The Companies Bill 2012 passed in the Lok Sabha Highlights of the Bill

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The much awaited Companies Bill, 2012 (Bill) was passed by the Lok Sabha on December 18, 2012, replacing 56-year-old Companies Act, 1956. The Bill seeks to consolidate and amend the law relating to the companies and intends to improve corporate governance and to further strengthen regulations for corporates.
The much awaited Companies Bill, 2012 (Bill) was passed by the Lok Sabha on December 18, 2012, replacing 56-year-old Companies Act, 1956. The Bill seeks to consolidate and amend the law relating to the companies and intends to improve corporate governance and to further strengthen regulations for corporates.
 
The Bill is divided into 29 chapters, 470 clauses and 7 schedules.
 
Some of the key highlights of the Bill are listed below:
  
One Person Company

  • The concept of One Person Company has been introduced. Clause 3(1)(c) provides for the same.
  • Clause 2(62) defines a One Person Company as a company which has only one person as a member.

 
                Private Company

  • Number of permissible members in a private company has been raised to 200 from 50 by vitue of clause 2 (68) (ii)

 
Private Placement  
 

  • Provisions for offer or invitation for subscription of securities on private placement basis have been revised to ensure more transparency and accountability.
  • Clause 42 lays down that an offer or invitation of securities through private placement may be made in the form and manner prescribed subject to compliance with the following conditions prescribed:

 
(a) the offer or invitation in a financial year, shall be made to such number of persons, excluding qualified institutional buyers, and on such conditions (including the maximum amount to be raised) as may be prescribed;
(b) the value of such offer or invitation shall be with an investment size of such amount as may be prescribed; and
(c) the company shall not issue any prospectus for such offer or invitation and such offer or invitation shall be made through a private placement offer letter
  
Share Capital
  

  • Clause 58(2) of the Bill provides that the securities of a public company shall be freely transferable subject to the provisions that any contract or arrangement between two or more persons shall be enforceable as contract.
  • By virtue of clause 53, companies are prohibited from issuing shares at discount except in case of issue of sweat equity shares.