Dear Professional Colleagues
The President of India gave his assent to the Companies (Amendment) Act, 2015 on 25th May, 2015. The Ministry of Corporate Affairs vide file no. 1/6/2015-CL.V dated May 29, 2015 has notified some of the provisions of the Companies (Amendment) Act, 2015 and some of the provisions of the said Act, are yet to be notified. The details of the above are as under:
I. The provisions of the Companies (Amendment) Act, 2015 which are notified with effect from 29th May, 2015:
a. Requirement of minimum paid- up share capital of Rupees one lakh and Rupees five Lakhs for private and public companies are dispensed with.
b. Section 11 of the Companies Act, 2013 which deals with the requirement for filing declaration by a company before commencement of business or exercising its borrowing powers, is omitted.
c. The provisions for a company to have common seal are made optional. Accordingly, Section 9, 12, 22 (2) & (3), 46, and 223 of the Act have been amended.
d. Specific punishment for contravention of Section 73 and Section 76 of the Principal Act, relating to acceptance of deposits is prescribed.
e. Public inspection of Board resolutions filed with the Registrar of Companies under section 117 (3)(g)of the Act is prohibited.
f. Provision for setting off previous year(s) losses and depreciation against the current year profit, before declaring dividend for the year is included after the third proviso of section 123 of the Act. Accordingly, the reference to the same stands omitted in Companies (Declaration and Payment of Dividend) Rules.
g. Section 185 prohibits loans to directors etc. The exemptions to the section are provided in the Rules. These are now included in the Act as a matter of abundant caution.
h. The amendments to Section 188 with respect to related party transactions to:
1. Replace ‘special resolution’ with ‘ordinary resolution’ for approval of related party transactions by non-related shareholders and
2. Exempt related party transactions between holding companies and wholly owned subsidiaries from the requirement of approval of non-related shareholders. No resolution required to be passed at general meeting.
i. Bail restrictions to apply only for offence relating to fraud u/s 447 (Section 212).
j. Rationalizing the procedure for laying draft notifications granting exemptions to various classes of companies (Section 462).
II. The provisions of the Companies (Amendment) Act, 2015 which have been incorporated in Companies Act, 2013 but are yet to be notified:
a. It was provided in the Act to transfer equity shares also to IEPF for which unclaimed/unpaid dividend has been transferred to the IEPF. The amendment provides that such transfer of equity shares would be in case where the dividend has not been paid or claimed for continuous period of seven years (Section 124)
b. Special Courts to try only offences carrying imprisonment of two years or more. (Section 435 and 436)
c. Winding Up cases to be heard by 2-member Bench instead of a 3-member Bench.(Section 419)
d. Power of Registrar to remove name of the company from register of companies in case subscribers to the Memorandum have not paid subscription money within the period of 180 days from the date of incorporation and a declaration u/s 11(1) has not been filed within 180 days of its incorporation, has been omitted. (Section 248)
III. The provisions of the Companies (Amendment) Act, 2015 which are yet to be notified:
a. For prescribing the thresholds beyond which fraud shall be reported to the Central Government (below the threshold, it will be reported to the Audit Committee). Disclosures made to the Audit Committee also to be made in the Board’s Report (Section 134 & 143).
b. Provisions authorising Audit Committee to give omnibus approvals for related party transactions (Section 177)
IV. Amendment Rules notified in the light of Companies (Amendment) Act 2015.
The following amendment rules have been notified in the light of Companies (Amendment) Act, 2015.
a. Companies (Incorporation) Second Amendment Rules, 2014
b. Companies (Share Capital and Debentures) Second Amendment Rules, 2015.
c. Companies (Declaration and Payment of Dividend) Second Amendment Rules, 2015
d. Companies (Registration Offices and Fees) Second Amendment Rules, 2015.
With Warm Regards,
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