What are the Highlights of Companies (Amendment) Act, 2018?
All the public and private companies are governed under the Companies Act 2013. It is beyond any doubt that the government has repeatedly amended the act so as to rule out complexities and provide for necessary changes in the corporate laws.
Introduced in 1956, the Companies Act was amended first in 2013 and then in 2017 as the Companies (Amendment) Act-2017. In a bid to resolve many ambiguities regarding Company Formation and Annual Compliance of Private Limited Company, that have recently arisen, the government has now has notified or promulgated the ‘Companies (Amendment) Act, 2018’,
#1. Why has the ‘Companies (Amendment) Act, 2018 been passed?
The main objective behind the promulgation of the Companies (Amendment) Act, 2018 is to amend or incorporate various provisions of the Act with regard to different financial years, regarding various legal formalities such as-
- Filing of declaration for company formation,
- Maintenance of registered office,
- Consolidation of financial statements as a part of RoC filing
- Simplification of fine and penalties for minor offenses such as failure to fulfill Annual Compliance of Private Limited Company.
#2. Which sections have now been amended in Companies Act?
Broadly, the following sections have been amended in the Companies Act-
List of the Sections amended in the Companies Act |
|
Sections |
Particulars |
2(41) |
Definition of the registered office of company |
12 |
Registered office of the company |
42 |
Offer or invitation for subscription of securities on private placement |
54 |
Issue of sweat equity shares |
64 |
Notice to be given to Registrar for alteration of share capital |
77 |
Duty to register charges, etc |
86 |
Punishment for contravention (registration of charges) |
87 |
Rectification by Central Government in register of charges |
90 |
Investigation of beneficial ownership of shares in certain cases |
92 |
Annual return (RoC filing) |
102 |
Statement to be annexed to notice |
105 |
Proxies |
117 |
Resolutions and agreements to be filed |
121 |
Report on annual general meeting (AGM) |
137 |
Copy of financial statement to be filed with Registrar |
140 |
Removal, resignation of auditor and giving of special notice |
157 |
Company to inform Director Identification Number (DIN) to Registrar |
159 |
Punishment for contravention (Appointment & Qualification of Directors) |
164 |
Disqualifications for appointment of director |
165 |
Number of directorships |
191 |
Payment to director for loss of office, etc, in connection with transfer of undertaking, property or shares |
197 |
Overall maximum managerial remuneration and same in case of absence or inadequacy of profits |
203 |
Appointment of key managerial personnel |
238 |
Registration of offer of schemes involving transfer of shares |
248 |
Power of Registrar to remove name of company from register of companies |
441 |
Compounding of certain offences (w.r.t. Special courts) |
446B |
Application of fines |
447 |
Punishment for fraud |
454 |
Adjudication of penalties |
#3. Which amendments have been made with regard to defaults?
Several amendments have been made to the offences with regard to corporate laws. These would be subject to an in-house adjudication mechanism, and pre-Act punishment. The list of offences have been re-categorized as below:
S.No. |
Section |
Nature of default |
Punishment |
|
|
Companies (Amendment) Act, 2017 |
Companies (Amendment) Act, 2018 |
||
1. |
Section 53(3) Prohibition of issue of shares at a discount |
Prohibition of issue of shares at a discount |
Fine or imprisonment or both |
Non-compliance with sub-section (3) of Section 53 shall result in the company and any officer in default subject to a penalty, rather than charged with fine or imprisonment or with both. |
2. |
Section 64(2) Notice to be given to Registrar for alteration of share-capital |
Failure/delay in filing notice for alteration of share capital |
Fine |
Non-compliance with sub-section (1) of Section 64 shall result in the company and any officer in default being liable to a penalty, instead of being punishable with fine. |
3. |
Section 92(5) Annual return |
Failure/delay in filing annual return |
Fine or imprisonment or both |
Non-compliance with sub-section (4) of Section 92 shall result in:(i) the company being liable to a penalty, instead of being punishable with fine; and(ii) every officer in default being liable to a penalty, instead of being punishable with fine or imprisonment or with both. |
4. |
Section 102(5) Statement to be annexed to notice |
Attachment of a statement of a special business in a notice calling for general meeting |
Fine only |
Non-compliance with Section 102 shall result in every promoter, director, manager or other key managerial personnel who is in default being liable to a penalty, instead of being punishable with fine. |
5. |
Section 105(3) Proxies |
Default in providing a declaration regarding appointment of proxy in a notice calling for general meeting |
Fine only |
Non-compliance with sub-section (2) of Section 105 shall result in every officer in default being liable to a penalty, instead of being punishable with fine. |
6. |
Section 117(2) Resolutions and Agreements to be filed |
Failure/Delay in filing Certain resolutions |
Fine only |
Non-compliance shall result in the company and every officer in default including liquidator of a company, being liable to a penalty, instead of being punishable with fine. |
7. |
Section 121(3) Report on annual general meeting |
Failure/Delay in filing Report on AGM by public listed company |
Fine only |
Non-compliance with sub-section (2) of Section 121 shall result in the company and every officer in default being liable to a penalty, instead of being punishable with fine. |
8.
|
Section 137(3) Copy of financial statement to be filed with Registrar
|
Failure/Delay in filing financial statement
|
Fine or imprisonment or both |
Non-compliance with sub-section (1) or (2) of Section 137 shall result in:(i) the company being liable to a penalty, instead of being punishable with fine; and(ii) the managing director and the Chief Financial Officer of the company, being liable to a penalty, instead of being punishable with fine or imprisonment or with both. |
9. |
Section 140(3) Removal, resignation of auditor and giving of special notice |
Failure/Delay in filing statement by auditor after resignation |
Fine only |
Non-compliance with sub-section (2) of Section 140 shall result in the auditor being liable to a penalty, instead of being punishable with fine. |
10. |
Section 157(2) Company to inform Director Identification Number to Registrar |
Failure/Delay by company in informing DIN of director |
Fine only |
Non-compliance with sub-section (1) of Section 157 shall result in the company and every officer in default being liable to a penalty, instead of being punishable with fine. |
11. |
Section 159 Punishment for Contravention – in respect of DIN |
Contraventions related to DIN |
Fine or imprisonment or both |
Penalty for default in certain provisions Non-compliance with Section 152 (Appointment of directors), Section 155 (Prohibition to obtain more than 1 DIN) and Section 156 (Director to intimate DIN) shall result in any individual or director of a company in default being liable to a penalty. |
12. |
Section 165(6) Number of Directorships |
Accepting directorships beyond specified limits |
Fine only |
If a person accepts appointment as a director in contravention of sub-section (1) of Section 165 such person shall be liable to a penalty. |
13.
|
Section 191(5) Payment to Director for Loss of Office |
Payment to director not to be made on loss of office |
Fine only
|
Non-compliance with Section 191 shall result in the director of the company being liable to a penalty, instead of being punishable with fine. |
14. |
197(15) Overall maximum managerial remuneration |
Managerial remuneration |
Fine only |
Under sub-section (15) Non-compliance with Section 197 shall result in any person in default being liable to a penalty. |
If you need any assistance regarding Annual Compliance of Private Limited Company or RoC filing, feel free to contact us at 8881-069-069.
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