Effective Provisions of Companies Act, 2013 as on 12th September 2013

On 30th August 2013 (Bhadrapada 8, 1935 Saka), Ministry of Law and Justice issued a notification regarding the Companies Act, 2013 immediately after it received assent of President of India. Only section 1 of the Act of 2013 came into effect from that day. Section 1 as usual deals with short title, Extent, commencement and application.

Earlier Act of 1956 was applicable to whole of India with some modification related to Indian State of Nagaland, but not applicable Indian state of Sikkim. Act of 2013 is applicable to whole of India including Sikkim and without any exception to any state. Sub – section 4 of Section 1 of Act of 2013 lists out some exception regarding particular classes of companies. However, Act of 2013 is not made effective to Sikkim as on 12th September 2013.

The notification of 12th September 2013 is issued by Ministry of Corporate Affairs, under power conferred by sub – section (3) of Section 1 of the Act of 2013. With this notification, we effectively have two Companies Acts in effect. Caution is Provision of Act of 1956 shall be applicable from this appointed date of 12th September 2013 subject to the provisions of Act of 2013 as made applicable. Where, there is any inconsistency among both Acts, provision notified under Act of 2013 shall have effect. (See Comments for clear understanding)

Whole Section 2 dealing with Definitions become applicable except few. The only definitions not notified are with respect to Accounting Standards (Cl. 2), Auditing Standards (Cl. 7), Books of Account (Cl. 13), company liquidator (Cl. 23), Special Court (Cl. 29(iv)), deposits (Cl. 31), financial year (Cl. 41), foreign company (Cl. 42), independent director (Cl. 47), Indian Depository Receipt (Cl. 48), One person company (Cl. 62), the Registration of Companies (Sikkim) Act, 1961 as previous companies Acts (Cl. 67(ix), Serious Fraud Investigation Office (Cl. 83), Small Company (Cl. 85) and Layer of Subsidiary Companies (Cl. 87 Proviso and Explanation(d)).

In Chapter II Section 19, 21 and 22 has been made effective. Section 19 provides that subsidiary company shall not hold shares in its holding company. While 21 deals with Authentication of documents, proceedings and contracts and 22 with Execution of bills of exchange, etc. I have discussed these Section in my blog post Minor Provision in Chapter II here.

In Chapter III, Sections 24, 29, 30, 31, 32, 34, 36, 37, and 38 become effective. However, only parts of Section 23, 25, 33, 35, 39, and 40 become effective.

In Section 23, Clause (b) of Sub – section (1) as well Sub – section (2) is not effective. These provisions are related to Private placement by private as well as public companies under Section 42. Practically for Public offer of companies, Act of 2013 is effective. All enabling provision has been made applicable. Regarding Matters to be stated in prospectus provisions of old Act of 1956 is still applicable. (Sections 26 and 27 of Act of 2013 not made effective.)  Offer for sale shall still be made under old Act of 1956 (Section 28 of Act of 2013 not made effective.) Private placement shall also be govern by provision old Act.

In Chapter IV, Section 44, 45, 49, 50, 51, 57, 58, 59, 60, 61, 65, 69, and part of 70 has been made applicable. With a word of caution, these are simple provisions mostly similar to provision of Act of 1956.

Acceptance of Deposit (Chapter V) and Registration of Charges (Chapter VI) shall still be applicable as under old Act of 1956 but interestingly punishment for contravention for any provision of Chapter VI has been made applicable. I am not sure, whether it will be effective for any contravention of provisions of old Act of 1956 related to charges. I invite views from reader.

Chapter VII is related to Management and Administration of companies. Sections 91, 100 (part), 102, 102, 103, 104, 105 (part), 106, 107, 111, 112, 113 (part), 114, and 116 has been made effective. Effectively, provisions related to General Meetings come to in force. With a word of caution, these provisions are mostly similar to provision of Act of 1956.

Chapter VIII related to declaration and payment of dividend has not been made effective except penal provision to this chapter under Section 127.

Chapter IX deals with Account and is subject to discussion everywhere. Only Sections 133 which give powers to Central Government to prescribe accounting standard come into effect, hence not much change.

Chapter X deals with Audit and Auditors has not been made effective.

Chapter XI deals with appointment and qualification of directors is also not made effective except Section 161 and 162 which are related to manner for appointment of director, additional director, Alternate director and nominee director.

Chapter XII deals with meeting of boards and its power. Section 176, 180, 181, 182, 183, 185, 192, 194 and 195 come into force. Contribution to charitable funds, political parties, and national defence fund has been made applicable. Further, provision related to Loan to directors, non – cash transaction of directors forward dealing and insider trading has been made applicable.

Provision related to Compensation for loss of office of managing or whole-time director or manager under Section 202 become effective.

Some provision related to foreign companies which are not much different from provisions under old Act of 1956, are effective now. These are Application of Act to foreign companies (S. 379), Display of name, etc., of foreign company (s. 382) Service on foreign company (s. 383) and Interpretation (S. 186 in part).

