Companies Amendment Ordinance 2018 promulgated by President to further amend the Companies Act 2013

Companies Amendment Ordinance 2018 promulgated by President to further amend the Companies Act 2013. It come into force at once

The President of India has promulgated an Ordinance to further amend the Companies Act, 2013 in exercise of the powers conferred by clause (1) of article 123 of the Constitution.

The Ordinance is called the Companies (Amendment) Ordinance, 2018 and it come into force at once.

The major highlight of the amendments is substitution of the word “Punishment” by “Penalty” for violation of various sections.

The twin objectives of the Ordinance are promotion of Ease of Doing Business along with better corporate compliance.  

The main amendments are as under;

1. Shifting of jurisdiction of 16 types of corporate offences from the special courts to in-house adjudication, which is expected to reduce the case load of Special Courts by over 60%,thereby  enabling them to concentrate on serious corporate offences.  With this amendment the scope of in-house adjudication has gone up from 18 Sections at present to 34 Sections of the Act.

2. The penalty for small companies and one person companies has been reduced to half of that applicable to normal companies.

3. Instituting a transparent and technology driven in-house adjudication mechanism on an online platform and publication of the orders on the website.

4. Strengthening in-house adjudication mechanism by necessitating a concomitant order for making good the default at the time of levying penalty, to achieve the ultimate aim of achieving better compliance.

5. Declogging the NCLT by:

a. enlarging the pecuniary jurisdiction of Regional Director  by enhancing the  limit up to Rs. 25 Lakh as against earlier limit of Rs. 5 Lakh under Section 441 of the Act;

b. vesting in the Central Government the power to approve the alteration in the financial year of a company under section 2(41); and

c. vesting the Central Government the power to approve cases of conversion of public companies into private companies.

6. Recommendations related to corporate compliance and corporate governance include re-introduction of declaration of commencement of business provision to better tackle the menace of ‘shell companies’; greater disclosures with respect to public deposits; greater accountability with respect to filing documents related to creation, modification and satisfaction of charges; non-maintenance of registered office to trigger de-registration process; and holding of directorships beyond permissible limits to trigger disqualification of such directors.

The following sections have been amended :

Amendment of section 2 – Financial year of a company

Insertion of new section 10A– restrictions on commencement. requirement to file a declaration by director regarding payment of subscribed share capital and filing with the Registrar a verification of its registered office

Amendment of section 12 – ROC Power to cause physical verification of the registered office of the company.

Amendment of section 14 – alteration of articles having the effect of conversion of a public company into a private company shall not be valid unless it is approved by an order of the Central Government.

Amendment of section 53 – Issue of shares at discount. Penalty prescribed

Amendment of section 64 Alteration of Share Capital. Penalty prescribed

Amendment of section 77 – Registration of charges with additional fees

Amendment of section 86 – Punishment for non compliance of charge provisions

Substitution of new   section for section 87. Rectification by Central Government in Register of charges.

Amendment of section 90 – Investigation of Beneficial ownership

Amendment of section 92 – Annual Returns. Provisions for prosecution removed

Amendment of section 102 – Statement to be Annexed to Notice. Penalty provisions amended

Amendment of section 105 – Proxies Punishment substituted by “Penalty” 

Amendment of section 117 – resolutions and Agreements to be filed. Punishment substituted by “Penalty”

Amendment of section 121 – Report on Annual general Meeting.  Punishment substituted by “Penalty”

Amendment of section 137 – Copy of Financial Statements to be filed with ROC.  Punishment substituted by “Penalty”

Amendment of section 140 – removal, resignation of auditor. Punishment substituted by “Penalty”

Amendment of section 157

Substitution of section 159

Amendment of section 164

Amendment of section 165

Amendment of section 191

Amendment of section 197

Amendment of section 203

Amendment of section 238

Amendment of section 248

Amendment of section 441

Amendment of section 446B

Amendment of section 447

Amendment of section 454

Insertion of section 454A Penalty for repeated default

Download the Ordinance, 2018 Click Here >>

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