Tag Archives: The Companies Act 2013


One of the fundamental principles of corporate law is that a company independent existence than the existence of its shareholders. Therefore, all members of a company may die, the company will not.

When I read this principle, admittedly, I had limited vision. I presumed members either as natural persons with life and death or bodies corporate as members, their merger, amalgamation, winding up and liquidation. The removal of the name of the member company from the registrar was not an example suggested then.

There would be no direct impact on the existence of the company if the Registrar of Companies removed the name of a member company under Section 248 of the Companies Act, 2013 from the register of companies. However, for companies with small numbers of members, this is not an ideal situation.

The removal of the name of one or more member companies:

  • quorum in general meetings;
  • holding of company meetings on shorter notice;
  • holder of beneficial interest in a share if in favour of such a member company; and
  • Significant beneficial ownership (SBO) may have interest impacts.

This list is not an exhaustive one.

No, paying dividends to these companies does not bother. On the contrary, it may help to a limited extent. The right issue of shares may also have an exciting twist.

Quorum in general meeting is not a big deal if managed by other members properly. They may calculate the required number of transfers to satisfy the legal number.

Even without such an odd situation, a company may face a hurdle to convene a general meeting on shorter notice. The company may not call an extraordinary public meeting on a shorter period notice, where a member company holds more than 5% shares. Similarly, where the company has less than 20 members, there will not be an annual general meeting on a shorter notice period. In the first case, only a fresh issue of shares may help. In the second case, some well-calculated share transfers by an existing member may help.

In all earlier situations, these shares shall always remain in the hand of companies whose name is not in the register of companies.

I see no direct impact on the holder of the beneficial interests except to comply with an earlier direction given by the actual owner or beneficial owner.

The law related to significant beneficial ownership comes into the picture if the member company has a shareholding of more than the threshold limit of the applicability of these rules. Unlike previous situations here, these shares may land in the hand of the Investor Education and Protection Fund Authority. The company will have to transfer these shares held by such a member company will also be transferred to the Investor Education and Protection Fund Authority in case of declaration of dividend, but with a wait of seven years.

As the name of the member company remains there in the register of members despite its removal from the register of companies in the office of the Registrar of Companies, it requires some regulatory step to be taken. I suggest a law to transfer shares belonging to these member companies in favour of the Investor Education and Protection Fund Authority.



Would you like if the name of your company is not of your choice? Would you like if the name of your company is alphanumeric beyond your control?

New Rule 33A of the Companies (Incorporation) Rules, 2014 may create such a possibility.  The root of the new rule is under Section 16 of the Companies Act, 2013.

Section 16, till this notification, was one of the marginalized provisions of the Companies Act, 2013 ignored by consultants and companies alike.

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Effective Provisions of the Companies Amendment Act 2017 w.e.f. 13 June 2018

With Four Notifications; S.O. 351(E) dated 23rd January 2018, S.O. 630(E) dated 9th February 2018, S.O. 1833(E) dated 7th May 2018 and S.O. 2422(E) dated 13th June 2018 most provisions of the Companies (Amendment) Act, 2017 (1 of 2018) come into force. Here is a bird’s eye view.

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In an earlier post here, we discussed warrant in corporate law and Securities law. In another post here we discussed, we discussed issues related to Share warrant and bottle neck making it impossible to issue share warrant as we know in corporate law. In this post we will discuss warrant as in securities law.

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AMENDMENT: Administration of CSR

In a post earlier here, we discussed provisions of Section 135 read with rule 4 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 regarding Administration of Corporate Social Responsibility Policy. Sub – rule (2) of rule 4 allow board of directors of a company to choose among various options, a better option to administer the CSR Policy. This rule 4(2) was slightly amended by the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2015. We discussed those amendment rules earlier here.

Now, a gazetted notification published on 23rd May 2016 in Official Gazette of India, which came into force from same date; amend sub – rule (2) of rule 4.

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In last post, we discussed meaning of warrant in with particular reference to share warrant. There are two questions pertinent to issue of share warrant:

  1. May Share Warrants be issued under the Companies Act, 2013 as fresh securities without pre – existence of underlying shares? or
  2. May share warrants be issued under the Companies Act, 2013 as conversion of underlying shares already existence?

In this post, we will discuss these questions.

