THE COMPANIES (AMENDMENT) ACT, 2015 – Highlights

THE COMPANIES (AMENDMENT) ACT, 2015

After implementation of New Companies Act 2014, the Government has made changes in provisions of the New Companies Act 2014 and published “Companies Amendment Act 2015” on 25.05.2015.  This Act came into force on 26.05.2015. The amendment has been made in the requirement of paid up capital, common seal, filing e-form INC-21 with the Registrar for commencement of business,  passing of special resolutions in certain cases and many more requirements which shall not apply henceforth.

Following is the list of comparison between the changed provisions.

Note the “highlighted” changes in the “The Companies Amendment Act 2015” column.

Sr. No. Amendment to Sections The Companies Act, 2013 The Companies Amendment Act 2015
1 Section 2 Clause 68    Definition of Private LimitedPrivate limited company means company “having minimum paid up share capital of one lakh rupees” or such higher paid up share capital (i) in clause (68), the words “of one lakh rupees or such higher paid-up share  capital” shall be omitted
2. Section 2 Clause 71   Definition of Public companyPrivate limited company means company which  (a) is not a private limited (b) has a minimum paid up share capital of five lakh rupees or such higher paid up share capital (ii) in clause (71), in sub-clause (b), the words “of five lakh rupees or suchhigher paid-up capital,” shall be omitted.
3. Section  9 Effect of registration the words “and a common seal” shall be omitted.
4. Section 11 Commencement of business The company shall be required to file e-form 21 before commencement of business or exercising its borrowing powers. Section 11 of the principal Act, shall be omittedFiling of e-form 21 with Registrar of company before the commencement of business or exercising its borrowing powers is not required.
5. Section 12 Registered office of company clause 3(b)“have its name engraved in legible characters on its seal”  In section 12 of the principal Act, in sub-section (3), for clause (b), the followingclause shall be substituted, namely:—“(b) have its name engraved in legible characters on its seal, if any;”.
6. Section 22 Execution of bills of exchangeRefer sub-section (2) of Companies Act 2014 which reads as follows : (2) A company may, by writing under its common seal, authorise any person, either generally or in respect of any specified matters, as its attorney to execute other deeds on its behalf in any place either in or outside India;3) A deed signed by such an attorney on behalf of the company and under his seal shall bind the company and have the effect as if it were made under its common seal.  In section 22 of the principal Act,—(i) in sub-section (2),—(a) for the words “under its common seal”, the words “under its common seal, if any,” shall be substituted;(b) the following proviso shall be inserted, namely:—“Provided that in case a company does not have a common seal, the authorisation under this sub-section shall be made by two directors or by a director and the Company Secretary, wherever the company has appointed a Company Secretary.”(ii) in sub-section (3), the words ‘‘and have the effect as if it were made under its common seal” shall be omitted.
7. Section 46 Certificate of shares Clause (1) of Section 46 read as follows(1) A certificate, issued under the common seal of the company, specifying the shares held by any person, shall be prima facie evidence of the title of the person to suchshares. In section 46 of the principal Act, in sub-section (1), for the words “issued under the common seal of the company”, the words “issued under the common seal, if any, of the company or signed by two directors or by a director and the Company Secretary, wherever the company has appointed a Company  Secretary” shall be substituted.
8. Section 76 Acceptance of deposits from public by certain companies  Earlier  Section 76A section was not implemented. Section 76A after Section 76 is inserted Where a company accepts or invites or allows or causes any other person to accept or invite on its behalf any deposit in contravention of the manner or the conditions prescribed under section 73 or section 76 or rules made thereunder or if a company fails to repay the deposit or part thereof or any interest due thereon within the time specified under section 73 or section 76 or rules made thereunder or such further time as may be allowed by the Tribunal under section 73,—(a) the company shall, in addition to the payment of the amount of deposit or part thereof and the interest due, be punishable with fine which shall not be less than one crore rupees but which may extend to ten crore rupees; and(b) every officer of the company who is in default shall be punishable with imprisonment which may extend to seven years or with fine which shall not be less than twenty-five lakh rupees but which may extend to two crore rupees, or with both:Provided that if it is proved that the officer of the company who is in default, has contravened such provisions knowingly or wilfully with the intention to deceivethe company or its shareholders or depositors or creditors or tax authorities, he shall be liable for action under section 447.”.
9. 117 Resolutions and agreements to be filed Sub section (3) (g) the resolutions passed in pursuance of sec section (3) of Section 179 and   In section 117 of the principal Act, in sub-section (3),—(i) in clause (g), the word ‘‘and’’ occuring at the end shall be omitted;(ii) after clause (g), the following proviso shall be inserted, namely:—“Provided that no person shall be entitled under section 399 to inspect orobtain copies of such resolutions; and”.
10. 123 Declaration of Dividend  There were only three proviso. In section 123 of the principal Act, in sub-section (1), after the third proviso, thefollowing proviso shall be inserted, namely:—“Provided also 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.”
11. 124 Unpaid Dividend Account Section 124 (6) All shares in respect of which unpaid or unclaimed dividend has been transferred under sub-section (5) shall also be transferred by the company in the name of Investor Education and Protection Fund along with a statement containing such details as may be prescribed: (i) for the words, brackets and figure “unpaid or unclaimed dividend has been transferred under sub-section (5) shall also be”, the words “dividend has not been paid or claimed for seven consecutive years or more shall be” shall be substituted;(ii) after the proviso, the following Explanation shall be inserted, namely:—“Explanation.—For the removal of doubts, it is hereby clarified that in case any dividend is paid or claimed for any year during the said period of seven consecutive years, the share shall not be transferred to Investor Education and Protection Fund.’’.
