On July 31, 2019, the Ministry of Corporate Affairs introduced the Companies (Amendment) Act, 2019 (the “Amendment“). The Amendment considers changes brought in by the Companies (Amendment) Ordinance, 2018, (the “2018 Ordinance“), the Companies (Amendment) Ordinance Act, 2019 and the Companies (Amendment) Second Ordinance, 2019 (the “2019Ordinances“) to further amend the Companies Act, 2013 (the “Act“).
The Amendments addresses difficulties in implementation facilitates ease of doing business, helps to achieve better harmonization with other statutes such as Reserve Bank of India Act, 1934 and regulations made thereunder, and rectifies inconsistencies in the 2013 Acts.
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Amendments through the companies (amendment) act, 2019
Re-introduction of the declaration of commencement of business provision; greater accountability with respect to filing documents related to creation, modification and satisfaction of charges; non-maintenance of the registered office to trigger de-registration process; holding of directorships beyond permissible limits to trigger disqualification of such directors.
Re- categorizing of offences which are in the category of compoundable offences to an in-house adjudication framework.
Ensuring compliance of the default and prescribing stiffer penalties in case of repeated defaults.
Section 454(3) – Adjudication of Penalties
Section 454(8) – Adjudication of Penalties
Section 454(A) – Penalty for repeated default
De-clogging the NCLT by:
enlarging the jurisdiction of Regional Director (“RD”) by enhancing the pecuniary limits up to which they can compound offences under section 441 of the Act.
Section 441(1)(b) – Compounding of Certain Offences
Section 441(6)(a) – Compounding of Certain Offences
vesting in the Central Government the power to approve the alteration in the financial year of a company under section 2(41); and
vesting the Central Government the power to approve cases of conversion of public companies into private companies
Additional amendments through companies (amendment) act, 2019
Section 26 – Matters to be stated in the prospectus
Section 29 – Public offer of securities to be in dematerialised form
Section 35 – Civil liability for mis Statements in the prospectus
Section 90 – Register of significant beneficial owners in a company
Section 132 – Constitution of National Financial Reporting Authority (NFRA)
Section 135 – Corporate Social Responsibility
Section 212 – Investigation into affairs of Company by Serious Fraud Investigation Office
Section 241 – Application to Tribunal for relief in cases of oppression, etc
Section 242 – Powers of Tribunal
Section 243 – Consequence of termination or modification of certain agreements
Section 272 – Power of Court to stay or restrain proceedings
Case Studies and Discussions on recent high-profile corporate cases with apparent violations
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