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In simple dictionary meaning warrant is to make particular activity necessary. In criminal law, warrant is term clearly defined term meaning a legal document permitting an action by authority and making its compliance necessary to the person named therein. In corporate and financial word, warrant is an instrument with different meaning at different financial and legal jurisdiction. In this post, we will discuss these meaning of warrant with reference to Share Warrant.

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Directorship within limit

Ministry of Corporate Affairs issued an advertisement (a Public Notice) in newspapers asking all directors to bring down number of their directorship to the permissible limit as prescribed under Section 165 of the Companies Act, 2013.

“All such individual who are holding directorship in more than, the limit of number of companies prescribed per the aforesaid mentioned provisions of the Act, are hereby notified to bring down the number of their directorship to / below the permissible limits as also prefer compounding application before the competent authority in terms of Section 621A of the Companies Act, 1956 within 30 days hereof and get the offence compounded. In case of non – compliance with the above directions, the jurisdictional ROC will initiate prosecution without further individual notices to them.”

In this blog post, we will discuss this Public Notice and applicable provisions.

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Compliance of Indian corporate law is a big issue for its stakeholders. Successive government here talk about ease of doing business and do mammoth task to achieve it with confusion related to directions.

The Companies Act, 2013 followed by end numbers of Companies Rules and their amendment rules was not enough; Ministry of Corporate Affairs launched V2R2 through its high profile contractor Infosys. Now, we have another circular to get some “ease of doing relaxation”. We will discuss short term circular here.

General Circular 03/2016 dated 12th April 2016 aims to Relaxation of additional fees and extension of last date of filing of various e-Forms under the Companies Act, 2013. The circular read as under:

“This ministry has launched V2R2 on 28th March, 2016, downtime was given to Infosys from 25th March 2016 to 27th March, 2016, since the launch of the system, a number of stakeholders have faced issues and representations have been received from stakeholders to resolve the issue including, for allowing waiver of additional till the new system stabilizes.

In view of the above, it has been decided to relax the additional fee payable on e- forms which are due for filing by companies between 25th March 2016 to 30th April 2016 as one time waiver of additional fee and it is also clarified to stakeholders if such due e – forms are filed after 10.05.2016, no such relaxation shall be allowed.

This issues with the approval of the competent authority.”

This circular has many communications to its stakeholders. Most read is, “Forms due for filing during period between 25th March, 2016 to 30th April, 2016 may be filed without additional fee till 10th May 2016”.

The circular contain other interpretation and information:

  • Ministry launched V2R2 system and replacing earlier filing system. A simple Google search suggests it as a system developed by IBM.
  • Downtime allowed to Infosys was from 25th March 2016 to 27th March, 2016.
  • Among other representations, for allowing waiver of additional till the new system stabilizes, was one and prominent.
  • Ministry seems to take no blame on itself.
  • System may take more time which may not be before 30th April 2016.
  • System may have practical trial for first 10 days in month of May.
  • Heavy filing may be there in May second half and thereafter  plan accordingly.
  • Start up India can wait as presently MCA is on trial for it.

It is advisable, not to file any document related to companies without assuming own risk.

This circular does not talk about Limited Liability Companies, to keep trying and assume own risk. 

I have just a request with government (please read bureaucracy, Not PM Modi), please understand compliance calendar of stakeholders. December to February may be best time to experiment.

Please note: This blog invite readers to share their comments, suggestions, hardship, queries and everything in comment section. This blog post is not a professional advice but just a knowledge sharing initiative for mutual discussion.


Government recently introduced the Companies (Amendment) Bill, 2016 to the Companies Act, 2013 proposes thirteen amendments in Section 2 related to definitions. Definition clauses always need contextual reading. Now, we will discuss these amendments in definitions.

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CARO 2016

The Companies (Auditor’s Report) Order, 2016 is notified on 29th March 2016 in supersession of the Companies (Auditor’s Report) Order, 2015 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii), vide number S.O. 990 (E), dated the 10th April, 2015, except as respects things done or omitted to be done before such supersession.
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Double Removal of Difficulties Orders

In a rare gesture, Ministry of Corporate Affairs notified two orders for Removal of Difficulty on same date.  I have no legal understanding for the requirement of two separate orders, except little drafting hurdle of combined order for its statement of reason or preamble.

