Implementation of the Companies Act, 2013

Companies Act 2013 3 Minutes

Section 1 of the Companies Act, 2013 (18 of 2013) came into force with effect from 29 August, 2013, the date of receipt of assent of the President of India.

98 provisions of the Companies Act 2013 are brought into force by the Ministry of Corporate Affairs (‘MCA’) from September 12, 2013. For MCA notification, click here.

These 98 provisions are deliberated separately. Click on tag “12 Sept 2013” for deliberations.

From 01 April 2014 few more provisions (184 in number), all seven Schedules to the Act along with Rules are brought to force.

By virtue of Section 465 of the Companies Act, 2013, the corresponding provisions of the Companies Act, 1956 are not applicable. However, section 465 is not yet brought to force!

So far, MCA has issued several clarifications.

  1. On September 13, 2013 MCA clarified that (a) the Registrar of Companies may register Memorandum and Articles of Association received till September 11, 2013 as per definition of ‘Private Company’ under the Companies Act 1956. (b) Further, Explanatory Statements included in notice convening general meeting of members and issued on or after September 2013 shall be in accordance with Section 102 of the Companies Act, 2013. (c) Until the Central Government notifies new Accounting Standards, the Accounting Standards notified under the Companies Act 1956 shall apply. (d) If notice of general meeting was issued prior to September 12, 2013 seeking consent of members by ordinary resolution in respect of matters enumerated in Section 180 which requires special resolution (as corresponding S. 293 of the Companies Act 1956 required consent by ordinary resolution), then such resolutions may be passed as per requirement of the Companies Act, 1956. For MCA General Circular no.15 of 2013, click here.
  2. On September 18, 2013 MCA clarified that 98 provisions of the Companies Act, 2013 prevails over the relevant corresponding provisions of the Companies Act, 1956 with effect from September 12, 2013. For MCA General Circular no. 16 of 2013, click here.
  3. On September 20, 2013 MCA issued Companies (Removal of Difficulties) Order,2013. Ss. 24 (S.55A), 58 (111), 59(111A). By the said order, MCA has vested powers for matters stated in sections 24, 58 and 59 of the Companies Act, 2013 with the Company Law Board until establishment of National Company Law Tribunal. For MCA order, click here.
  4. On November 19, 2013 – MCA clarified that provisions of Section 372A of the Companies Act, 1956 shall continue to operate until corresponding new provision under Section 186 of the Companies Act 2013 is notified. For MCA General Circular no.18 of 2013, click here.
  5. On December 10, 2013 – MCA clarified that where companies contribute amount to ‘Electoral Trust Company’ for contributing to political parties, it is not required to make disclosure under section 182(3) of the Companies Act, 2013 and it will suffice if it discloses amount contributed to an electoral trust company. However, where a company contributes amount directly to political parties, it shall make disclosure under section 182(3). Electoral Trust Companies will be required to make disclosure of amount received from other companies/ sources in their books of accounts and also disclose amounts contributed by them to political parties under section 182(3). For MCA General Circular no.19 of 2013, click here.
  6. On December 27, 2013 – MCA clarified that shares held by a company or powers exercised by it in a fiduciary capacity shall not be counted for the purpose of determining the holding-subsidiary relationship in terms of section 2(87) of the Companies Act, 2013. For MCA General Circular no.20 of 2013, click here.
  7. On February 14, 2014 – MCA clarified that till section 186 of the Companies Act, 2013 is brought to force (it is made operational from April 01, 2014),  any guarantee give or security provided by a holding company in respect of loans made by a bank or financial institutions to its subsidiary company, exemption under section 372A(8)(d) shall be applicable, even though section 185 of the Companies Act, 2013 is brought to force from September 12, 2013. MCA has also stated that this exemption will however be applicable to cases where loans so obtained (by subsidiary) are utilised by the subsidiary for its principal business activities. For MCA General Circular no.03 of 2014, click here.
  8. On March 25, 2014 – MCA clarified that resolution passed under section 293 of the Companies Act, 1956 prior  to September 12, 2013 with reference to borrowings and/or creation of security on assets of the Company will be regarded as sufficient compliance of section 180 of the Companies Act, 2013 for a period of one year from September 12, 2013. For MCA General Circular no.04 of 2014, click here.
  9. On April 01, 2014 – MCA made public a table indicating the provisions of the Companies Act, 2013 so far notified, corresponding provisions of the Companies Act, 1956 and corresponding provisions of the Companies Act, 1956 which shall remain in force. For MCA General Circular no.07 of 2014, click here.
  10. On April 04, 2014 – MCA clarified that the financial statements (and documents required to be attached thereto), auditors report and Board’s report in respect of financial years that commenced earlier that April 01, 2014 shall be governed by the relevant provisions / schedules / rules of the Companies Act, 1956 and that in respect of financial years commencing on or after April 01, 2014, the provisions of the Companies Act, 2013 shall apply. For MCA General Circular no.07 of 2014, click here.
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