The present Amending Act no. 21 of 2015 i.e. the Companies (Amendment) Act, 2015 is enacted to amend the provisions of the Companies Act of 2013– Original Act (Act no. 18 of 2013). And the present concerned Original Act was enacted and notified in the year 2013 (August) and provisions in that Act relation to the setting up of the National Company Law Tribunal, Appellate Tribunal, Investor Education and Protection Fund, National Financial Reporting Authority and Special Court, have been brought into operation from the First day of April, 2014. Moreover, it was further seen that the Government have received the representations from the various stakeholders like Industry Chambers, Professional Institute, Legal Experts and Ministries, after the commencement of such provisions from Original Act, where they were expression the practical difficulties in complying of the some requirements laid down in the provisions of that Act. However, it was seen that in connection with some of such issues, the suggestions can be addressed only by way of amendment in the Act, also the immediate resolutions were also considered needed. Thus, the present Amending Act was proposed and introduced in the form of Bill in the year 2014 (December) in the Lok Sabh by the Minister of Finance and it has passed from there in the same month and later in the month of May, 2015 the said Bill was passed from the Rajya Sabha. Moreover, this President of India has given his assent to this Amending Act on 25th day of May, 2015 and this Amending Act has been published in the Official Gazette on 26th day of May, 2015. Moreover, the Central Government is given power in this Amending Act too, to appoint different dates for implementation of the different provisions in this Act, however, most of the provisions have become effective from 29th day of May, 2015, leaving some amendments which are yet to be notified.
The Present Amending Act is containing, in all 23 sections for amending the provisions of the Original Act. Moreover, in the key provisions of this Amending Act, there are some important proposed amendments dealing with the related party transactions, fraud reporting by auditors, jurisdiction of special courts for trying certain offences, making common seal optional, etc.
- Where to file the documents for incorporation?
- What are steps involved in the Formation of a Company?
- Is it possible to make amendments to the Articles of Association subsequent to its incorporation?
Firstly, the Amending Act is providing to remove the minimum paid- up share capital, which the Original Act was considering the necessary requirement of the private company to have minimum paid- up share capital of One Lakh Rupees or higher and also for the Public company, it was of Five Lakh Rupees or higher. Now, the bill is removing the said requirements by amending the Section 2, clause (68) and (71)(b) of the Original Act. Moreover, by amending the Section 9 of the Original Act, the Bill is removing the ‘common seal’ requirement. Also, the Amending Act has omitted the Section 11 of the Original Act.
Secondly, the Amending Act in its major amendments have further inserted a new provisions as Section 76A in the Original Act, after its Section 76 and sough to provide for the punishment for contravention for accepting of deposits from the public, and says if anyone accepting, inviting or allowing another person to accept or inviting on its behalf any deport which is in contravention to the provisions specified in the Original Act or rule made thereunder, or other does any this which is prohibited in this section, then he will be punished and imposed with the fine of minimum Rs. One Crore to maximum Ten Corore rupees, in addition to the deposit or interest that is due and also, he may further be required to undergo the imprisonment provided with fine. Moreover, punishment for the company doing this wilfully will also be held liable for offence of fraud under Original Act.
- What is meant by Event Based Returns?
- What is authorized capital of a company?
- What are the features of foreign company?
- What is the procedure to initiate application as per Fast Track Exit (FTE) Mode?
Further, the Amending Act is also replaces the provisions in the Original Act dealing with the powers and duties of the auditors and says that for the offence of fraud, there must be specific amounts as prescribed and then only the auditor will be required to report the matter to the Central Govt. and in the lesser amounts fraud cases, the auditor is to report to the audit committee, or to a Board.
Also, the Amending Act is in connection with the related party transactions, is stating that the resolution would not be necessary for the transactions between the holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and have been placed before the shareholders for their approval. In its amendments for the Special Courts provisions, the Amending Act is requiring the constitution of the Special Court only for the trial of the offences where the punishment is imprisonment of two years or more. Moreover, it is further stated that the other all offences are to be tried by the Metropolitan or First Class Judicial Magistrate.
Download PDF: The Companies (Amendment) Act, 2015