October 16

APPOINTMENT OF DIRECTOR, RESIGNATION OF DIRECTOR, INDEPENDENT DIRECTOR, CONDUCT OF BOARD MEETING AND COMPOSITION OF BOARD UNDER COMPANIES ACT,2013

A. Steps for appointment of director: The steps for appointment of director of a private limited company are as follows :

Note: Only provision regarding appointment of an additional director has been notified.

Step 1: Section 152[1]: Ensure that the director has been allotted a director identification number.

Step 2: Section 149[2]: Ensure that the number of director for a private company is a minimum of two in number.

Step 3: Section 149[3]: Ensure that the company has atleast one director who has stayed in India for a total period of not less than 180 days in the previous calendar year. This provision is applicable for all companies and all the companies existing on and before the commencement of this act have to comply with this requirement within one year from date of notification of the rules in this regard or from the commencement of the act[4].

Step 4: Section 161[5]: In case of appointment of additional director : Ensure that the director to be appointed by board of directors exercising the power so conferred in them by the Articles of the company is not such a person who has failed to get appointed as a director in a general meeting. The additional director has to be appointed till date of next AGM or last date on which AGM should have been held , whichever is earlier

Step 5: Section 161(2)[6]: In case of appointment of an alternate director: Ensure that such director is appointed as a director in place of a director during his absence from India for a period not less than three months. Also ensure that such person is appointed by the board on being so authorized by the AOA or resolution passed in general meeting. Such director shall not be appointed as an alternate director unless he is qualified to be an independent director under the companies act.

Step 4: Section 160[7]: In case of a person notifying his candidature: Notice must be given to the Company regarding proposal for appointment of a person as a director not less than 14 days before the General Meeting. Such notice should be given by deposit of Rs, 1 Lakh or any higher amount which may be prescribed

Step 5: Section 152(5)[8]: In case the person has not himself notified his candidature: Obtain consent from the person who is to be appointed as Director. The consent should be in form 11.2 (Chapter XI, Draft rules[9]). The format has changed with respect to the old act.

Step 6: Hold and convene a board meeting and pass resolution to the effect

Step 7: The consent for appointment should be filed by the company with the Registrar in Form No. 11.8 along with the fee as provided in Annexure ‘B’. (Chapter XI, Draft rule 11.6[10])

Step 8: Section 170[11]– Make necessary entries in the Register of Director

Changes vis-à-vis Companies Act, 1956:

1) In case of a person notifying his candidate the person had to deposit Rs. 500 but according to the companies act, 1956 the person has to deposit Rs. 1 Lakh or higher amount so prescribed.

2) Format for written consent has changed (The format can be found at Form 11.2)

3) Provision regarding a resident director has been introduced.

4) Changes have been introduced with respect to additional director.

B. Steps for resignation of a director: The steps for resignation of director of a private limited company according to companies Act, 2013 are as follows:

Note: None of the provisions have been notified.

Step 1: Notice to be given by the director resigning to the company (Section 168[12])

Step 2: After the receipt of notice the company should within thirty days from the date of receipt of notice from a director, intimate the Registrar in Form No. 11.8 and post the information on its website, if any. (Chapter XI, Rule 11.12[13]).

Step 3: Place the fact of such resignation in the report of directors laid in the immediately following general meeting by the company (Section 168[14]).

Step 4: The director may within thirty days from the date of resignation, forward to the Registrar a copy of his resignation along with reasons for the resignation in Form No. 11.7 along with the fee as provided in Annexure ‘B’. (Chapter XI, Rule 11.13[15])

C. Steps for conducting a board meeting : The procedure for conducting a board meeting according to the provisions of the Companies Act, 2013 is as below:

Note: None of these provisions have been notified

Step 1: Section 173[16]: Check that four meetings of board of directors are being conducted every year and the time period between two consecutive board meetings is not more than 121 days.

Step 2: Section 173[17]: Check that a notice of not less than 7 days has been sent by hand or post or electronic means to all the directors .

Step 3: Section 174[18]: The quorum for meeting has to be seen. The quorum for the meeting should be 1/3 of its total strength or two directors whichever is higher. The participation of directors by video conferring and other audio visual means shall be also counted for the purpose of quorum

Step 4: If the meeting is being conducted through audio visual means check that requirements of Chapter XI [19]are met.