Now, we will discuss both orders here.

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One of the biggest concerns among stakeholders related to incorporation of companies in India was diverse practices across Company Registrar Offices related to documentation. There was a joke that Registrar Offices colour of ink using which documents should be signed, which will otherwise be scanned in black. All this was due to different interpretation of relatively simple laws related to incorporation. It was learned that Institute of Company Secretaries of India initiated for discussion across registrar offices and professionals to bring consensus among registrar offices. Many time Registrar transferred from one offices to another bring their local practise to another jurisdiction or adopt new one, keeping aside own interpretation. Without any doubt, majority of visit to Registrar Offices was related to incorporation only.

This year bring a welcome change. New financial year will be new as far as company incorporation is concern. Even though, I still see opportunity for more reform.

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Triggering Unlimited Liability for Members

Recently introduced amendment bill to the Companies Act, 2013 propose to reintroduce unlimited liability for members in certain cases. Though, similar provision was there in earlier in the companies Act, 1956; I have no intention to go into history; but to examine this provision in light of justice and equity.

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Investor Education and Protection Fund Authority established under Section 125(5) of the Companies Act, 2013 is an authority to administer for administration of Investor Education and Protection Fund established under Section 125(1) of the Act. Operating provisions of Section 125 are not force, but recently a Notification S.O. 125(E) dated 13th January 2016 notified part of this Section to be effective with effect from 13th January 2016. Consequently, Ministry of Corporate Affairs also put a draft notification for the Investor Education and Protection Fund Authority (Appointment of Chairperson and Members, holding of meetings and provision for offices and officers) Rules, 2016. In this post, we discuss the Notification and these Rules.

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Central Registration of companies is under consideration since long and is being considered on different forums. The Central Government silently launched a pilot project for setting of Central Registry for companies in India. This should initiate more actively by all interest groups to avoid any future concern, as happened in case of companies. In this post, we will discuss notification setting the Central Registration Centre and corresponding amendment in the Companies (Incorporation) Rules 2014.

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Ministry of corporate Affairs issued a notification dated 14th December 2015 and published here in the Gazette of India dated 15th December 2015 regarding amendment in the Companies (Meetings of Board and its Power) Rules 2014.

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Meetings of Board and its Power: Second Amendment Rules

Ministry of corporate Affairs issued a notification dated 14th December 2015 and published here in the Gazette of India dated 15th December 2015 regarding amendment in the Companies (Meetings of Board and its Power) Rules 2014.

The Companies (Meetings of Board and its Power) Second Amendment Rules, 2015 (i) inserts a new Rule 6A, (ii) omit present Rule 10 and (iii) amend present Rule 15(3).

We will discuss newly inserted Rule 6A in a future post. In this post we bill discuss other two amendments in very brief way.

Loan to Directors

We have discussed now omitted Rule 10 earlier here. These rules became redundant after the Company (Amendment) Act, 2015 as discussed earlier here. Hence, it is deleted.

Amendment in Rule 15

We have discussed Rule 15 earlier here. There is a minor but very important amendment in Rule 15(3). In rule 15, in sub-rule (3), for the words “special resolution”, wherever they occur, the word “resolution” shall be substituted.

This amendment is in line with the amendment in Section 188 by the Companies (Amendment) Act, 2015 discussed earlier here.

This has a very significant effect and dilutes corporate governance to certain level. This cut power of non – promoter investors whether they are indigenous investors or foreign investors.

Please note: This blog invite readers to share their comments, suggestions, hardship, queries and everything in comment section. This blog post is not a professional advice but just a knowledge sharing initiative for mutual discussion.


Ministry of corporate Affairs issued a notification dated 14th December 2015 and published here in the Gazette of India dated 15th December 2015 regarding amendment in the Companies (Audit and Auditors) Rules, 2014.

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Remaining Part of Companies Amendment Act became Effective

A gazette notification posted here on official website of the Gazette of India and posted on website of Ministry of Corporate Affairs says that Section 13 and Section 14 of the Companies (Amendment) Act, 2015 came into force with effect from 14th December 2015. The official language of notification read, “The Central Government hereby appoints the 14th day of December, 2015 as the date on which the provisions of section 13 and 14 of the said Act shall come into force.”

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