Category Archives: MAY 2015

The Companies Amendmnet Act 2015

Dear,

Companies Amendment Act, 2015 has been notified in Official gazette on 26th May 2015. Highlights of the amendments are as follow:

  1. Requirement of minimum paid up capital to be done away with.
  1. Having a Common Seal is not mandatory.
  1. Section 11 pertaining to Commencement of Business Certificate to be ommited.
  1. Penalty for violation of provision regarding acceptance/invitation of deposits stipulated by inserting section 76A. Minimum penalty is 1 crore maximum is Rs. 10 Crore.
  1. Dividend not to be given unless previous years losses/depreciation not provided in previous Year are set off from current year profits.
  1. Concept of omnibus approval for RPT by audit committee inserted in section 177.
  1. Exemption given under rules of section 185 regarding giving loans to WOS and subsidiary to be incorporated in section itself.
  1. Only ordinary resolution will be required for related party transaction.
  1. No shareholder approval reqd. in case of Related party Transaction between holding and WOS if accounts of subsidiary company are consolidated.

Section wise amendment are as follow:

 

Sr. No. Section Number Amendments
1. In section 2 (i) in clause (68), the words “of one lakh rupees or such higher paid-up share capital” shall be omitted;
2. (ii) in clause (71), in sub-clause (b), the words “of five lakh rupees or such higher paid-up capital,” shall be omitted.
3. In section 9 the words “and a common seal” shall be omitted
4. Section 11 shall be omitted.
5. In section 12 in sub-section (3), for clause (b), the following clause shall be substituted, namely:-

“(b) have its name engraved in legible characters on its seal, if any;”.

6. In section 22 (i) in sub-section (2),-

(a) for the words “under its common seal”, the words “under its common seal, if any,” shall be substituted;

(b) the following proviso shall be inserted, namely:-

“Provided that in case a company does not have a common seal, the authorisation under this sub-section shall be made by two directors or by a director and the Company Secretary, wherever the company has appointed a Company Secretary.”;

(ii) in sub-section (3), the words ”and have the effect as if it were made under its common seal” shall be omitted

7. In section 46 in sub-section (1), for the words “issued under the common seal of the company”, the words “issued under the common seal, if any, of the company or signed by two directors or by a director and the Company Secretary, wherever the company has appointed a Company Secretary” shall be substituted
8. Insertion of new section 76A

Punishment for contra-

vention of section 73 or section 76.

“76A. Where a company accepts or invites or allows or causes any other person to accept or invite on its behalf any deposit in contravention of the manner or the conditions prescribed under section 73 or section 76 or rules made thereunder or if a company fails to repay the deposit or part thereof or any interest due thereon within the time specified under section 73 or section 76 or rules made thereunder or such further time as may be allowed by the Tribunal under section 73,-

(a) the company shall, in addition to the payment of the amount of deposit or part thereof and the interest due, be punishable with fine which shall not be less than one crore rupees but which may extend to ten crore rupees; and

(b) 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 twenty-five lakh rupees but which may extend to two crore rupees, or with both:

Provided that if it is proved that the officer of the company who is in default, has contravened such provisions knowingly or wilfully with the intention to deceive the company or its shareholders or depositors or creditors or tax authorities, he shall be liable for action under section 447.”.

9. In section 117 (i) in clause (g), the word ”and’’ occuring at the end shall be omitted; (ii) after clause (g), the following proviso shall be inserted, namely:-

“Provided that no person shall be entitled under section 399 to inspect or obtain copies of such resolutions; and”.

10. In section 123 , in sub-section (1), after the third proviso, the following proviso shall be inserted, namely:-

“Provided also that no company shall 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.”.

11. In section 124 in sub-section (6),-

(i) 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;

(ii) after the proviso, the following Explanation shall be inserted, namely:-

Explanation.For the removal of doubts, it is hereby clarified that in case any dividend is paid or claimed for any year during the said period of seven consecutive years, the share shall not be transferred to Investor Education and Protection Fund.”.

12. In section 134 in sub-section (3), after clause (c), the following clause shall be inserted, namely:-

“(ca) details in respect of frauds reported by auditors under sub-section (12) of section 143 other than those which are reportable to the Central Government;”.