Step 5: Section 118[20]: Ensure that the minutes of the meeting are prepared and signed within 30 days of the conclusion of the meeting.

D. Independent Director: The provisions regarding Independent director according to Companies Act, 2013 are as follows:

Note: None of these provisions have been notified

An independent director shall be appointed for the following companies:

§ Section 149 (4) : Every listed public company shall have at least one-third of the total number of directors as independent directors and the Central Government may prescribe the minimum number of independent directors in case of any class or classes of public companies.

The classes of such public companies are mentioned in Chapter XI Rule 11.2. They are:

§ Public Companies having paid up share capital of one hundred crore rupees or more; or

§ Public Companies having turnover of three hundred crore rupees or more;

§ Public Companies which have, in aggregate, outstanding loans or borrowings or debentures or deposits, exceeding two hundred crore rupees. (Chapter XI, Rule 11.2[21])

§ Applicable to all companies be it public or private, provision ambiguous in nature : Section 135[22] : Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director (This provision requires clarification and clarification would be soon given as stated my Mr. Sachin Pilot. )

The definition and requirements of an independent director is stated in Section 149 (6)[23]. The steps for appointment of independent Director are as follows:

Step 1: Ensure that the independent director meets the requirements stated in Section 149 r/w Schedule VI [24]

Step 2: Ensure that explanatory statement attached to the notice of the meeting for approving the appointment of independent director includes a statement that in the opinion of the Board, the independent director proposed to be appointed fulfils the conditions specified in the Act and the rules made there under and that the proposed director is independent of the management (Schedule VI of companies Act, 2013[25])

Step 3: Getting the appointment of independent director(s) approved at the meeting of the shareholders. (Schedule VI[26])

Step 4: Issuing a letter of appointment to the independent director enlisting the term of appointment, the expectations, the fiduciary duties, code of ethics, terms and conditions , remuneration etc (Schedule VI[27])

E. Composition of board ; The following is the composition of Board in a private Limited company as per the Companies Act, 2013

Note : Only provision regarding additional and nominee director has been notified.

I. Minimum and maximum no of directors: Section 149[28]: Every company shall have board of directors constituting of individuals as directors and shall have minimum of two directors in case of private limited company and a maximum of 15 directors. A Company may appoint more than 15 directors after passing a special resolution.

II. Resident Director Section 149 (3)[29]: Applicable to private company: Every company shall have at least one director who has stayed in India for a total period of not less than one hundred and eighty-two days in the previous calendar year.

Compliance time: Section 149(5)[30]: Every company existing on or before the date of commencement of this Act shall, within one year from such commencement or from the date of notification of the rules in this regard as may be applicable, comply with the requirements of the provisions of resident director[31].

III. Additional director: Section 161 (1)[32]: Applicable to private company:The Additional director can be to be appointed by board of directors exercising the power so conferred in them by the Articles of the company till date of next AGM or last date on which AGM should have been held , whichever is earlier but such a person should not has failed to get appointed as a director in a general meeting.

IV. Alternate Director: Section 161(2)[33]: Applicable to private company:Such director is appointed as a director in place of a director during his absence from India for a period not less than three months. An Alternate Director is appointed by the board on being so authorized by the AOA or resolution passed in general meeting. A Person qualified to become an independent director can only be appointed as an alternate director [34]

V. Nominee Director: Section 161(3) [35]: Applicable to private company:Board may appoint any person as a director nominated by any institution in pursuance of the provisions of any law for the time being in force or of any agreement or by the Central Government or the State Government by virtue of its shareholding in a Government company.

VI. Key managerial personnel: Section 203[36] : applicable to listed company as well as private company with paid up share capital of five crores or more[37]:Every company belonging to such class or classes of companies as may be prescribed shall have the following whole-time key managerial personnel,—

(i) managing director, or Chief Executive Officer or manager and in their absence,

a whole-time director;

(ii) company secretary; and

(iii) Chief Financial Office

Points to be taken into consideration:

a) Section 203 (2)[38]: Every whole-time key managerial personnel of a company shall be appointed by means of a resolution of the Board containing the terms and conditions of the appointment including the remuneration.

b) Section 203 (3)[39]: A Whole-time key managerial personnel shall not hold office in more than one company except in its subsidiary company at the same time.

