17 Nov 2018Posted By: Mudit Handa


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.

To know more, read the .

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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