casting of the books of accounts of a Company pursuant to order of Court or Tribunal. The National Advisory Committee on Accounting Standards renamed as The National Financial Reporting Authority. The authority to advise on Auditing Standards in addition to Accounting Standards. The Central Government may prescribe standards of accounting or any addendum thereto, as recommended by the Institute of Chartered Accountants of India (ICAI) in consultation with and after examination of the recommendations made by the National Financial Reporting Authority. The Director's Report for every company except for one person company, shall provide additional information such as number of meetings of the board, company's policy on directors' appointment and remuneration; explanations or comments by the board on every qualification, reservation or adverse remark or disclaimer made by the company secretary in his secretarial audit report, particulars of loans, guarantees or investments etc. The Directors Responsibility Statement shall include additional statement on compliance with all applicable laws and, in case of listed companies, it shall also include statement that adequate internal finance control were in place. The Bill provides provisions related to Corporate Social Responsibility (CSR). Every Company with net worth of Rs 500 crore or more, or turnover of Rs 1,000 crore or more or a net profit of Rs 5 crore or more during any financial year to constitute a Corporate Social Responsibility Committee of the board consisting of three or more Directors, including at least one independent director. The committee shall recommend the policy for CSR to the board. The board of every company to ensure that the company spends, in every financial year, at least 2% of the average net profits it made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy. The board in its report to explain reasons for faiure to spend such amount.. Companies to give preference to local area of operation for CSR spendings. Private Companies will not be allowed to file their Balance Sheet & Profit and Loss account separately. The Bill provides for conduct of internal audit of prescribed class or classes of companies. Chapter X- Audit and Auditors Every Company shall, at the first annual general meeting (AGM), appoint an individual or a firm as an auditor who shall hold office from the conclusion of that meeting till the conclusion of its sixth AGM and thereafter till the conclusion of every sixth meeting. However the Company shall place the matter relating to such appointment for ratification by members at every AGM. The Bill provides provision for compulsory rotation of individual Auditors in every 5 years and of audit firm in every 10 years in listed Companies & certain other classes of Companies, as may be prescribed. A transition period of three years from the commencement of the Act has been prescribed for existing companies to comply with the provision of the rotation of auditors. A company can resolve for the annual rotation of auditing partners and his team within the audit firm appointed by it. The Bill provides for certain new disqualifications for the Auditors. An Auditor shall also comply with auditing standards. The Central Government will prescribe the standards of auditing or any addendum thereto, as recommended by the ICAI, in consultation with and after examination of the recommendations made by the National Financial Reporting Authority. Auditors, during the course of performance of its duties, are required to immediately report to the Central Government, any offence involving fraud that is being or has been committed against the company by its officers or employees.. The duties, which have been cast on an Auditor under clause 143, shall apply mutatis mutandis to both Cost Accountants for Cost Audit and Company Secretary in Practice for Secretarial Audit. The Auditor of the Company shall not provide directly or indirectly certain specified services to the company, its holding and subsidiary company An auditor contravening the provisions related to his appointment (including powers & duties, services that he cannot render and signing and reading of Auditor's Report at the general meeting), then in addition to punishment provided in the Act, has to refund the remuneration received from the company and also be liable to pay damages to the company or to any person for the loss arising out of misleading or incorrect information. A partner or partners of the audit firm and the firm also to be jointly and severally responsible for the liability, whether civil or criminal as provided in the Bill or in any other law for the time being in force. If proved that the partner or partners of the audit firm has or have acted in a fraudulent manner or abetted or colluded in any fraud by, or in relation to, the company or its directors or officers, then such partner or partners of the firm shall also be punishable in the manner provided in clause 447. Now, instead of Company pertaining to any class of Companies engaged in production, processing, manufacturing or mining activities which are required to have cost audit under the Companies Act 1956, under the Bill the Central Government can only direct Cost Audit to be conducted in such class of Companies engaged in the production of such goods or providing such services, which have the prescribed networth or turnover and has been directed to include the particulars relating to the utilization of material or labour or to other items of cost as may be prescribed in their books of