Provided that nothing contained in this sub-section shall disentitle a keymanagerial personnel from being a director of any company with the permission of the Board:

Provided further that The whole-time key managerial personnel holding office in more thanone company at the same time on the date of commencement of this Act, shall, within a period of six months from such commencement, choose one company, in which he wishes to continue to hold the office of key managerial personnel

Provided also that a company may appoint or employ a person as its managing director, if he is the managing director or manager of one, and of not more than one, other company and such appointment or employment is made or approved by a resolution passed at a meeting of the Board with the consent of all the directors present at the meeting and of which meeting, and of the resolution to be moved thereat, specific notice has been given to all the directors then in India.

c) In case of vacation :Section 203(4)[40] : If the office of any whole-time key managerial personnel is vacated, the resultingvacancy shall be filled-up by the Board at a meeting of the Board within a period of six months from the date of such vacancy.

Penalty for contravention (Non appointment of KMP) : Section 203 (5)[41] : In case of contravention of the provisions of the section 203 , the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees and every director and key managerial personnel of the company who is in default shall be punishable with fine which may extend to fifty thousand rupees and where the contravention is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the contravention continues.

VII. Independent Director : Not applicable to Private companies but section 135 of the act which is related to corporate social responsibility states that Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director .

VIII. Women directors (Not applicable to private companies) : Proviso to section 149 : The prescribed class or classes of companies as may be shall have at least one woman director. The prescribed companies[42]are :

(i) every listed company – within one year from the commencement of second proviso to sub-section (1) of section 149;

(ii) every other public company having –

(a) paid–up share capital of one hundred crore rupees or more; or (b) turnover of three hundred crore rupees or more within three years from the commencement of second proviso to sub-section (1) of section 149

[1] Not in force

[2] Not in force

[3] Not in force

[4] Section 149(5), not in force.

[5] In force , notification dated 14.09.2013.

[6] Not in force

[7] Not in force

[8] Not in force

[9] Not in force

[10] Not in force

[11] Not in force

[12] Not in force

[13] Not in force

[14] Not in force

[15] Not in force

[16] Not in force

[17] Not in force

[18] Not in force

[19] Not in force

[20] Not in force

[21] Not in force

[22] Not in force

[23] Not in force

[24] Not in force

[25] Not in force

[26] Not in force

[27] Not in force

[28] Not in force

[29] Not in force

[30] Not in force

[32] In force

[33] Not in force

[34] Provio to section 161, not in force.

[35] In force

[36] Not in force

[37] Rule 13.6, Chapter XIII, not in force

[38] Not in force

[39] Not in force

[40] Not in force

[41] Not in force

[42] Rule 11.2, Draft Rules Chapter XI, Not in force

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October 16

Steps for Holding an EGM under Companies Act, 2013

Note: The following sections are notified:

Section 100- General Provision for holding EGM – no change

Section 102- Statement to annexed to notice – change w.r.t Companies Act, 1956

Section 103- Quorum for meetings – change w.r.t Companies Act, 1956

Section 104- appointment of chairman- no change

Section 105 – Appointment of proxies change w.r.t Companies Act, 1956 but changes not notified

Section 107- Voting by show of Hands-no change

Section 108- Demand for Poll- no change

General provision: An Extra Ordinary General Meeting can be conducted in the following three ways: (No change with respect to the old companies act)

Meeting by Board: Section 100(1)[1]: The Board may, whenever it deems fit, call an extraordinary general meeting of the company.

Meeting by Board on requisition: Section 100(2)[2] : The board can also call an EGM at the requisition of members.

a) in the case of a company having a share capital, such number of members who hold, on the date of the receipt of the requisition, not less than one-tenth of such of the paid-up share capital of the company as on that date carries the right of voting;

(b) in the case of a company not having a share capital, such number of members who have, on the date of receipt of the requisition, not less than one-tenth of the total voting power of all the members having on the said date a right to vote, call an extraordinary general meeting of the company within the period specified in subsection

Meeting by requisitonits: Section 100(3)[3]: If the Board does not, within twenty-one days from the date of receipt of a valid requisition in regard to any matter, proceed to call a meeting for the consideration of that matter on a day not later than forty-five days from the date of receipt of such requisition, the meeting may be called and held by the requisitonists themselves within a period of three months from the date of the requisition.

The following are the steps for holding an EGM under the Companies Act, 2013 by the board:

Step 1: Convene Board Meeting after giving notice to all the directors to discuss besides others the following matters.

