The Companies (Amendment) Bill, 2015 had been passed in Rajya Sabha on 13th May 2015 and was passed in Lok Sabha on 17.12.2014. Bill got assent of the president on 25.05.2015 and got published in official Gazette of India on 26th May, 2015 and now known as THE Companies (Amendment) Act, 2015.
The government has notified amendments to the Companies Act, which makes it easier to do business and provided for severe penalties in case of frauds.
Given Below are the highlights of Companies (Amendment) Bill, 2015
- The Act has removed threshold limit for minimum paid up capital required for the formation of private or public limited company. – [Section 2(68)/2(71) of the Companies Act, 2013 (Act)].
For setting-up a private company, New Act has done away with the norms of Rs 1 lakh minimum capital requirement and Rs 5 lakh in case of a public sector unit and various other amendments.
- The concept of company seal has become optional.
In case a company does not have a common seal, the authorization shall be made by two directors or by a director and the company Secretary, wherever the company has appointed a company Secretary. – [sections 9, 12, 22, 46 and 223 of the Companies Act, 2013]
- Doing away with the requirement for filing a declaration by a company before commencement of business or exercising its borrowing powers. – [Omission of Section 11 of the Companies Act, 2013 and consequential change in section 248 of the Companies Act, 2013].
- With regard to acceptance of deposits by the companies, in contravention with regulations, the new law said that if a company fails to repay the deposit or any interest due thereon within the time specified, it will be
- Punishable with fine which shall not be less than Rs 1 crore but which may extend to Rs 10 crores in addition to payment of deposits or part thereof; and
- Every officer of the company who is in default shall be punishable with imprisonment which may extend to seven years or with fine which shall not be less than Rs 25 lakh but which may extend to Rs 2 crore, or with both. – [New Section 76A of the Companies Act, 2013].
- Prohibiting public inspection of Board resolutions filed in the Registry. – [Section 117(3) of the Companies Act, 2013].
- In case of dividend, the amended Act said that no company will declare dividend unless “carried over previous losses and depreciation not provided in previous year or years are set off against profit of the company for the current year.” – [Section 123(1) of the Companies Act, 2013].
- The unclaimed/ unpaid dividend will not be transferred to Investor Education and Protection Fund. – [Section 124(6) of the Companies Act, 2013].
- Enabling provisions to prescribe thresholds beyond which fraud shall be reported to the Central Government (below the threshold, it will be reported to the Audit Committee constituted under section 177 or to the Board). Disclosures for the latter category also to be made in the Board’s Report. – [Section 143(12) and 134(3) of the Companies Act, 2013].
- Audit Committee can make omnibus approval for related party transactions proposed to be entered into by the company. – [Section 177(4) of the Companies Act, 2013].
- Exemption u/s 185 provided for loans to wholly owned subsidiaries and guarantees/securities on loans taken from banks by subsidiaries. – [Section 185(1) of the Companies Act, 2013].
- Related party transactions can be passed through ordinary resolution instead of special resolution required currently and Related party transactions entered into between holding companies and its wholly owned subsidiaries whose accounts are consolidated withsuch holding company and placed before the shareholders at the general meeting for approval exempted from the requirement of passing the resolution. – [Section 188(1) of the Companies Act, 2013].
- Bail restrictions to apply only for offences relating to fraud u/s 447. – [Section 212(6) of the Companies Act, 2013].
- In Section 419(4) winding up was mentioned which is now omitted. Now, Winding up cases to be heard by 2-member Bench instead of a 3-member Bench. – [Section 419 of the Companies Act, 2013].
- With regard to trial of offences under this Act, the new norms said that all cases under the Companies Act cannot be tried by a special court and that only offences punishable with the imprisonment of two years or more will go to such courts, while the others would be tried by 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. – [Section 435 and 436 of the Companies Act, 2013].
- Rationalizing the procedure for laying draft notifications granting exemptions to various classes of companies or modifying provisions of the Act in Parliament, in order to ensure speedier issue of final notifications. – [Section 462 of the Companies Act, 2013].
Click here to see The Companies (Amendment) Act, 2015