Companies Act

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Decoding the Provisions

Old Vs New Law

Historical Preview Necessity of New Law Committee Report Concept Paper Highlights-Companies Bill 2011 What's New & Modified Old vs New Law

Old vs New Law

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Under this section, we have made comparison between the Companies Bill 2011 and Companies Act 1956 on various topics under different chapters of the bill. This section , can you help you in finding out in quick manner, the changes in the new or old law. Please click the relevant chapter, to read the comparison . Chapter -II - Incorporation of Company and matters incidental thereto Chapter III - Prospectus and allotment of securities

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Chapter -IV - Share Capital and Debentures Chapter V - Acceptance of Deposits by Companies Chapter VI - Registration of Charges Chapter VII - Management and Administration Chapter VIII - Declaration and Payment of Dividend Chapter IX - Accounts of Companies Chapter X - Audit and Auditors Chapter XI - Appointment and Qualification of Directors Chapter XII - Meetings of Board and its Power Chapter XIII - Appointment and Management of Managerial personnel Chapter XV - Compromise, Arrangements and Amalgamations Chapter XVI - Prevention of Oppression and Mismanagement Chapter XIX - Revival and rehabilitation of Sick Companies Other Chapters

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Chapter III : Prospectus and allotment of securities Basis of Difference

Contents of Prospectus

Companies Bill, 2011

Content of prospectus is stated in the section itself. Section also provides for declaration of source of promoter Contribution in the prospectus. Besides the stated matter in the section the bill reserves the power to declare such other matters and set out such other reports in the prospectus as may be prescribed. The Power of SEBI to administer the sections of the Companies Act related to listed company and company, which is intending to get itself listed, has been extended to include some more categories under the chapter prospectus and allotment of securities, shares capital and debentures. Only with the approval of, or an authority given by the company in general meeting by way of special resolution. Notice of such proposed variation shall also be published in the

Companies Act, 1956

Content of prospectus is stated in the schedule to companies Act 1956..

Sections to be administered by SEBI

The Companies act also provided for the power of SEBI to administer the sections of the Companies Act with a limited coverage of the sections

Variation in terms of contract or objects in Prospectus

Only with the approval of, or an authority given by the company in general meeting. Publication in the newspaper is not required. No restriction for buying, trading or

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Companies Act

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Offer by Sale by Members

newspapers Such Company shall not use the amount raised through prospectus for buying, trading or otherwise dealing in equity shares of any other listed company The dissenting shareholders shall be given an exit offer by promoters or controlling shareholders in the prescribed manner Certain Members of a company can offer part of their holding to public; in the prescribed manner, in consultation with the Board of directors. Document by which the offer of sale to the public is made shall be deemed to be a prospectus Such members would authorize the company to act on their behalf and shall reimburse the company for the expenses.

otherwise dealing in equity shares of any other listed company. No exit offer for dissenting shareholders.

Option of offer of sale by members was not provided under the Companies Act 1956

Shelf Prospectus

The companies who can file shelf prospectus will be prescribed by SEBI Apart from untrue statement, persons who have authorized the issue of prospectus shall also be criminally liable, in case prospectus contains statement which is misleading in form or context or where any inclusion or omission of any matter is likely to mislead. Punishment has been made stringent the person responsible shall be liable for mandatory imprisonment for minimum 6 months and maximum 10 years along with fine equivalent to amount of fraud and maximum upto 3 times of such amount of fraud. Now civil liability will arise in cases of prospectus issued for all types of securities and not only shares and debentures.

Criminal Liability for mis statement in Prospectus

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Only Public Financial Institutions, Public Sector Banks or Schedule Banks whose main object is financing can issue Shelf Prospectus Where a prospectus issued after the commencement of this Act includes any untrue statement, every person who authorised theSubmit issue of the 8 prospectus shall be Now punishable as criminal liability which is non compoundable..

Civil Liability for Mis-Statement in Prospectus

Civil liability will arise in cases of prospectus issued for shares and debentures only.

Apart from untrue statement, Civil liability will also arise in case inclusion or omission of any matter which is misleading

Liability only in case of untrue statements

Civil liability is also been extended to experts and his liability shall not only be limited to any untrue statement in the prospectus made by him as expert. Companies may now issue Global Depository Receipt subject to the prescribed conditions by passing special resolution Subject to the fulfillment of specified conditions 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 in such form and manner as may be prescribed.

Experts were out of preview of Civil Liability.

GDR

Provision for issuance of GDR has not been dealt under the Companies Act 1956.

Private Placement

No specific provisions for private placement.

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Companies Act

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