Companies Bill,2011- What Is New

By Author: Suzane Morgan
Total Articles: 4
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One Person Company

• The 2011 Bill enables the formation of a new entity ‘One Person Company’ (OPC).
• Under the 1956 Act, it is not possible to form or have a company with only one person as its member.
• OPC means a company with only one person as its member [Clause 2(62)]
• One person company is categorized as a private company. “Private company” is the genus. “OPC” is a ‘species’ of private company [See clause 3(1)(c)]
• OPC must satisfy the requirements applicable to private companies except the limit on number of members of 200 [See clause 2(68)]
• OPC must have a minimum paid-up capital of Rs.1,00,000 or such higher paid-up capital as may be prescribed.
• For forming a private company being one person company, one person should subscribe his name to the memorandum [see Clause 3(1)(c)]
• There is no provision of conversion of an existing sole proprietorship into an OPC. Chapter XXI (corresponding to Part IX of 1956 Act) only allows associations or entities having 7 or more partners or members to register themselves as companies.

Entrenchment ...
... provisions in articles of association

• The articles may contain provisions for entrenchment.
• Provisions for entrenchment provide that specified provisions of articles shall be alterable only if conditions or procedures more restrictive than passing a special resolution are complied with.
• The entrenchment provisions shall only be made either :
a) on formation of a company, or
b) by an amendment in the articles agreed to by all the members of the company in the case of a private company and by a special resolution in the case of a public company.
• The company shall give notice to the Registrar of entrenchment provisions in the prescribed forms. [see Clause 5(3) to 5(5)]

Corporate Social Responsibility (CSR) spends mandatory for specified companies

• CSR spends to the tune of 2% of average net profits in a financial year compulsory for every company having:
a) a net worth of ₹ 500 crores or more;
b) a turnover of ₹ 1,000 crores or more; or
c) a net profit of ₹ 5 crores or more during any financial year.
• The company shall give preference to local areas where it operates, for spending amount earmarked for Corporate Social Responsibility (CSR) activities [Clause 135]

Secretarial audit by Company Secretary mandatory for listed companies and other specified classes of companies

• Every listed company and company belonging to other class of companies as may be prescribed shall annex with its Board’s Report [See clause 134(3)], a Secretarial Audit Report given by a company secretary in practice in such form as may be prescribed. [see Clause 204(1)]
• It shall be the duty of the company to give all assistance and facilities to the Company Secretary in practice for auditing the secretarial and related records of the company. [see Clause 204(2)]
• The Board of Directors shall explain in full in their report any qualification or observation or other remarks made by the company secretary in practice in his report. [see Clause 204(3)]

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