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    Companies Amendment Act, 2015 [No.21 Of 2015] – A Review

    All are aware that on the pretext of ease of doing business in India, some amendments were proposed to the Companies Act, 2013 and the said amendments were approved by the Union Cabinet on 02.12.2014.

    The said Amendment Bill was placed in the Lower house (Lok Sabha) of the Parliament and the same was approved on 17. 12.2014, and the Upper House (Rajya Sabha)approved the said Amendment Bill on 13.05.2015. The Amendment Bill received the assent of theHon’ble President on 25.05.2015, and notified in the Gazette on the 26.05.2015.

    Since, not all the provisions for which amendments have been made in the Amendment Act, have been notified, the Central Government has vide commencement notification Dated:29.05.2015, had notified 29.05.2015, as the appointed date for coming in to force of the Sections 1 to 12, 15 to 23 of the said Amendment Act.

    The Amendments under the Companies (Amendment) Act, 2015, predominantly hover over the aspect of “ease of doing business”. Subsequent to the coming in to force of the Amendment Act, the Central Government has also altered the relevant Rules and has notified the relevant Amendment rules, pursuant to the Amendment Act.

    A couple of amendments in the Amendment Act, are for incorporating some provisions, which were erroneously left out in the respective provisions of the Companies Act, 2013, but included in the Rules framed thereunder the respective section.

    Sl.

    No

    Section(s)

    under the CA,

    2013,amended

    Section No. in

    theAmendment

    Act

    Existing provision in the

    Section/Clause in the CA, 2013

    Amendment relating to

    Remarks/Comments

    1

    Amendment

    to     Section 2

    (68), (71) and

    Section 11

    2 and 4

    Section2(68),      (71)– As                         per the

    definition, a Private Company to have a

    minimum paid-up capital of Rs.1 Lakh

    and Public Company to have minimum

    paid-up capital of Rs.5 lakhs.

    Section 2 (68), (71) - Deletion of the

    requirement as to Minimum Capital i.e.,

    Rs. 1 Lakh for Private Companies and Rs. 5

    Lakhs for Public Companies.

    Now a company can be

    incorporated with paid-up

    capital of Rs.1/-, may be.

    Section 11 – Declaration as to receipt

    of the minimum paid-up capital from

    the subscribers.

    Section 11 – Omitted.

    No    requirement    of filing

    commencement of business

    declaration.

    Sl.

    No

    Section(s)

    under the CA,

    2013,amended

    Section No. in

    theAmendment

    Act

    Existing provision in the

    Section/Clause in the CA, 2013

    Amendment relating to

    Remarks/Comments

    2

    Amendment

    to sections 9,

    12, 22, 46 and

    223.

    3, 5, 6, 7 and

    18

    Section-9-Company to have Common

    Seal.

    Section-12-Company to have its name

    engraved in legible characters on its

    seal;

    Section-22-Execution                                        of                                    Bills of

    Exchange, authorisation to execute

    under the Common Seal.

    Section-46-Issue      of                        Certificates

    (Share/Debenture) to be issued under

    the Common seal of the Company.

    Section -223-nspectors report to be

    authenticated by the Common Seal of

    the Company.

    Amendment as to making commonseal

    optional, and consequential changes for

    authorisation  for execution         of

    documents for companies having no

    Common Seal.   i.e., authorisation shall

    be made by Two Directors or 1 Director

    and 1 CS, if the Company has CS

     

    3

    Insertion      of

    new Section

    76 A

    8

    No section

    Section – 76 A - Punishment for deposits

    acceptedin violation of the provisions of

    the said Act;

    Penalty:

    On Company:

    To refund the deposit with

    interest +Fine not less than

    Rs.1 Cr and upto Rs. 10 Cr.

    On every Officer:

    7 years imprisonment or fine

    not less than Rs. 25 Lakhs and

    upto Rs. 2 crores or with both

    + if proved that punishment if

    the violation is committed

    knowingly, under Section 447.

    Sl.

    No

    Section(s)

    under the CA,

    2013,amended

    Section No. in

    theAmendment

    Act

    Existing provision in the

    Section/Clause in the CA, 2013

    Amendment relating to

    Remarks/Comments

    4

    Amendment

    to Section 117

    (3) (g)

    9

    117 (3) (g) – Resolutions passed in

    pursuance of Section 179 (3) are to be

    filed with the Registrar of Companies.

    Amendment to prohibit public

    inspection of Board resolutions filed in

    the Registry.

    Board Resolution cannot to be

    inspected by others.

    Further, the many items as

    prescribed under the relevant

    rules     have   also                been

    considerably Omitted by the

    relevant amendment Rules

    5

    Amendment

    to sub-

    section (1) of

    section 123

    10

    No proviso in the Principal Act

    Amendment to include provisions for

    writing off past                 losses/depreciation

    before declaring dividend for the year

    Erroneously missed out in the

    Principal Act, but was given as

    an amendment to the relevant

    rules made under the section.

