ASSENTED BY PRESIDENT OF INDIA ON 29 TH AUGUST 2013
- The new Act has 29 chapters, 470 sections and 7 Schedules;
- A substantial part of the new act will be in the form of rules, which will be prescribed separately;
- Concept of 'One Person Company' introduced;
- No central government approval required under most actions by Company which require such approval under the existing law;
- Compulsory rotation of auditors;
- Liability of advisors of Company under Class action suits;
- Concept of 'Independent Directors' recognised and detailed;
- Compulsory woman director in prescribed class of companies;
- The new act has tried to bring private companies at par with public companies from the compliance perspective;
- Cross border mergers and amalgamations possible;
- NCLT to be operational finally.
OUR TRANSACTIONS TO WHICH CHANGES WILL BE RELEVANT
- PRIVATE EQUITY
- BANKING TRANSACTIONS
- NCD TRANSACTIONS
- DUE DILIGENCE
Private Equity Transactions
- Definition of Listed Company –
- "listed company" means
a company which has any of its securities listed on any recognised
Would this mean that a company (including a private company), which has only its debentures listed, should comply with all the provisions applicable to listed companies? e.g. having 1/3rd independent directors and compliances to be made by a listed company including constitution of committees.
- "listed company" means a company which has any of its securities listed on any recognised stock exchange.
- Section 42 – Private Placement
- Provisions relating to private placement of all securities
- Invitation to be given by a private placement offer letter
- Private placement to be made to such persons whose names are recorded by the company prior to the invitation and offer shall be made by name
- Terms and conditions to be prescribed under rules
This does not seem to be in tune with the definition of privatecompanies which allows 200 members in a private company.
Name of entities will have to be decided to whom securities shall be issued.
- Section 62 – Further Issue of
- Applicability to all types of Companies;
- Applicability of the provisions from day 1 (section 81 of the companies act, 1956 after 2 years from the date of formation of the company);
- Further issue of capital can be to employees under ESOP if special resolution passed by shareholders (terms and conditions to be prescribed);
- Issue to other persons shall be approved by a special resolution and at a price determined by a registered valuer;
- Issue of convertible loan and debentures shall be on terms and conditions approved by shareholders and no need to comply with any rules prescribed in relation to the same.
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