account . No approval is required of the Central Government for the appointment of a cost auditor to conduct the cost audit. Chapter XI- Appointment and Qualification of Directors Prescribed class or classes of companies to have atleast one woman director. Atleast one director on the board to be a person who has stayed in India for not less than 182 days in the previous calendar year. At least one-third of the board of every listed public company to consist of independent directors. Existing companies to be provided a transition period of one year from the date of commencement of the Act to comply. The Central Government to prescribe the number of Independent Directors for certain class or classes of Public Company. The Bill provides provision for limiting the liability of Independent Director and Non Executive Director not being promoter or key Managerial Personnel. Independent Directors not entitled to any stock option. They may receive remuneration by way of fees and profit related commission as approved by the members. The Schedule to the Bill provides the following in respect of an Independent Director Professional Conduct Role & Functions Duties Manner of Appointment Removal & Resignation etc Companies can have maximum of 15 directors, up from 12 allowed in the Companies Act, 1956. More can be appointed after passing a special resolution.. Certain new disqualification for the directors given in the Bill. A person cannot become Director in more than 20 Companies instead of 15 as provided under the Companies Act, 1956 and out of this 20, he cannot be the Director of more than 10 public Companies. The limit of 20 companies includes private Company whereas under the Companies Act 1956 , there is no limit on the number of private companies in which a person can become a Director. Persons acting as directors to be allowed a transition period of one year from the commencement of the Act to comply with the provisions on maximum number of directorships. Each company where the person intends to continue as a director as well as the Registrar needs to be informed of the choice. Duties of the directors towards a company prescribed.Not provided in the Companies Act, 1956. For the purpose of the calculation of the directors retiring by rotation, the independent directors shall be out of the ambit. Directors are also required to mandatorily forward their resignation along with detailed reasons for resignation to the Registrar within 30 days of resignation in prescribed manner. There is no such requirement under the Companies Act, 1956. The notice for removal of Director can only be given by prescribed number of members or members holding prescribed number of shares or voting power. Chapter XII- Meeting of Board and its Powers A director can participate in a board meeting through video conferencing or other audio visual mode as may be prescribed. A notice of not less than 7 days in writing is required to call a board meeting. The notice of meeting to be given to all directors, whether he is in India or outside India by hand delivery post or electronic means. At least four meetings to be held every year, and not more than 120 days to elapse between two consecutive meetings. No requirement to hold the meeting every quarter as provided under the Companies Act, 1956. Every listed company and such other company as may be prescribed to have an audit committee. Audit committees to have a minimum of three directors, with majority of the independent directors and majority of members of committee should have the ability to read and understand the financial statements. A vigil mechanism in the prescribed manner to be established by every listed company or such class or classes of companies, as may be prescribed. Every listed company and prescribed class or classes of companies shall constitute a nomination and remuneration committee consisting of three or more non-executive directors, of which not less than one half shall be independent directors. Every company with more than 1,000 shareholders, debenture-holders, deposit-holders and any other security holders at any time during a financial year shall constitute a Stakeholders Relationship Committee consisting of a chairperson who is a non-executive director and such other members as may be decided by the board. The Bill provides certain new matters that are required to be transacted by the board of directors at their meeting only. Certain powers which earlier can be exercised by the Board with the approval of general meeting by way of ordinary resolution under section 293 of the Companies Act 1956,, shall now to be passed by special resolution. The limits for political contribution by a company changed. Now instead of 5% that was allowed under the Companies Act, 1956, contribution cannot exceed 7.5% of the average net profits of the company during the three immediately preceding financial years. In a private company, an interested director cannot vote or take part in the discussion relating to any matter in which he is interested, whereas under the Companies Act, 1956, he can. The Companies Act, 1956 requirement of seeking permission of the central government for giving loan to director has been dispensed with. The provisions related to inter-corporate loans and investments (section 372A of Companies Act, 1956) has been extended to include loans and investments to any person. While considering the limits for making investments, providing loan, providing guarantee or security , the amount for which the investment has been made or the loan, guarantee or