    6

    Amendment

    to sub-

    section (6) of

    section 124

    11

    Section 124 (6) - All shares in respect

    of which unpaid or unclaimed

    dividend has been transferred under

    sub-section        (5)                          shall                          also                          be

    transferred by the company in the

    name of Investor Education and

    Protection       Fund                        along with a

    Statement.

    for the words,       brackets and figure

    “unpaid or unclaimed dividend has been

    transferred under sub-section (5) shall

    also be”, the words “dividend has not

    been paid or claimed for seven

    consecutive years or more shall be” shall

    be substituted;

    Amendment so as to rectify the

    requirement of transferring equity

    shares for which unclaimed/unpaid

    dividend has been transferred to the

    Investors Education and                                Protection

    Fund even though subsequent

    dividend(s) has been claimed and paid.

     

    Sl.

    No

    Section(s)

    under the CA,

    2013,amended

    Section No. in

    theAmendment

    Act

    Existing provision in the

    Section/Clause in the CA, 2013

    Amendment relating to

    Remarks/Comments

    7

    Amendment

    to sub-section

    (3) of section

    134 and sub-

    section (12) of

    section 143

    12 and 13

    134 (3)(ca) – New provision – Details

    as to the frauds as reported by the

    Auditor to be included in the Directors

    report.

    143 (12) – reporting of Fraud by the

    Auditor

    Disclosures to be made in the Board's

    Report;

    Alteration to       incorporate                           enabling

    provisions to       prescribe thresholds

    beyond which fraud shall be reported to

    the Central Government. Below the

    threshold, it will be reported by the

    Auditor to the Audit Committee.

    Some relief to the Auditors.

    8

    Amendment

    to clause (iv)

    of sub-section

    (4) of section

    177

    14

    New proviso to Section 177 (4) (iv) –

    giving powers to Audit Committee.

    Inclusion of proviso, empowering Audit

    Committee to give omnibus approvals for

    Related party transactions on annual

    basis, subject to conditions as may be

    prescribed.

     

    9

    Amendment

    to Section 185

    of

    15

    New sub-sections 185 (1) (c) & (d) –

    These subsections were earlier

    included in the rules

    Alteration to provide for exemption for

    loans/ guarantees/securities                                             by                                               a

    Company to its wholly owned

    subsidiaries and guarantees/securities

    given by a company to its subsidiaries for

    the loans availed by it from Banks/FI.

     

     

     

     

     

     

     

    Sl.

    No

    Section(s)

    under the CA,

    2013,amended

    Section No. in

    theAmendment

    Act

    Existing provision in the

    Section/Clause in the CA, 2013

    Amendment relating to

    Remarks/Comments

    10

    Amendment

    to sub-section

    (1) of section

    188

    16

    188 (1) – Requirement of prior

    approval of the members by way of

    special   resolution for transactions

    with the related party.

    188 (3) – Requirement of special

    resolution for transaction by the

    Director      or employee with the

    Company.

    Alteration      for                      replacing                      'special

    resolution' with 'resolution' for approval

    of Related party transactions by non‑

    related shareholders;

    to exempt     relatedparty transactions

    between holding companies and wholly

    owned subsidiaries (WOS) whose

    accounts are consolidated.

    Relaxed to ordinary resolution.

     

    11

    Amendment

    to sub-section

    (6) of section

    212

    17

    212 (6) – Releasing of accused on bail.

    Many sections were covered

    Alteration    to remove the repetition of

    sections, which attract punishment for

    fraud under Section 447

     

    12

    Amendment

    to Sub-Section

    (1) of Section

    248

    19

    248 (1)-Power of Registrar to remove

    the name of the Company from the

    Register of Companies

    Alteration as to removal of Clause (b) of

    Subsection (1) of Section 248- As to

    receipt of minimum subscription and

    filing of commencement of business with

    ROC.

     

    13

    Amendment

    to sub-section

    (4) of section

    419

    20

    419 (4)-Powers of the president of the

    NCLT to constitute benches for

    disposal of cases as to rehabilitation,

    restructuring, reviving or winding up

    of companies

    Alteration as to deletion of the word

    Winding-up, so as to enable the, taking‑

    up cases relating to winding-up by 2‑

    member Bench instead of a 3-member or

    a larger Bench.

     

    Sl.

    No

    Section(s)

    under the CA,

    2013,amended

    Section No. in

    theAmendment

    Act

    Existing provision in the

    Section/Clause in the CA, 2013

    Amendment relating to

    Remarks/Comments

    14

    Amendments

    to       sections

    435 and 436

    21 and 22

    435 (1) – establishment of special

    courts for trial of offences.

    436 (1) – Offences trailable by Special

    Courts

    Earlier no limit was mentioned in the

    respective    sections,                         now,                         the

    amendment provides for Special Courts

    to    try     only        offences        carrying

    imprisonment of two years or more.

    And all other offences shall be tried, as

    the case may be, by a Metropolitan

    Magistrate or a Judicial Magistrate of the

    First Class having jurisdiction to try any

    offence under this Act or under any

    previous company law.

     

    15

    Amendment

    to Section 462

    23

    462 – Power of Central Government

    to exempt certain class of companies

    from provisions of the Act.

    Amendment to Sub-Section (2) of

    Section 462, as to the manner of placing

    the    notifications issued         by the CG

    pursuant to Section sub-section (1). The

    content of Sub-section has been altered

    and divided in to new Sub-Section (3) &

    (4).

     

     

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