· To propose resolutions to be passed at the Extraordinary General Meeting of shareholders

· To fix the date, time and place for convening the Extraordinary General Meeting of shareholders.

Step 2: Section 101[4], Notice: Issue and dispatch notices in writing or through electronic mode giving atleast 21 clear days in such a manner as may be prescribed. Chapter VII, Rule 7.16 lays down in details the procedure to be followed while sending a notice through electronic means. The notice shall specify the place, date, day and hour of the meeting and shall contain a statement of business to be transacted at such meeting[5]. The notice of meeting shall be given to:

(a) every member of the company, legal representative of any deceased member
or the assignee of an insolvent member;
(b) the auditor or auditors of the company; and
(c) every director of the company

Step 3: Section 101(1) Provio[6]: The meeting can be held at a shorter notice if the consent is given in writing or electronically by not less than 95 percent of members entitled to vote at such meeting.

New: Step 4: Attach statement to the notice[7]: According to Section 102[8]: the statement annexed to the notice shall contain

(a) the nature of concern or interest, financial or otherwise, if any, in respect of each items of—

(i) every director and the manager, if any;

(ii) every other key managerial personnel; and

(iii) relatives of the persons mentioned in sub-clauses (i) and (ii);

(b) any other information and facts that may enable members to understand the meaning, scope and implications of the items of business and to take decision thereon

Step 5:Quorum: section 103[9]: Ensure that the quorum required for private companies that is 2 members is present. If the quorum is not present within half-an-hour from the time appointed for holding a meeting of the company—

(a) the meeting shall stand adjourned to the same day in the next week at the same time and place, or to such other date and such other time and place as the Board may determine; or

(b) the meeting, if called by requisitionists under section 100, shall stand cancelled:

New: Provided that in case of an adjourned meeting or of a change of day, time or place of meeting under clause (a), the company shall give not less than three days notice to the members either individually or by publishing an advertisement in the newspapers (one in English and one in vernacular language) which is in circulation at the place where the registered office of the company is situated.

Step 6:Chairman: Section 104[10]: The members personally present at the meeting shall elect one of themselves to be chairman on show of hands. If a poll is demanded on the election of the Chairman, it shall be taken forthwith in accordance with the provisions of this Act and the Chairman elected on a show of hands shall continue to be the Chairman of the meeting until some other person is elected as Chairman as a result of the poll, and such other person shall be the Chairman for the rest of the meeting

Step 7:Appointment of Proxies: Section 105[11]: Provision exactly same as old act except the following:

New :Section 105 (1)Proviso 3[12]: Provided also that the Central Government may prescribe a class or classes of companies whose members shall not be entitled to appoint another person as a proxy:

Section 105 (1) Proviso 4[13]: Provided also that a person appointed as proxy shall act on behalf of such member or number of members not exceeding fifty and such number of shares as may be prescribed

Step 8:Voting: Section 107[14]states that voting can be done by show of hands unless a poll is demanded.

Demand for Poll: Section 108[15]states that before or on declaration of result of voting on any resolution by show of hands a poll may be ordered by the chairman on an demand made by:

(a) in the case a company having a share capital, by the members present in person or by proxy, where allowed, and having not less than one-tenth of the total voting power or holding shares on which an aggregate sum of not less than five lakh rupees or such higher amount as may be prescribed has been paid-up; and

(b) in the case of any other company, by any member or members present in person or by proxy, where allowed, and having not less than one-tenth of the total voting power.

New: Section108[16]: Voting can also be done through electronic means for the class or classes of companies so prescribed by the central government. Chapter VII Rule 7.18 states that the following companies can conduct voting through electronic means:

a) Every listed company

b) a company having five hundreds or more shareholders may provide to its members facility to exercise their right to vote at general meetings by electronic means.

The procedure for electronic voting and requirements are further stated in proviso to Rule 7.18 , Chapter VII Draft Rules

Step 9: After the voting is done and resolutions are passed ensure that the minutesof the meeting are prepared and signed within 30 days of the conclusion of the meeting. (Section 118[17])

Step 10:Section 117[18]: File the appropriate form with ROC within 30 days of passing of the resolution.