security already provided, will not be considered, as opposed to what is provided in the Companies Act, 1956. No stock broker, sub-broker, share transfer agent, banker to issue, registrar to an issue, merchant banker, underwriter, portfolio manager, investment advisor or any intermediary associated with capital market shall take inter-corporate loans and deposits exceeding the limits that will be prescribed. A company, unless otherwise prescribed, cannot make investment through more than two layers of investment companies subject to certain exemptions. Apart from the existing transactions, certain new related party transactions are also provided for which approval of board will be required. No approval of the central government required for entering into any related party transactions. Under the Companies Act, 1956 approval is required under section 297. No approval of the central government required for appointment of any director or any other person to any office or place of profit in the company or its subsidiary. Under the Companies Act, 1956 approval is required under section 297. A company shall not enter into any arrangement by which a director of the company or of its holding company or any person connected with him can acquire assets for the consideration other than cash from the company & vice versa without the approval of company in general meeting. The Bill prohibits forward dealings in securities of company by any director or key managerial personnel. Under the Companies Act, 1956 there is no such provision. The Bill prohibits insider trading in the company. Under the Companies Act, 1956 there is no such provision. Chapter XIII- Appointment and Remuneration of Managerial Personnel Provisions relating to the appointment of managing director/whole time director/manger to apply to a private company. The appointment of managing director/whole time director /manager to be approved by general meeting by special resolution and if the appointment is not in accordance with schedule V (Schedule XIII in the Companies Act, 1956), then the approval of central government is also required. Where a company is required to re-state its financial statements due to fraud or non-compliance with any requirement under this Act and the rules made thereunder, the company shall recover from any past or present managing director or whole-time director or manager who, during the period for which the financial statements are required to be re-stated, the remuneration received (including stock option) arisen due to such statement or non-compliance in excess of what would have been paid to the managing director, whole-time director or manager under such re-stated financial statements. Every company belonging to such class or description of companies as may be prescribed, to have managing director, or chief executive officer or manager and in their absence, a whole-time director, company secretary and chief financial officer. The Bill provides for provision related to secretarial audit in certain prescribed class or classes of companies. The Bill prescribes the functions of a company secretary. The Schedule to the Bill provides the conditions under which a company can pay remuneration to its managerial personnel in excess of the limits prescribed therein, without the government approval. Chapter XIV- Inspection, Inquiry and Investigation In case of inspection or inquiry,, now the Registrar shall possess powers as are vested in a Civil Court under the Code of Civil Procedure, 1908, while trying a suit in respect of certain specified matters. The search and seizure powers of the Registrar /Inspector extended to cover places where documents pertaining to key managerial personnel, auditors and company secretary in practice are kept. For search or seizure of documents, the Registrar need to take permission from the special court instead of Magistrate of first class or Presidency Magistrate. The Serious Fraud Investigation Office (SFIO) to investigate frauds relating to a company to be set up through a notification. Till it is established, the SFIO set up by central government through an administrative resolution to be used for the purpose of this clause. The central government may,under the prescribed situation, refer any matter for investigation to the SFIO. No provision for inspection or investigation by SEBI. The affairs of related company may also be investigated while the inspector is making an investigation as to the ownership of a company. This is not provided under the Companies Act, 1956. As per the Bill, the Tribunal may by order, direct that a transfer, removal or disposal of funds, assets or properties of a company shall not take place during such period not exceeding three years as may be specified in the order or may take place subject to such conditions and restrictions as the Tribunal may deem fit, where it appears to it, on a reference made to it by the Central Government or in connection with any inquiry or investigation into the affairs of a company under this Chapter or on any complaint made by such number of members as specified under sub-clause(1) of Clause 244 or a creditor having an amount of Rs 1 lakh outstanding against the company or any other person having a reasonable ground to believe that the removal, transfer or disposal of funds, assets, properties of the company is likely to take place in a manner that is prejudicial to the interests of the company or its shareholders or creditors or in public interestWhere pursuant to transfer of shares under the Companies Act 1956, the Tribunal