Some Sections of the Companies Act, 2013 Come Into Force

The Ministry of Corporate Affairs (MCA) has notified
a list of provisions of the Companies Act, 2013 that came into force with
effect from 12 September 2013.
A cursory review of the list of sections does not indicate
any coherent pattern regarding which aspects of the new legislation are being
brought into force, and the sections are peppered across various chapters. The
only seeming common thread is that most of them do not require rules to be
promulgated by the Central Government in order to make them operational. This
approach of piecemeal effectiveness is bound to cause significant practical
problems given there is no clarity regarding the legislative/regulatory rationale
for why these sections have been brought into force first.
The social media is abuzz with another curious question
posed by some lawyers. Section 465 of the new legislation, which repeals the
Companies Act, 1956, has not been notified. Hence, there could be a question as
to whether the new provisions notified will operate in addition to the
provisions of the 1956 Act. It is not clear as to what would happen in case of
a conflict.

Hopefully,
such a hairsplitting exercise will not be required, and that these issues are
confined to a fairy short transitional phase. They may get addressed once the other
provisions of the Act become effect. Practical difficulties would get exacerbated,
however, if there were to be an inordinate delay in giving effect to the other
provisions.

About the author

Umakanth Varottil

Umakanth Varottil is an Associate Professor at the Faculty of Law, National University of Singapore. He specializes in corporate law and governance, mergers and acquisitions and cross-border investments. Prior to his foray into academia, Umakanth was a partner at a pre-eminent law firm in India.

4 comments

  • "….and the sections are peppered across various chapters. The only seeming common thread is that most of them do not require rules.."

    The 'official' reasons for MCA notifying only a few of the new provisions, on a selective basis, without bothering to go into the rationale or genuineness, or want of it,behind,are found to have been indicated in the write-up HERE > MCA notifies 98 Sections of the Companies Act.

  • Some of my colleagues and myself are of the view that this notification has not come into force as on the first page of notification it specifies as "To be published in official gazette". As per section 1(3) the provisions will come into effect only on publication in official gazette. I have tried to verify in the public gazette, but did not find any such notification. If you come across the same, please do share it.

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