Modification in Companies Act 2013

1. The CA2013 proposes a fast track and simplified procedure for mergers and amalgamations of certain class of companies such as holding and subsidiary, and small companies after obtaining appro al of the !ndian go ernment. 2. The CA2013 permits cross border mergers, both "ays# a foreign company merging "ith an !ndia Company and ice ersa but "ith prior permission of $%!. 3. The CA2013 prohibits directors and key managerial personnel from purchasing call and put options of shares of the company, its holding company and its subsidiary and associate companies as if such person is reasonably e&pected to ha e access to price'sensiti e information (being information "hich, if published, is likely to affect the price of the company)s securities*. +arlier these pro isions "ere contained in regulations framed by ,+%!, as the capital market regulator. -o", it has also been informed that ,+%! is e&pected to discuss changes in certain norms for listed firms so as to make them in line "ith the rules in the ne" Act. .. The CA 2013 increased the number of ma&imum shareholders in a pri ate company from /0 to 200. /. The ma&imum number of persons0partners in any association0partnership may be upto such number as may be prescribed but not e&ceeding one hundred. This restriction "ill not apply to an association or partnership, constituted by professionals like la"yer, chartered accountants, company secretaries, etc. "ho are go erned by their special la"s. 1nder the CA12/3, there "as a limit of ma&imum 20 persons0partners and there "as no e&emption granted to the professionals. 3. The CA2013 pro ides ne" form of pri ate company, i.e., one person company is introduced that may ha e only one director and one shareholder. The CA12/3 re4uires minimum t"o shareholders and t"o directors in case of a pri ate company. 5. The CA2013 pro ides for entrenchment of articles of association ha e been introduced.

6. The CA2013 proposed +'7o ernance for arious company processes like maintenance and inspection of documents in electronic form, option of keeping of books of accounts in electronic form, financial statements to be placed on company)s "ebsite, etc. 2. + ery company shall ha e at least one director "ho has stayed in !ndia for a total period of not less than 162 (one hundred and eighty t"o* days in the pre ious calendar year. 10. The CA2013 pro ides that all listed companies should ha e at least one'third of the %oard as independent directors. ,uch other class or classes of public companies as may be prescribed by the Central 7o ernment shall also be re4uired to appoint independent directors. -o independent director shall hold office for more than t"o consecuti e terms of fi e years. 11. The CA2013 has introduced ne" concept of class action suits "ith a ie" of making shareholders and other stakeholders, more informed and kno"ledgeable about their rights. 12. The CA2013 focused and pro ide ma8or aspect on appro als from shareholders on arious significant transactions. The 7o ernment has rightly reduced the need for the companies to seek appro als to managerial remuneration and the shareholders ha e been ested "ith the po"er to sanction the limit. 13. The CA2013 stipulates appointment of at least one "oman 9irector on the %oard of the prescribed class of Companies so as to "iden the talent pool enabling big Corporates to benefit from di ersified backgrounds "ith different ie"points.

1.. The CA2013 stipulates certain class of Companies to spend a certain amount of money e ery year on acti ities0initiati es reflecting Corporate ,ocial $esponsibility. There may be difficulties in implementing in the initial years but this measure "ould help in impro ing the 1nder'pri ileged : back"ard sections of ,ociety and the Corporate "ould in fact gain in terms of their reputation and image in the ,ociety. 1/. The CA2013 introduced -ational Company ;a" Tribunal and the -ational Company ;a" Appellate Tribunal to replace the Company ;a" %oard and %oard for !ndustrial and <inancial $econstruction. They "ould relie e the Courts of their burden "hile simultaneously pro iding speciali=ed 8ustice.

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15. The CA2013 re4uires at least se en days) notice to call a board meeting. The notice may be sent by electronic means to e ery director at his address registered "ith the company. The CA12/3 did not prescribe any notice period to call the board meeting of a company. 16. The CA2013 pro ides ne" form of pri ate company, i.e., one person company is introduced that may ha e only one director and one shareholder. The CA12/3 re4uires minimum t"o shareholders and t"o directors in case of a pri ate company. 12. The CA2013 pro ides for entrenchment of articles of association ha e been introduced. 20. The CA2013 proposed +'7o ernance for arious company processes like maintenance and inspection of documents in electronic form, option of keeping of books of accounts in electronic form, financial statements to be placed on company)s "ebsite, etc. 21. + ery company shall ha e at least one director "ho has stayed in !ndia for a total period of not less than 162 (one hundred and eighty t"o* days in the pre ious calendar year. 22. The CA2013 pro ides that all listed companies should ha e at least one'third of the %oard as independent directors. ,uch other class or classes of public companies as may be prescribed by the Central 7o ernment shall also be re4uired to appoint independent directors. -o independent director shall hold office for more than t"o consecuti e terms of fi e years. 23. 1nder the CA12/3, a director had fiduciary duties to"ards a company. >o"e er, the CA2013 has -?@ defined the duties of a director.