is of the opinion that such change is prejudicial to the public interest, then its power to put restrictions on exercise of voting rights in respect of such shares or to prevent the resolution for change in composition of board of directors from being put into effect has been dispensed with   If the inspector reports of a fraud has taken place in a company and as a result undue advantage is derived by any director, key managerial personnel or an officer or other person, in the form of any asset, property or cash or in any other manner, the central government can file an application to the Tribunal for appropriate orders of disgorgement of such assets, property or cash and for holding of such director, key managerial personnel, officer or other person liable personally without any limitation of liability. An investigation under this chapter may nevertheless be initiated and shall neither be stopped nor be suspended even where winding up is approved by the shareholders or any proceeding for winding up is pending before the Tribunal. Provisions for inspection and investigations of a foreign company is provided in this chapter. In the Companies Act, 1956, these provisions are in the chapter related to foreign company. During the process of the investigation, inquiry or inspection if any person: destroys, mutilates or falsifies or conceals or tampers or unauthorizedly removes or is a party to destruction, mutilation or falsification or concealment or tampering or unauthorized removal of any document relating to the property, assets or affairs of the company or body corporate, or makes or is a party to the making of any false entry in the document concerning the company or body corporate, or provides any false information which he knows to be false, Chapter XV- Compromise, Arrangement and Amalgamations Only persons holding not less than 10% of the shareholding or having outstanding debt amounting to not less than 5% of the total outstanding debt, as per the latest audited financial statements, are eligible to raise any opposition to an arrangement or compromise. The Tribunal may dispense with calling of a meeting of creditors or class of creditors where such creditors or class of creditors, having at least 90% value, agree and confirm, by way of affidavit, to the scheme of compromise or arrangement. Any provision of buyback in any compromise or arrangement shall be in compliance with the provisions of the buyback. Any takeover offer of listed company under compromise or arrangement shall comply with SEBI guidelines. In case of a merger of a listed company with an unlisted company, the Tribunal can order that the unlisted company i.e., transferee company continue to be unlisted. No compromise or arrangement shall be sanctioned by the Tribunal unless a certificate by the company’s auditor has been filed with the Tribunal stating that the accounting treatment, if any, proposed in the scheme of compromise or arrangement is in conformity with the accounting standards prescribed under Clause 133. The Bill prohibits creation of treasury stock/trust shares. Separate provisions have been provided for the merger or amalgamation between two small companies or between a holding company and a wholly-owned subsidiary company. The Bill makes provision for cross border amalgamations between Indian companies and companies incorporated in the jurisdictions of such countries as may be notified from time to time by the central government The Bill provides for purchase of minority shares in case an acquirer or person acting in concert with the acquirer becomes holder of 90% or more of the issued capital of the company, either directly or by virtue of any amalgamation, share exchange, conversion of securities or any other reason. Chapter XVI- Prevention of Oppression and Mismanagement Application against oppression or mismanagement to be filed before the National Company Law Tribunal instead of the Company Law Board. Provisions for relief from oppression and mismanagement combined under one provision, as opposed to Companies Act, 1956. The Bill provides for class action suit by specified number of members or depositors against the company except the banking companies, which is prevalent in developed countries. No such provision in the Companies Act, 1956. Chapter XVII- Registered Valuer Where any valuation is required to be made of any property, stocks, shares, debentures, securities or goodwill or any other assets (herein referred to as the assets) or net worth of a company or its liabilities under the provision of this Act , it shall be valued by a person having such qualifications and experience and registered as a Valuer in such manner, on such terms and conditions as may be prescribed and appointed by the audit committee or in its absence by the board of directors of that company. Chapter XVIII- Removal of Name of Companies from Register of Companies The conditions under which the Registrar can remove the name of a company from his record have been changed. The Registrar of Companies has been empowered to file an application with the Tribunal for restoration of the name of a company where the company was struck off inadvertently or on the basis of the incorrect information. Chapter XIX- Revival and Rehabilitation of Sick Companies The manner of declaring a company sick and process of its revival and rehabilitation has been completely rationalized. Any company, and not just industrial company as provided under the Companies Act, 1956, can be declared as sick company. Secured creditors representing 50% or