Ever since the  arrival of Companies Act, 2013, the corporate market is immersed in its tidal waves. Simple, Precise and to the point- this Act sweeps you off your feet with its 29 chapters, 7 schedules and 470 sections.  The viral wave seems to have reached the Government as well. The ECI (Election Commission of India) has finally shown the green flag to this new-born Act.

The final rules governing this Act will be released by the Ministry of Corporate Affairs next week. Till date, 98 sections of the Act have been notified by the Ministry. Recently, the rules regarding Corporate Social Responsibility (CSR) have also been notified. Companies having a net worth of Rs. 500 crore or more OR having a turnover of  Rs. 100 crore or more OR Net Profit of Rs. 5 crore or more will mandatorily have to spend 2% of their average net profit of last three years on Social upliftment.  

Except the rules relating to National Company Law Tribunal (NCLT) and National Financial Reporting Authority (NFRA) , all the other rules will be applicable w.e.f from 01st April, 2014.  Some of the striking features of the Companies Act that start-ups should rejoice about are:

 

• Start-ups can opt freely for crowd funding and angel funding due to the cushion of maximum members being increased to 200.
• Concept of dormant company which will allow the start-ups to operate with much ease in the initial 5 years.
• The concept of “small company” as made applicable by this legislature.
• Provision for setting up a One Person Company.
• AGMs can be held on Sundays, without the fear of flying notices.
• Contributing to Incubators, notified by the Central Government, is eligible for spending under CSR program (incubators-Time to raise a toast!!)

It will be very interesting to see how the market players react to this. While some are extremely happy and welcoming, some are miffed with the little time that will be available at their disposal  to comply with its provisions. We will not get into the debate about the good, bad and gray provisions of the Act. Any new change is subject to various contemplations, controversies and radicalism. To what extent they are valid and how the provisions will actually be administered will be some thing worth witnessing.

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