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Companies Law A comprehensive Makeover



The Companies Act 1956 is an Act of the Parliament of India enacted in 1956, which enabled companies to be formed by registration, and set out the responsibilities of companies, their directors and secretaries

The Companies Act 1956 is administered by the Government of India  through the Ministery of Corporate  and the Offices of Registrar of Companies, Official Liquidators, Public Trustee, Company Law Board, Director of Inspection, etc. The Registrar of Companies (ROC) handles incorporation of new companies and the administration of running companies.

Since its commencement, it has been amended many times, in which amendment of 1988, 1990, 1996, 2000 and 2011 are notable.

The Act is 658 sections long. It contains provisions about Companies, directors of the companies, memorandum and articles of associations, etc. This act states and discusses every single provision requires or may need to govern a company.1956. Apart from the act, one must be thorough with the rules, regulations, notifications, circulars etc issued by central govt from time to time

Background

Structure of the Companies Act 1956 & the Companies Bill 2011

Act

Bill

13 Parts

29 Chapters

750 + Sections

470 Clauses

15 schedule

7 schedule

Transfer of Shares

Particulars Act Bill
Transfer of share of public company Share of public companies are freely transferable Shares of public company arefreely transferable. However, Contract or arrangement between two or more persons in respect of transfer of securities shall be enforceable as a contract
Restriction of further offer of Buy-Back In case buy-back is made by BoD (10% of the total paid-up equity capital and free reserves), no further offer of buy-back is permissible within a period of 365 days reckoned from the date of the preceding offer of buy-back No buy-back up to period of 1 year from the date of preceding  buy-back whether approved by BoD or shareholders

 

The Companies Bill, 2009 (the Bill), as passed by the Rajya Sabha on 8 August 2013 will introduce the concept of ‘Corporate Social Responsibility’ (CSR) into Indian company law. The World Business Council for Sustainable Development defines the concept of CSR as a “continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large

CSR is applicable to which companies?
Applicable to companies with: A net worth of Rs. 500 crore or more; a turnover of Rs 1,000 crore or more; and a  net profit of Rs 5 crore or more during any financial year.

Requirement and contribution relation to CSR
Companies qualifying are required to form a CSR Committee with at least one independent director. The CSR spend of a company which meets the aforementioned threshold is required to be 2% of the average net profits for the preceding three financial years. This extended to both public and private limited companies.

Duties
Formulate and recommend a ‘CSR Policy’ to the Board which indicate the activities to be undertaken by the company; Recommend the amount of expenditure to be incurred in relation to the CSR policy; and Monitor the progress of the CSR policy from time to time. The CSR policy is required to be disclosed on the company’s website. CSR activities recognised under the Bill include: Eradicating extreme hunger and poverty; Promotion of education; Promoting gender equality and empowering women;   Reducing child mortality and improving maternal health; Combating HIV, AIDS, Malaria and other diseases; Ensuring environmental sustainability; Imparting employment enhancing vocational skills;   Social business projects; and Contribution to certain funds. The company is to give preference to local areas when formulating its CSR policy.

 


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