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The New Company Act 2012 has been made to bring Corporate Laws on par with the today’s economic scenario, as it attempts at making Company law in accordance to the changed time, Considering Global economic changes, investor’s value protection, as well as the need for greater transparency and Corporate Governance.


The Highlights of The Companies Act 2012, and some major changes brought by it.

• Maximum number of members in a private company increased from 50 to 200

• Concept of One Person Company introduced

• Shares cannot be issued at a discount except sweat equity shares

• Time gap between 2 buy-backs shall be minimum 1 year

• Terms for offer of securities, form and manner of “private placement‟ to be as prescribed

• A person liable for punishment for fraudulently obtaining credit facilities from any bank or financial institutions

• Any deposit accepted before the commencement of 2012 Act or any interest due thereon to be repaid within 1 year from the commencement of 2012 Act or from the date on which such payments are due, whichever is earlier

• Stringent norms provided for acceptance of fresh deposits including creation of deposit repayment reserve account of 15% of the amount of deposits maturing in the current year and the next FY

• Consolidation of financial statements made mandatory

• 2% of average net profits of last 3 years to be mandatorily spent on CSR for specified class of companies

• Mandatory transfer of profits to reserves for dividend declaration done away with

• Rotation of Auditor made mandatory

• One of the directors of a company shall be a person who has stayed in India for 182 days or more

• Prescribed class of companies to have at least 1 woman director. Existing companies to comply with this requirement within 1 year

• Independent Director is not liable to retire by rotation and also not to be included in the “total number of directors‟ liable to retire by rotation

• A Chairperson can be an MD or CEO at the same time, if the Articles of the company permits or if the company does not have multiple businesses or where the company has multiple businesses and has appointed 1 or more CEO for each such business

• Provisions for loan to directors applicable to private companies and need to obtain CG approval for such loans removed

• Restriction on multilateral investment subsidiaries

• Indian company can be merged with a foreign company

• Fast track merger for small companies and holding-WOS introduced

• Provisions of revival and rehabilitation of sick companies to apply to all companies and not only to an “industrial company”

• Valuation under 2012 Act to be done by registered valuer
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