What is the validity of resolutions passed under Companies Act, 1956 post implementation of the provisions of the Companies Act, 2013? As an answer to this question, the MCA has issued a circular. In this Circular, MCA clarifies on transitional period for resolutions passed as per Companies Act, 1956.  

The Companies Act was notified in three (3) phases.  First phase of 98 sections  of the new Act was notified in September, 2013. On February 27, 2014, Section 135 and Schedule VII dealing with CSR was notified. Further,  on March 26,2014, 196 sections were notified.In the light of these piece-meal notifications, the validity of the resolutions passed under the 1956 Act was at stake.

MCA CLARIFIES ON TRANSITIONAL PROVISIONS:

In order to resolve these doubts and ambiguities, MCA issued Circular Number 32/2014  dated 23rd July, 2014. By way of this Circular, it was notified  that resolutions passed under the relevant provisions of 1956 Act during the period from September 1, 2013 to March 31, 2014 can be implemented in accordance with the provisions of 1956 Act notwithstanding the repeal of the said provisions, provided implementation of the resolutions commenced before April 1, 2014.This transitional arrangement will be available upto expiry of one year from the passing of the resolution or six months from the commencement of the corresponding provision in 2013 Act, whichever is later.

Hence, if the resolutions are passed before September 01st 2013 and not implemented till date then it is not valid.

TEXT OF THE CIRCULAR:

It has been brought to the notice of the Government that many companies have passed resolutions during financial year 2013-14 under the relevant provisions of the Companies Act, 1956 (Old Act) which are/were at  different stages of implementation after coming into force of corresponding provisions of the new Companies Act, 2013 (New Act). Ministry has received suggestions that while section 6 of the General Clauses Act, 1897 protects the validity of such resolutions, it will be advisable if a suitable communication is also issued in the matter by the Ministry by way of abundant caution.2. The matter has been examined in the light of similar issues clarified earlier. It is clarified that resolutions approved or passed by companies under relevant applicable provisions of the Old Act during the period from 1st September, 2013 to 31st March, 2014, can be implemented, in accordance with provisions of the Old Act, notwithstanding the repeal of the relevant provision subject to the conditions (a) that the implementation of the resolution actually commenced before 1st April, 2014 and (b) that this transitional arrangement will be available upto expiry of one year from the passing of the resolution or six months from the commencement of the corresponding provision in New Act whichever is later. It is also clarified that any amendment of the resolution must be in accordance with the relevant provision of the New Act.

This issues with the approval of the competent authority.

Click here to download the Circular.

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