In what may come as good news for India Inc, come April 1, around 60% of the new Companies Act, 2013, will come into force. The ministry of corporate affairs (MCA) on Wednesday came out with an additional list of around 183 sections of the new Act that will come into effect in six days. In September 2013, MCA had notified 98 sections of the new law and, later in February this year, notified the section dealing with Corporate Social Responsibility.
Altogether, 282 sections out of 470 sections will get notified from April 1. However, experts said despite these notifications, certain provisions of the old Companies Act, 1956, will continue to be in force, leading to confusion in the next fiscal.
According to ministry officials, the draft rules to these 183 sections will come out in the next few days.
These sections deal with various key aspects of the new companies law, including public and private placement, allotment of securities, resolutions requiring special notice, establishment of Serious Fraud Investigation Office (SFIO), one-person company, related-party transaction, audit and auditors, qualification of directors, board and its powers and revival and rehabilitation of sick companies, among others.
MCA has, however, left out 40% of the 470 sections in the new law, the rules for which will not be released anytime soon as they are still under the works.
These remaining sections relate to National Financial Reporting Authority (NFRA), Investor and Education Protection Fund, compromise and arrangement, oppression and mismanagement, winding up, sick companies ,special courts and National Company Law Tribunal (NCLT), among others. Some of the left-out sections deal with fraud and the damages required to be paid by companies involved.
Lalit Kumar, partner in J Sagar and Associates, a leading law firm, said: "It is a good sign for India Inc that MCA has come out with a list of 180-odd sections which will be notified. However, there were some expectations on the transitory period for the implementation of some key sections like appointment of women director, auditor appointment and rotations, etc. As of today, there is no such mention."
Echoing the sentiments, Sai Venkateshwaran, partner and head of accounting advisory services, KPMG in India, said: "Corporates will get very little time to understand the ramifications...One does hope the rules contain some additional transitional provisions that would provide companies reasonable time to comply with the new requirements."
MCA had first notified a total of