[1] In force

[2] In force

[3] In force

[4] Not in force

[5] Section 101(2), not in force

[6] Not in force

[7] Section 102, in force

[8] In force

[9] In force

[10] In force

[11] In force

[12] Not in force

[13] Not in force

[14] In force

[15] Not in force

[16] Not in force

[17] Not in force

[18] Not in force

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October 2

Liability of directors with respect to Annual Accounts

The companies Act provides a range of obligations to be discharged by every company registered under this act and also on the part of its Directors / Managers / Secretaries, etc. The law relating to penalties and criminal liabilities arising from noncompliance with respect to Annual Accounts are enlisted below:

Officer in default: Section 2(31) of the Companies Act, 1956 defines an officer in default in the following terms “in relation to provision referred to section 5, has the meaning specified in that section.” Section 5 of the Companies Act, 1956 defines officer in default as including all the following officers of the company including the managing director or managing directors, the whole-time director or whole time directors, the manager, the secretary, any person charged by the board with the responsibility of complying with that provision, where no officer mentioned above is specified all the directors.

Section 2(60)[1]of the Companies Act, 2013 ,defines an officer in default for the provisions of the act as any officer who is in default namely whole time director, key managerial personnel, where there is no key managerial personnel, such director or directors specified by board, any person charged with the responsibility by the board , any person with whose advice board of director is accustomed to act, every director who has knowledge of contravention and in respect of share issue, transfer the share transfer agents, registrars and merchant bankers.

1) Default in laying down accounts at AGM:

Under the Companies Act, 1956, Section 210(5) lays down that the board of directors of the company shall lay down the balance sheet and profit and loss at the annual general meeting. If the person being a director of a company fails to take reasonable steps to comply with the provisions of the section, he shall in respect of each offence be punishable with imprisonment for a term which may extent to six months or fine which may extend to ten thousand Rupees or with both.

Under the companies act, 2013, Section 129 (7) [2]lays down that if the company makes a contravention of the section that deals with preparing of financial statements and laying down the financial statement at the AGM , the managing director, the whole time director in charge of finance, the Chief Financial Officer, or any other person charged by the Board with the duty of complying with the requirements of this section and in absence of any of the officers mentioned above all the directors shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than fifty thousand rupees which may extend to five lakh rupees or with both .

2) Failure to file Annual Accounts with MCA:

Section 220 of the Companies Act, 1956 lays down that that after the Balance Sheet and Profit and Loss have been laid at the AGM the Profit and Loss and Balance Sheet duly signed the managing director, manager or secretary of the company or if there be none of these, by a director of the company has to be file with the registrar within 30 days from the date of AGM. If any default is made in complying with the provisions of this section the punishment for the default is penalty of Rs. 500 till the default continues.

Section 137(3)[3]of the Companies Act, 2013 provides that if a company fails to file financial statements before the expiry of time provided in Section 403, the penalty imposed is Rs. 1000 for every day of default but this amount shall not be more than 10 lakh rupees and in the absence of managing director, chief financial officer and in the absence of the managing director and chief financial officer and in the absence of above any director who is charged with the responsibility shall be punishable with imprisonment for a term which may extend to six months or fine which shall not be less than one lakh rupees but which may extend to a five lakh rupees or both .

3) Improper issue, circulation or publication of Balance sheet and Profit and loss Account:

Section 218 of the Companies Act, 1956 states that is any copy of balance sheet and profit and loss which has not been signed and issued, circulated or published or if any balance sheet is issued circulated and published without attachments such as profit and loss, any accounts, statements, auditor’s report , directors report the company and every officer in default shall be punishable with fine which may extent to 5000 Rupees.

Section 134[4]of the Companies Act, 2013 states that the financial statement including the consolidated financial statement shall be approved by the board of directors before they are signed on behalf of the board . The auditor’s and Director’s Report as required by the section shall be attached .The signed copy of every financial statement including consolidated financial statement if any shall be issued, circulated or published. If there is any contravention of this section the company shall be punishable with fine that shall not be less than 50 thousand Rupees but may extend to 25 Lakh Rupees and every officer who is in default shall be punishable with imprisonment for a term which may extend to 3 years or fine which shall not be less than 50 thousand Rupees but may extent to 5 Lakh Rupees or both.

