Update on Companies Act, 2013

new-companies-act-2013

Update on Companies Act, 2013

• Commencement Notification Dated December 7, 2016
• Companies (Transfer of Pending Proceeding) Rules, 2016
• Companies (Removal of Difficulties) Fourth Order, 2016

Introduction:

Pursuant to Section 434 (1) (C) of the Companies Act, 2013 (“the Act”) provides that on a date which may be notified by the Central Government, all proceedings under the Companies Act, 1956 (“1956 Act”) including proceedings relating to Arbitration, Compromise, Arrangements, Reconstruction and Winding-Up of Companies, pending immediately before such date before District Court or High Court, shall stand transferred to the tribunal and tribunal may proceed to deal with such proceedings from the stage before their transfer.

Central Government has a power to prescribe only such proceedings relating to winding-up that shall be transferred to the Tribunal that at a stage as may be provided.

Commencement Notification Dated December 7, 2016 :

Ministry of Corporate Affairs vide Notification dated December 7, 2016 has notified certain Sections of the Companies Act, 2013 which will come into force with effect from December 15, 2016. The list of Sections which are notified is as follows:

 Sr.No  Notified Section 
 1  Clause (23) of section 2
 2  Clause (c) and (d) of sub-section (7) of section 7
 3  Sub-section (9) of section 8
 4  Section 48
 5  Section 66
 6  Sub-section (2) of section 224
 7  Section 226
 8  Section 230 [except sub-section (11) and (12)], and
Sections 231 to 233
 9  Sections 235 to 240
 10  Sections 270 to 288
 11  Sections 290 to 303
 12  Section 324
 13  Sections 326 to 365
 14  Provision to section 370
 15  Sections 372 to 373
 16  Sections 375 to 378
 17  Sub-section (2) of section 391
 18  Clause (c) of sub-section (1) of section 434

 

Companies (Transfer of Pending Proceeding) Rules, 2016:

Ministry Of Corporate Affairs wide Notification dated 7th December, 2016 vide No. G.S.R. 1119(E) has notified Companies (Transfer of Pending Proceedings) Rules, 2016 (“the Rules”). The Rules shall come into effect from 15th December, 2016, except rule 4, which shall come into force from 1st April, 2017. The Rules provide for certain definitions which are as follows:

Definitions:-

(a) “Code” means the Insolvency and Bankruptcy Code, 2016 (31 of 2016);`

(b) “Tribunal” means the National Company Law Tribunal constituted under section 408 of the Companies Act, 2013.

Rule 3 provide for Transfer of pending proceedings relating to cases other than Winding up. All proceedings under the Act, including proceedings relating to arbitration, compromise, arrangements and reconstruction, other than proceedings relating to winding up on the date of coming into force of these rules shall stand transferred to the Benches of the Tribunal exercising respective territorial jurisdiction. However all those proceedings which are reserved for orders for allowing or otherwise of such proceedings shall not be transferred.

Rule 4 provides for Pending proceeding relating to Voluntary Winding up – All applications and petitions relating to voluntary winding up of companies pending before a High Court on the date of commencement of this rule, shall continue with and dealt with by the High Court in accordance with provisions of the Act.

Rule 5 states that Transfer of pending proceedings of Winding up on the ground of inability to pay debts:-

(1) All petitions relating to winding up on the ground of inability to pay its debts pending before a High Court, and where the petition has not been served on the respondent as required under rule 26 of the Companies (Court) Rules, 1959 shall be transferred to the Bench of the Tribunal established under of the Act, exercising territorial jurisdiction and such petitions shall be treated as applications under sections 7, 8 or 9 of the Code, as the case may be, and dealt with in accordance with Part II of the Code:

(2) All cases where opinion has been forwarded by Board for Industrial and Financial Reconstruction, for winding up of a company to a High Court and where no appeal is pending, the proceedings for winding up initiated under the Act, pursuant to section 20 of the Sick Industrial Companies (Special Provisions) Act, 1985 shall continue to be dealt with by such High Court in accordance with the provisions of the Act.

Rule 6 contains provisions regarding Transfer of pending proceedings of Winding up matters on the grounds other than inability to pay debts – All petitions filed pending before a High Court and where the petition has not been served on the respondent shall be transferred to the Bench of the Tribunal exercising territorial jurisdiction and such petitions shall be treated as petitions under the provisions of the Companies Act, 2013.

Rule 7 contains Transfer of Records – Pursuant to the transfer of cases as per these rules the relevant records shall also be transferred by the respective High Courts to the National Company Law Tribunal Benches having jurisdiction forthwith over the cases so transferred.

Companies (Removal of Difficulties) Fourth Order, 2016 (effective from 15th December, 2016):

Whereas difficulties have also arisen regarding transfer of proceedings relating to cases other than winding-up where hearing have completed and only pronouncement of order is pending and the transfer to the tribunal may result into delay and rights of the parties to the proceedings are likely to be affected prejudicially then in order to resolve that difficulty amendment has been brought to the Section 434 (1) (C) of the Act.

The Amendment provides for that only such proceedings relating to cases other than winding-up, for which the proceedings or order for allowing are not reserved by the High Court shall be transferred to the Tribunal. Further all proceedings under 1956 Act other than cases relating to winding-up of Companies that are reserved and such proceedings relating to winding-up which have not been transferred from the High Court shall be dealt according to the provisions of the Companies Act, 1956 and Companies (Court) Rules, 1959.

http://www.mca.gov.in/Ministry/pdf/commencementnotif_08122016.pdf visited on 12.12.2016
http://www.mca.gov.in/Ministry/pdf/CompaniesTransferofPending_08122016.pdf visited on 12.12.2016
http://www.mca.gov.in/Ministry/pdf/CompaniesROD_08122016.pdf visited on 10.12.2016

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