Clarification on resolutions under old cos Act ambiguous.


The government’s move to clarify the applicability of company resolutions passed as per the old Companies Act of 1956 raises many questions, said company law experts.

Following India Inc’s demand, the corporate affairs ministry, in a recent circular, has clarified that resolutions approved/passed by companies under the old company laws of 1956 in the six-month period September 1, 2013, till March 31, 2014, can be implemented as per the old Act, subject to two conditions. First, the implementation of resolution actually commenced before April 1, 2014, and second, this transitional arrangement would be available up to expiry of one year (from the passing of the resolution) or 6 months from the commencement of the corresponding provision in the new Companies Act of 2013, whichever is later.

This gesture by the ministry is despite the fact that 60% of the new Companies Act, 2013, has been implemented since April 1, 2014.

The circular also said even though the Section 6 of the General Clauses Act, 1897, protects the validity of such resolutions, the leniency has been accorded in view of the the representations made by companies. But experts question the legal tenability of the move.