4 ) Failure to comply with provisions of Annual Return :

Section 162 of the Companies Act, 1956 states that the non compliance of Section 159(form of annual return for a company having a share capital ), 160 (form of annual return for a company not having share capital ), 161 (Annual return to be signed by both a directory and secretary and to be filed with the registrar )with respect to Annual Return will attract a fine of Rs. 5000 which has to be paid by the company

Section 92 [5]of the Companies Act, 2013 lays down that a company who fails to file its annual return within a the period so allowed by section 403 with additional fee shall shall be punishable with fine that shall not be less than 50 thousand Rupees but may extend to 25 Lakh Rupees and every officer who is in default shall be punishable with imprisonment for a term which may extend to 6 months or fine which shall not be less than 50 thousand Rupees but may extent to 5 Lakh Rupees or both .

5) Failure to send the Annual Accounts to members:

Section 219(1) of the Companies Act, 1956 lays down that the Annual accounts should be sent atleast 21 days before the Annual General Meeting. Section 219 (3), furthermore states that any default in complying with this requirement would attact a fine of Rs. 5000 by the company and any every officer in default. Section 219(4) lays down that if any member makes a demand of annual account and the same is not provided to him the company and every officer in default would attract a fine of Rs. 5000.

Section 136[6]of the Companies Act, 2013 also lays down the same requirement but the penalty which the company is subject to Rupees 25 thousand and every officer in default is subject to a penalty of 5000 Rupees.

Summing up, criminal liability is only attracted in the following cases with respect to Annual Accounts

a) Default in laying down accounts at AGM: Criminal Liability under both Old and new act

b) Failure to file Annual Accounts with MCA: Criminal Liability Only under new act

c) Improper issue, circulation or publication of Balance sheet and Profit and loss Account: Criminal Liability Only under new act

d) Failure to comply with provisions of Annual Return: Criminal Liability Only under new act

[1] In force, by notification dt . 12.09.2013

[2] Not in force

[3] Not in force

[4] Not in force

[5] Not in force

[6] Not in force

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September 30

Change in authorized capital – a comparison between companies Act 1956 and Companies Act, 2013

Increase in the authorized capital under Companies Act, 1956: The provisions regarding increase of share capital are found in section 94(1) r/w Section 16, 31 and section 97 of the Companies Act, 1956.

Section 94 (1) of the act states that a limited company having a share capital, if so authorized by its articles , alter the conditions of its memorandum to increase its share capital by such amount as it thinks expedient by issuing new shares.

Furthermore section 31 of the act states that the articles of company can be altered by a special resolution if so allowed by the memorandum of the company and section 16(3) states that the memorandum of articles can be altered by the same procedure as provided for altering of articles if the procedure for same is not provided in the section.

In addition to this section 97 states that when the capital is increased a notice of the same has to be given to the registrar within 30 days of passing of the resolution (Form 5).

Procedure:

Meetings to be held:

A board meeting is to be convened to discuss the agenda and fix general meeting date for passing special resolution of shareholders.
Convene general meeting and pass Special resolution for alteration of MOA or AOA and increase of share capital.

Alteration in MOA and AOA:

If the Memorandum of Association (MOA) and the Articles of Association (AOA) contain a clause regarding the share capital they have to altered by filing E-Form 23 with an explanatory statement within 30 days of passing the resolution. (Section 192- Registration of Resolution)

Forms to be filed with Ministry of Corporate Affairs:

Form 5 has to be filed with ROC (Registrar of Companies) within 30 days and accordingly the Registrar of Companies will make necessary changes in the Company’s Memorandum & Articles of Association. (Section 97)

Increase in authorized capital under the Companies Act, 2013: The increase in authorized capital under companies Act, 2013 has been dealt under section 61 and section 64 R/W sections 13 and section 14

Section 13 and section 14 are regarding alteration of memorandum and articles by passing a special resolution. Section 61 states that a limited company having its share capital may if so authorized by its articles alter its memorandum in its general meeting to increase its authorized share capital by such amount as it thinks expedient. Section 64 states that when the authorized capital is increased the notice of the same should be given to the registrar in 30 days of such alteration or increase.

Changes: All the requirements are same except the following:

Notice to the registrar: According to the old act the notice to the registrar should be within 30 days after passing of the resolution whereas under the Companies Act the notice to the registrar has to be given in 30 days after such alteration or increase.

Penalty for not reporting to the Registrar : The penalty under the old act for not reporting about the change of capital to the registrar was Rs. 500 per day till the default continues but under the Companies Act, 2013 the penalty shall not be less than Rs. 1000 per day till default continues or Rs. 5,00,000 whichever is less .

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