Ministry of Corporate Affairs (“MCA”) has notified the following sections of the Companies Act, 2013 (“CA 2013”) vide notification S.O.3677(E) dated 7 December 2016 which shall become effective from 15 December 2016.
· Section 2 (23): Definition of Company Liquidator - Eleventh Schedule of Insolvency and Bankruptcy Code, 2016 has amended the definition of the term “Company Liquidator” which states that "Company Liquidator" means a person appointed by the Tribunal as the Company Liquidator in accordance with the provisions of Section 275 for the winding up of a company under CA 2013
· Section 7 (7) (c) and (d): The NCLT has now been granted powers to remove the name of the company from the Register of Companies or pass an order for winding up of the company where a company has been incorporated by furnishing any false or incorrect information or representation or by suppressing any material facts
· Section 8 (9): The clause deals with the transfer of proceeds of winding up of companies incorporated under Section 8 of the Act
· Section 48: Variation of shareholders rights – The provisions pertaining to variation of shareholders rights was governed by Section 106 and Section 107 of Companies Act, 1956 (“CA 1956”) until now. However, going forward the variation of rights of shareholders would be governed by the provisions of Section 48 of CA 2013
· Section 66: Reduction of share capital – The provisions pertaining to reduction of share capital was governed by Section 100 to Section 105 of CA 1956 until now. However, going forward the reduction of share capital would be governed by the provisions of Section 66 of CA 2013
· Section 224 (2): Power of Central Government to file a petition for the winding up of company on the basis of inspectors report
· Section 226: Voluntary winding up of the company etc. not to stop investigation proceeding
· Section 230 [except sub-section (11) and (12)]: Power to compromise and make arrangements with creditors and members, except the case of Takeover as specified in Section 230(11) and Section 230(12)
· Sections 231 to 233 and Section 235 to 240: Compromises, Arrangements and Amalgamations (Chapter XV of the Act) except section related to mergers and amalgamation with foreign company which is yet to be enforced
· Sections 270 to 288 and Section 290 to 303: The provisions pertaining to modes of winding up and winding up by Tribunal are notified. However, as per Section 255 of Insolvency Bankruptcy Code, provisions governing voluntary winding up is omitted under Companies Act, 2013 with effect from 15 November 2016 and voluntary winding up proceedings will be governed under Insolvency Bankruptcy Code post notification of provisions relating to voluntary liquidation of corporate person under the code
· Section 324 and Sections 326 to 365: Provisions applicable to every mode of Winding Up (Part III of Chapter XX of the Act)
· Proviso to section 370 and Sections 372 to 373: The provisions pertaining to continuation of pending legal proceedings, power of court to stay or restrain proceedings and suits stayed on winding up order
· Section 375 to 378: Winding up of unregistered companies (Part II of Chapter XXI of the Act)
· Section 391 (2): Chapter XX relating to winding up shall apply for closure of the place of business of a foreign company in India
· Section 434 (1)(c): Transfer of certain pending proceedings(Transfer of proceedings from high court to NCLT)
Through this notification, important provisions of the CA 2013 governing reduction of capital, compromise, arrangement, mergers and winding up are enforced. However, rules pertaining to the aforesaid sections are yet to be notified.
Also, notification of the aforesaid Sections would impact the petitions and proceedings pending with the High Court and we will roll out an alert shortly on the provisions pertaining to transfer of proceedings from the High Court to NCLT.
To read the notification, please click the below links: