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The Companies (Amendment) Bill, 2020 is passed by Raj Sabha on 22 September 2020, the same was cleared by Lok Sabha last week.
The Bill was introduced to “Decriminalize Minor Procedural Offences/ Technical Lapses Under Companies Act 2013” into civil wrong, with an intent to boost assuage of performing business in India.
It suggested amending of 64 provisions plus 75 changes overall in the Act.
Decriminalization of offences
- For certain offences the Bill eradicates imprisonment
- any default is made in complying with the provisions of this section with the variation of shareholders rights(Sec 48(5) of the Act)
- for the reduction in shares publication of the order of the National Company Law Tribunal (Sec 66(1) of the Act)
- any default is made in complying with the order of the Tribunal in regards of debentures (Sec 71(11) of the Act),
This clauses have been proposed to be removed from the Act
- Also, the Bill concerning certain other non-serious offences which are punishable with imprisonment and/or fine has proposed to substitute such offences with fine only.
These offences are default by a company in compliance:
- at the time of buy-backing its own securities(Sec 68(11) of the Act),
- for registration of charges(Sec 86(1) of the Act),
- in maintaining books of accounts at registered office (Sec 128(6) of the Act)
- Reduction in amount of penalty
The Bill too intends to lessen the penalties for certain offences
- Not maintaining member’s register (Sec 88(5) of the Act),
- Fails in filing annual return under the prescribed time (Sec 92(5)&(6) of the Act),
- Fails in filing the resolutions and agreements prescribed under the Act(Sec 117 (2) of the Act),
- non-compliance of the unpaid dividend account-related provisions(Sec 124(7) of the Act)
Other modifications as proposed in the Bill
- By making parallel provisions it permits payment of adequate remuneration to both non-executive directors and executive directors in matters of inadequate profits.
- Ease provisions in respect of “charging of higher additional fees for default on two or more occasions in submitting, filing, registering or recording any document, fact or information” as stated in sec 403 of Act
- Enlarged the applicability of section 446B, it states that “the payment of lesser monetary penalty by a start-up company, Producer Company, One Person Company or small company on failure to comply with provisions of the Act which attract monetary penalties”.
- Exempt any class of persons from complying with sec 89s requirements regarding “declaration of the beneficial interest in shares” and also exempt any class of foreign companies incorporated outside India from the provisions of Chapter XXII pertaining to companies incorporated outside India
- Lessen the timelines for “applying for rights issues so as to speed up such issues under section 62”
- Expanded exemptions to certain classes of non-banking financial companies as well as housing finance companies from “filing certain resolutions under sec117”
- The companies that have Corporate Social Responsibility expenditure responsibility up to 50lakh shall not be required to form the Corporate Social Responsibility Committee along with the bill permit appropriate companies under section 135 to set off any amount spent in excess of their Corporate Social Responsibility expenditure responsibility in a specific financial year towards such responsibility in subsequent financial years;
- The Bill provides for the window in certain cases, under which penalties shall not be imposed for the delay in filing annual returns and financial statements. Also, it specifies classes of unlisted companies to arrange as well as file their periodical financial results. The Bill permits the direct listing of securities by Indian companies in acceptable foreign jurisdictions according to the rules to be prescribed.