more of the debt of a company and whose debt the company has failed to pay within 30 days of service notice, can apply to the Tribunal for declaring the company as sick. A company that fails to repay the debt of secured creditors representing 50% or more of its debt may also apply to the Tribunal to be declared sick. Erosion of 50% of the networth no longer the criteria for declaring the company as sick. Where the financial assets of a sick company have been acquired by any securitization company or reconstruction company under sub-section (1) of section 5 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, any application for revival or rehabilitation shall not be made without the consent of securitization company or reconstruction company, which has acquired such assets. Chapter XXIV- Registration Offices and Fees Any document or returns required to be filed under this Bill, if not filed within prescribed time, have to be filed within a period of 270 days on payment of such additional fees as may be prescribed. Chapter XXVI- Nidhi Companies New definition of Nidhi Company prescribed. Chapter XXVII- National Company Law Tribunal and Appellate Tribunal The person to be appointed as President of the Tribunal shall be the judge of the High Court for atleast 5 years, as opposed to the Companies Act 1956, where no term has been prescribed for High Court Judge to be appointed as President; the only condition was that the person should be qualified for being a judge of high court. Eligibility critieria for appointment of a judicial member or technical member has also changed. The National Company Law Appellate Tribunal shall now consist of combination of technical and judicial members not exceeding 11, instead of 2 as provided in the Companies Act, 1956. A serving judge of the Supreme Court or a chief justice of a High Court can be appointed as the Chairman of the National Company Law Appellate Tribunal. The Companies Act, 1956 provided that only past judges of the Supreme Court or chief justice of high courts can be appointed. The President of the Tribunal and the Chairperson and the Judicial Members of the Appellate Tribunal to be appointed after consultation with the Chief Justice of India, instead of the selection committee as provided in the Companies Act, 1956. Every proceeding before the Tribunal to be dealt with and disposed of as expeditiously as possible. The Tribunal has toendeavour to dispose the proceedings within 3 months from the date of commencement of the proceeding before it. On such date as may be notified by the central government: All matters, proceedings or cases pending before the Board of Company Law Administration (hereinafter in this section referred to as the Company Law Board) constituted under sub-section (1) of section 10E of the Companies Act, 1956, immediately before such date shall stand transferred to the Tribunal and the Tribunal shall dispose of such matters, proceedings or cases in accordance with the provisions of this Act. All proceedings under the Companies Act, 1956, including proceedings relating to arbitration, compromise, arrangements and reconstruction and winding up of companies, pending immediately before such date before any district court or high court, shall stand transferred to the Tribunal and the Tribunal may proceed to deal with such proceedings either de novo or from the stage before their transfer: Chapter XXVIII- Special Courts The central government may, for the purpose of providing speedy trial of offences under this Bill, by notification, establish as many Special Courts as may be necessary. Chapter XXIX- Miscellaneous Only offences punishable with fines are compoundable under the Bill. Any offence punishable with fine or imprisonment or with both will be compoundable with the permission of Special Court. The Bill makes provision for establishment of Mediation and Conciliation panel by central government. Under the Companies Act, 1956 there is no such provision. The Bill provides for specific provisions related to any act of fraud. Under the Companies Act, 1956 there is no such provision. “Fraud” in relation to affairs of a company or any body corporate includes any act, omission, concealment of any fact or abuse of position committed by any person or any other person with the connivance in any manner, with intent to deceive, to gain undue advantage from, or to injure the interests of, the company or its shareholders or its creditors or any other person, whether or not there is any wrongful gain or wrongful loss. Where a company is formed and registered under this Bill for a future project or to hold an asset or intellectual property and has no significant accounting transaction, such a company or an inactive company may make an application to the Registrar in such manner as may be prescribed for obtaining the status of a dormant company. A dormant company will have such minimum number of directors and have to file such documents and pay such fees, as may be prescribed, to retain its dormant company status. The maximum number of persons who can carry on businesses for profitable purpose through an association or partnership will be prescribed by rules, but the number will not exceed 100, instead of 12 as provided in the Companies Act, 1956. The government by Rules will prescribe Sections that will not be applicable to private companies & one person companies.. The Bill provides that producer companies shall continue to be governed by Chapter IXA of the Companies Act, 1956 until the enactment of Special Act for Producer Companies.