The Companies (Amendment) Second Ordinance, 2019 – Key changes

President promulgates the Companies (Amendment) Second Ordinance 2019. Different financial year allowed to certain companies and re-categorisation of minor offences as civil defaults 

In pursuance of the Government’s objective of providing Ease of Doing Business to Law abiding corporate while simultaneously strengthening the corporate governance and compliance framework enshrined in the Companies Act, 2013, the Companies (Amendment) Second Ordinance, 2019 has been promulgated.

The Ordinance shall empower the Central Government to allow certain companies to have a different financial year instead of as determined by the Tribunal.

The Ordinance, inter alia, addresses the need to impose civil liability for technical and procedural defaults of a minor nature and to plug the corporate governance and enforcement frame work, through the following:

(i) re-categorisation of 16 minor offences as civil defaults which will de-clog special courts;

(ii) transfer of certain routine functions such as permitting conversion of a public company into a private company from NCLT to the Central Government;

(iii) making non-maintenance of registered office and non-reporting of commencement of business as grounds for striking of from register of companies; and

(iv) breach of ceiling on Directorships being made a ground for disqualification;

(vi) Enhancing the pecuniary jurisdiction of Regional Director’s for compounding offences under the Companies Act with a view to unburdening the NCLT of routine functions etc.