The Companies (Amendment) Bill, 2015 – Complete Details. MCA Issued New Companies (Amendment) Bill, 2015. Here we are providing complete details regarding The Companies (Amendment) Bill, 2015. the new bill is passed by both the Houses of Parliament. Now you can scroll down below and check full details regarding “The Companies (Amendment) Bill, 2015 – Complete Details”
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The Companies (Amendment) Bill, 2015 – Complete Details
The Government of India is trying currently to bring on the road map to make the country as one of the Investment Hubs for the international business community. One of the impediments, which was felt in achieving the goal, was that the procedures for starting and running the business in India are not only lengthy but also very cumbersome. As a prelude to these steps, the Companies Act, 2013 was put into operation with around 283 sections being notified; yet, it was felt that speedier steps are required to attract foreign investment in India. For that the theme set in was “Ease of Doing business in India” which was a holistic attempt to see that laws relating to businesses including its allied laws are in alignment. Though the Companies Act, 2013 contained several initiatives in relation to the administration and regulation of companies in India, it was felt that further reforms are to be taken on an urgent basis. The Parliament on 13th May, 2015 approved the Companies (Amendment) Bill, 2015 which contains several amendments facilitating the ease of doing business taking into account the representations from corporate, stakeholders, professionals and in the largest interest of protection of investors. Continuous and rapid knowledge updation is a pre-requisite for a CA student and therefore for your quick reference and reading, the highlights of the Bill, 2015 are given below. These amendments will be incorporated in the study module at appropriate places in the course of revision and from the point of view of forthcoming examinations and its applicability; you may wait for an announcement in this regard. However, as said earlier, you can update well before the date of examination.
- No Minimum requirement for start-up of public and private companies: Currently, the private and public companies require having a minimum of one lakh rupees and five lakh of rupees respectively to start with. The amendment dispenses the above requirements as specified in section 2 (68) & (71) respectively.
- No Declaration before Commencement of Business or exercising borrowing powers: As minimum requirement of capital for both public and private companies has been dispensed with, there is no more requirement for Directors to file any declaration before commencement of business. section 11 of the Companies Act, 2013 is now to be omitted.
- Common Seal now optional: Common Seal was required for various purposes. For ease of doing business, now it has been made optional and section 12 (3) (b) has been modified accordingly with the usage of words ‘if any’ after the words ‘common seal’. However in section 22(2), a proviso has been added to the effect that if the company does not have a common seal, authorization shall be made by two directors or by a director and the Company Secretary, if the company has appointed a Company Secretary. Also omission of the word ‘common seal’ has been made in sections 9, 22(3), 46 (1) and 223.
- Specific Punishment for deposits accepted in violation of section 73 & 76 of the Act: Currently in the Companies Act, 2013, there is no specific penal provision for deposits accepted in violation of section 73 and 76. The amendment provides for the same with penalty ranging from one crore to ten crore of rupees for the company and for every officer who is in default by way of imprisonment which may extend to 7 years or with fine ranging not less than 25 lac of rupees and upto two crore of rupees. Further, action under section 447 (for fraud) will also follow.
- Public Inspection of Board Resolutions Prohibited: Companies are required to file copies of the Board resolutions passed under section 179 (3) with the Registrar within 30 days of passing such resolutions. Now public inspection of Board’s Resolutions has been prohibited and this has been done by way of proviso in section 117(3)(g) that no person shall be entitled under section 399 to inspect or obtain copies of such resolutions.
- Before declaration of dividend, write off past losses/depreciation: Though the same was provided in Rule 3 (5) of the Companies (Declaration & Payment of Dividend) Rules, 2014, it was not there in the Act. To provide the same, it has been provided now in section 123(1) by way of a new proviso 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.
- Shares to be transferred only if dividend remains unpaid or unclaimed for a continuous period of seven years: Earlier section 124(6), provided for transfer of all shares to Investor Education and Protection Fund if dividend remained unpaid or unclaimed. Now it can be done so only if remains unpaid/unclaimed for a period of 7 consecutive years or more.
- Threshold limits to be proposed for reporting on fraud: Earlier in section 143(12) and the Rules thereto, there were no threshold limits prescribed for reporting on fraud by the auditors. Now a threshold limit has been proposed to be included in the Rules and accordingly the said section has been amended to provide for the same. Further provisos have been added to section 143(12) to provide that in case of a fraud of lesser amount than the specified amount (now proposed to be prescribed), auditor shall report to the audit committee or to the Board in other cases. Also, where the same has been reported to Audit Committee/Board as the case may be and not to the Central Government, the same shall be disclosed in the Board’s report.
- Exemption on the prohibition of loans to Directors now provided in the Act: Earlier, the Rules to section 185 provided for exemptions to such prohibitions. Now the same has been provided in the Act itself.
- Audit Committee (AC) empowered to make omnibus approvals for RPTs : Whereas the Clause 49 to the listing agreement provided for the above said power, the Companies Act, 2013 did not provide for the same. To align and provide for ease of doing business, section 177 (4) has been amended to empower AC to make omnibus approvals for related party transactions.
- Relaxations for RPTs : Section 188 provided for special resolution for related party transactions. Now an ordinary resolution shall suffice for the purpose and also related party transactions between holding and wholly owned subsidiaries are exempted from the requirement of passing resolution at the general meeting.
- Now bail restrictions to apply only for offence relating to fraud under section 447.
- Winding Up cases now will be heard by a two members bench instead of a three member bench as earlier provided in section 419(4 ).
- Special Courts under section 435(1) to try only offences carrying imprisonment of two years or more: Earlier in the said section, it provided for the trial of all offences. All other offences shall be tried by a Metropolitan Magistrate or a Judicial Magistrate.
- Rationalization of the procedure relating to laying draft notifications: Section 462 empowers Central Government to exempt certain class or classes of companies from complying with any of the provisions of Act, 2013 for which draft notification is to be laid before each House of Parliament. In order to rationalize the procedure, section 462 has been proposed to be amended that such draft notification shall be laid before each House of Parliament in session for a total period of thirty days and such notification shall be issued only if it is approved by both the Houses. While reckoning the period of thirty days, no account shall be taken into account, if the House has been prorogued or adjourned for more than four consecutive days. A copy of every notification shall as soon may be after it has been issued be laid before each House of Parliament.
The above in the form of dispensations/exemptions/additional provisio/fill-up omissions in the Companies Act, 2013 are the reforms for ease of doing business in India through the Companies (Amendment) Bill, 2015. The Bill now requires assent of the President of India and thereafter it may be called as the Companies (Amendment) Act, 2015.