MCA notifies rules for ten more chapters in new Companies Act

Companies Act 2013 will come into effect from April 1

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Rolling out the new Companies Act, the government has notified rules for ten more chapters, including those related to powers of boards and appointment of directors.

Most parts of the Companies Act, 2013, that replaces the nearly six-decade old law that governs corporates in the country, would come into effect from April 1.

The Corporate Affairs Ministry has notified rules for ten more chapters of the new legislation.

Rules pertaining to registration of charges, management and administration, declaration and payment of dividend, meetings of board and its powers, appointment and qualification of directors, and accounts have been notified, according to various notifications dated March 27.

Besides, rules for chapters related to incorporation, prospectus and allotment of securities, share capital and debentures, and specification of definition details have been notified.

On Wednesday, the Ministry had notified more than 180 sections of the new Companies Act. All the schedules of the new law have already been notified.

In late February, the Ministry notified rules for CSR (Corporate Social Responsibility) spending. Under the legislation, certain class of companies have to shell out at least 2 per cent of their 3-year annual average net profit towards social welfare activities.

The voluminous legislation is spread across 29 chapters, seven schedules and 470 sections.

"Considering the immediate effective date of April 1, 2014, timelines to ensure compliance is expected to be a concern for the corporates.

"What will now be interesting to see is how soon are the other related rules notified and become effective, and whether they provide any additional transition time," Yogesh Sharma, Partner, Assurance at consultancy firm Grant Thornton India LLP said.

On March 20, the Ministry had received Election Commission's approval for notifying rules related to various sections of the new Companies Act.

With the Election Commission of India announcing the schedule for the Lok Sabha polls, the Model Code of Conduct came into force from March 5. Consequently, the Ministry sought the Commission's nod for notifying the rules.

Notifications related to National Financial Reporting Authority (NFRA), Investor and Education Protection Fund, sick companies, special courts and National Company Law Tribunal (NCLT), among others, would come later.

The Companies Bill 2013 had received approval from the Parliament in August.