13. In section 143 for sub-section (12), the following sub-section shall be substituted, namely:-

“(12) Notwithstanding anything contained in this section, if an auditor of a company in the course of the performance of his duties as auditor, has reason to believe that an offence of fraud   involving such amount or amounts as may be prescribed, is being or has been committed in the company by its officers or employees, the auditor shall report the matter to the Central Government within such time and in such manner as may be prescribed:

Provided that in case of a fraud involving lesser than the specified amount, the auditor shall report the matter to the audit committee constituted under section 177 or to the Board in other cases within such time and in such manner as may be prescribed:

Provided further that the companies, whose auditors have reported frauds under this sub-section to the audit committee or the Board but not reported to the Central Government, shall disclose the details about such frauds in the Board’s report in such manner as may be prescribed.”.

14. In section 177 in clause (iv), the following proviso shall be inserted, namely:-

“Provided that the Audit Committee may make omnibus approval for related party transactions proposed to be entered into by the company subject to such conditions as may be prescribed;”.

15. In section 185 in sub-section (1), in the proviso, after clause

(b), the following clauses and proviso shall be inserted, namely:-

“(c) any loan made by a holding company to its wholly owned subsidiary company or any guarantee given or security provided by a holding company in respect of any loan made to its wholly owned subsidiary company; or

(d) any guarantee given or security provided by a holding company in respect of loan made by any bank or financial institution to its subsidiary company:

Provided that the loans made under clauses (c) and (d) are utilised by the subsidiary company for its principal business activities.”.

16. In section 188 (a) in sub-section (1),-

(i) for the words “special resolution”, at both the places where they occur, the word “resolution” shall be substituted;

(ii) after the third proviso, the following proviso shall be inserted, namely:- “Provided also that the requirement of passing the resolution under

first proviso shall not be applicable for transactions entered into between

a holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval.”;

(b) in sub-section (3), for the words “special resolution”, the word “resolution” shall be substituted.

17. In section 212 in sub-section (6), for the words, brackets and figures “the offences covered under sub-sections (5) and (6) of section 7, section 34, section 36, sub-section (1) of section 38, sub-section (5) of section 46, sub-section (7) of section 56, sub-section (10) of section 66, sub-section (5) of section 140, sub-section (4) of section 206, section 213, section 229, sub-section (1) of section 251, sub-section (3) of section 339 and section 448 which attract the punishment for fraud provided in section 447″, the words and figures “offence covered under section 447” shall be substituted.
18. In section 223 in sub-section (4), in clause (a), for the words “by the seal”, the words “by the seal, if any,” shall be substituted.
19. In section 248 in sub-section (1),-

(i) in clause (a), after the word ‘incorporation’, the word ‘or’ shall be inserted; (ii) clause (b) shall be omitted.

20. In section 419 in sub-section (4), the words “or winding up” shall be omitted.
21. In section 435 (i) for the words “trial of offences under this Act”, the words “trial of offences punishable under this Act with imprisonment of two years or more” shall be substituted;

(ii) the following proviso shall be inserted, namely:-

“Provided that 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.”.

22. In section 436 in clause (a), for the words “all offences under this Act”, the words, brackets and figures “all offences specified under sub-section (1) of section 435″ shall be substituted.
23. In section 462 for sub-section (2), the following sub-sections shall be substituted, namely:-

”(2) A copy of every notification proposed to be issued under sub-section (1), shall be laid in draft before each House of Parliament, while it is in session, for a total period of thirty days, and if, both Houses agree in disapproving the issue of notification or both Houses agree in making any modification in the notification, the notification shall not be issued or, as the case may be, shall be issued only in such modified form as may be agreed upon by both the Houses.

(3) In reckoning any such period of thirty days as is referred to in sub-section (2), no account shall be taken of any period during which the House referred to in sub- section (2) is prorogued or adjourned for more than four consecutive days.

(4) The copies of every notification issued under this section shall, as soon as may be after it has been issued, be laid before each House of Parliament.”.

You can download the said notification from the following link:

http://mca.gov.in/Ministry/pdf/AmendmentAct_2015.pdf