Tuesday, September 3, 2013

Companies Act, 2013 Receives Presidential Assent

Although press reports indicated last week that the Companies Act, 2013 had received the assent of the President, the official confirmation is now available. The Gazette notification, which also carries the legislation as enacted, indicates that the Presidential assent was received on August 29, 2013.

Currently, while the law has been enacted in its entirety, it is yet capable of implementation as the substantive sections of the Act are still to be notified. Only section 1 of the Act has come into effect, and section 1(3) provides:

This section shall come into force at one and the remaining provisions of this Act shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint and different dates may be appointed for different provisions of this Act and any reference in any provision to the commencement of the Act shall be construed as a reference to the coming into force of that provision.

The Companies Act provides the broad framework and a substantial part of the details of the corporate law regime will be governed by various sets of rules to be promulgated by the Central Government. The implementation of the Act will be subject to finalization of the rules, and hence various substantive provisions will become effective once the respective rules are promulgated. Hence, it is likely that there could be a phased implementation of the Act, somewhat similar to the process followed in the case of the UK Companies Act of 2006. In that case, a timetable for implementation was set out upfront, but in India’s case there is an element of uncertainty as no implementation schedule has been announced yet.

2 comments:

Gokkamokka said...

But the notification states that "it is published for general information" - Surely it cannot mean that publication for information purposes brings it into effect Section 1. If that were the case, then as per Section 1(4), the provisions of this Act would be applicable to companies existing today. So in such cases, we would have both Companies Act, 1956 and Companies Act, 2013 being applicable to an entity. My two cents is as and when there is a specific gazette notifying provisions of the Act, then Section 1(3) will come into effect. Until then, this legislation published in the gazette remains an 'Agreed Form'- a version that can be used as an official version.

vswami said...

IMPROMPTU
Refer the reproduced provision of section 1 (3). It ought not to have been over-sighted, but rightly require to have been made a conscious note of, that such a provision typifies and is reminiscent of the lately developed practice, not a palatable one. That concerns the pattern of legislation that has come to be increasingly adopted, and largely accepted/invariably taken in the stride.
If remembered (subject to checking), one such legislation is the Regulatory Bill for the realty sector but long pending enactment.
In one's conviction, this type of legislation, leaving open to be given effect, not in go but in bits and pieces, that too with no certainty of the timing of it, has the potential to numerous legal, besides ethical, controversies. So much so, entail the otherwise avoidable scope for an inconclusive, mainly the apprehensive cum reprehensive lawyer -stimulated, litigation.
It is for eminent law experts, truly righteous with an impartial thinking among them, to devoutly deliberate and make their well-considered multidimensional views/opinion known to the concerned rest / the men in power, essentially in the larger public interest.