Section 405 constituting Chapter XXV dealing with Power of Central Government to direct companies to furnish information or statistics become effective.

Chapter XXVII deals with National Company Law Tribunal and Appellate Tribunal. Section 407 to section 414 (both inclusive) become effective. These provisions enable government to constitute these tribunal. This may be good news for company law professionals.

In other effective Section 439 (offence to be non – cognizable), Section 443 (Power of Central Government to appoint company prosecutors) Section 444 (Appeal against acquittal), Section 445 (Compensation for accusation without reasonable cause) are also related to penal provisions related to companies law.

Section 456 – 463 and Section 467 – 470 are some enabling provisions relating to central government.

This is my preliminary view on the notification issued on 12th September 2013. Views of readers are most welcome. I welcome all of us to new era of Companies Act 2013.

Please note: I welcome your comments and feedback. This blog post is not a professional advice. Readers may share this post on social media by using buttons given here.


19 responses to “Effective Provisions of Companies Act, 2013 as on 12th September 2013

  1. One friend pointed out to me that any provision of old Act of 1956 has not be “de-notified” or made ineffective..
    Further, repealing section of Act of 2013 has not been notified yet.
    I was of the impression that Notification of Sections of new Act automatically made corresponding provisions of earlier Act ineffective..

    I am studying provisions and not on firm conclusions..


  2. When I, originally formed my opinion; I had understanding that Section 465 has no provision for repealing of Companies Act, 1956 in part i.e Section or sub – section. I has further understanding that Section 1(3) has provision for notification of Companies Act, 2013 in part i.e. Section or Sub section wise.

    I had understanding that whether there is clear – cut clarification or not, it is clear intention of legislature that on notification of a particular Section under Act of 2013, corresponding provision under Act of 1956 become ineffective at least, even if not repealed.

    I have further understanding that Executive had seconded this legislative intention when it brought notification dated 12th of September 2013 and a clarification thereon by executive made intention of executive very clear.

    I have simple question, whether individual understandings as I mentioned above were correct or not?

    Further, may they have any support from Section 8 of General Clauses Act 1987, as quoted by Sh. Rakesh Jain Ji in his mail (copy hereunder)

    “Section 8 of General Clauses Act 1987 (“This Act”) provides that “Where any (Central Act) or regulation made after the commencement of this Act, repeals and re-enacts, with or without notification, any provision of a former enactment, then references in any other enactment or in any instrument to the provision so repealed shall, unless a different intention appears, be construed as references to the provision so re-enacted”. Therefore it can be referred that notification of new sections of Companies Act 2013 automatically repeals their corresponding counterpart under the Companies Act 1956 and there is no need for a separate notification to that effect.”

    We know, court may take recourse of legislative intention in case of legal dispute but Presently, we are facing question; how we should frame our opinion.

    I request all readers to share their views.


  3. Sachin Pilot- 98 notified Sections active now. Relevant Sections in the old Act stand repealed.
    Source: https://twitter.com/thefirmupdate/status/379480943347503104


  4. MCA had issued circular No. 16 dated 18 Sept 2013 to put this matter to rest. This read as under:

    lt is hereby clarified that with effect from 12.09.2013, the relevant provisions of the companies Act, 1956, which correspond to provisions of 98sections of the companies Act, 2013 brought into force on 12.09.2013, cease to have effect from that date.

    We may access this circular at http://mca.gov.in/Ministry/pdf/General_Circular_16_2013.pdf.pdf



  6. hello, you have explained all the provisions of Companies act, 2013.
    i need your help can u tell me what provisions should i mentioned of Companies Act, 2013. in my project of corporate governance in India. i will really appreciate…
    Thank you


  7. Here every thing is OK.
    But i would like to say that there is no clarity & full discription for all about section which are made effective from 12 sep. 2013.


  8. Pingback: AishMGhrana: Annual Report 2013 | AishMGhrana

  9. Pingback: CHARGES (Companies Act, 2013) | AishMGhrana

  10. Anoop Kr Barnwal

    Which Companies act is applicable for F.Y. 2013-2014 ? Is it Companies Act 1956 or Companies Act 2013 or Both partially ?



  12. hi, interesting article.. hope to see more on this..
    can u plz tell us when OPC will be actually effective? means from which month of current year i can apply for a OPC?


  13. page is super and usefull


  14. kavitt vashist

    will you tell us annual accounts resolution will go in mgt-14 or not


  15. This new law of union by repealing the old and existing law of Sikkim violates the provisions of Article 371F of the constitution. Article 371F is the non obstinate clause and has overriding effect in regard to other provisions of the constitution. Abruptly repealing the old law of Sikkim by enacting new central law has violated the most revered provisions of ARTICLE 371 F of the constitution. Please suggest more.


No professional query in comments (but in mail). Only academic discussion here. Comments moderated. Sometime, I reply to your mail ID.

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