12. 134 Financial Statement, Board’ Report In section 134 of the principal Act, in sub-section (3), after clause (c), the followingclause shall be inserted, namely:—“(ca) details in respect of frauds reported by auditors under sub-section (12) of section 143 other than those which are reportable to the Central Government;”.
13. 143 Powers and duties of auditors and auditing standards  Sub section 12 of Section 143 as follows 🙁12) Notwithstanding anything contained in this section, if an auditor of a company, in the course of the performance of his duties as auditor, has reason to believe that an offence involving fraud is being or has been committed against the company by officers or employees of the company, he shall immediately report the matter to the Central  Government within such time and in such manner as may be prescribed “(12) Notwithstanding anything contained in this section, if an auditor of a company in the course of the performance of his duties as auditor, has reason to believe that an offence of fraud involving such amount or amounts as may be prescribed, is being or has been committed in the company by its officers or employees, the auditor shall report the matter to the Central Government within such time and in such manner as may be prescribed:Provided that in case of a fraud involving lesser than the specified amount, the auditor shall report the matter to the audit committee constituted under section 177 or to the Board in other cases within such time and in such manner as may be prescribed:Provided further that the companies, whose auditors have reported frauds under this sub-section to the audit committee or the Board but not reported to the Central Government, shall disclose the details about such frauds in the Board’s report in such manner as may be prescribed.”.
14. 177 Audit Committee In section 177 of the principal Act, in sub-section (4), in clause (iv),(iv) approval or any subsequent modification of transactions of the company with related parties; In section 177 of the principal Act, in sub-section (4), in clause (iv), the followingproviso shall be inserted, namely:—”Provided that the Audit Committee may make omnibus approval for relatedparty transactions proposed to be entered into by the company subject to such conditions as may be prescribed;”.
15. 185 Loan to Directors There were only two Provisos (a ) and (b)  to Section 185 In section 185 of the principal Act, in sub-section (1), in the proviso, after clause(b), the following clauses and proviso shall be inserted, namely:—”(c) any loan made by a holding company to its wholly owned subsidiarycompany or any guarantee given or security provided by a holding company in respect of any loan made to its wholly owned subsidiary company; or(d) any guarantee given or security provided by a holding company in respectof loan made by any bank or financial institution to its subsidiary company:Provided that the loans made under clauses (c) and (d) are utilised by the subsidiary company for its principal business activities.”.
16. 188 Related Party Transactions  There were only three proviso. Section 188 (a) in sub-section (1),—(i) for the words “special resolution”, at both the places where they occur, the word “resolution” shall be substituted;Now Ordinary resolution shall suffice.  (ii) after the third proviso, the following proviso shall be inserted, namely:—”Provided also that the requirement of passing the resolution under first proviso shall not be applicable for transactions entered into between a holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval.”;(b) in sub-section (3), for the words “special resolution”, the word “resolution” shall be substituted.Now Ordinary resolution shall suffice.
17. 212 Investigation into affairs of Company by Serious Fraud Investigation Office In section 212 of the principal Act, in sub-section (6), for the words, brackets andfigures “the offences covered under sub-sections (5) and (6) of section 7, section 34, section 36, sub-section (1) of section 38, sub-section (5) of section 46, sub-section (7) of section 56, sub-section (10) of section 66, sub-section (5) of section 140, sub-section (4) of section 206, section 213, section 229, sub-section (1) of section 251, sub-section (3) of section 339 and section 448 which attract the punishment for fraud provided in section 447″, the words and figures “offence covered under section 447” shall be substituted
18. 223 Inspector’s Report (4) The report of any inspector appointed under this Chapter shall be authenticated either—(a) by the seal of the company whose affairs have been investigated; or In section 223 of the principal Act, in sub-section (4), in clause (a), for the words”by the seal”, the words “by the seal, if any,” shall be substituted.Common seal is optional.
19. 248 Power of Registrar to remove name of company from Registrar of Companies.(1) Where the Registrar has reasonable cause to believe that—(a) a company has failed to commence its business within one year of its incorporation;(b) the subscribers to the memorandum have not paid the subscription whichthey had undertaken to pay within a period of one hundred and eighty days from the date of incorporation of a company and a declaration under sub-section (1) of section 11 to this effect has not been filed within one hundred and eighty days of its incorporation; In section 248 of the principal Act, in sub-section (1),—(i) in clause (a), after the word ‘incorporation’, the word ‘or’ shall be inserted; (ii) clause (b) shall be omitted.
20. 419 Benches of Tribunal (4) The President shall, for the disposal of any case relating to rehabilitation, restructuring, reviving or winding up, of companies, constitute one or more Special Benches consisting of three or more Members, majority necessarily being of Judicial Members In section 419 of the principal Act, in sub-section (4), the words “or winding up”shall be omitted.
21. 435 Establishment of Special Courts (1) The Central Government may, for the purpose of providing speedy trial of offences under this Act, by notification, establish or designate as many Special Courts as may be necessary. In section 435 of the principal Act, in sub-section (1),—(i) for the words “trial of offences under this Act”, the words “trial of offencespunishable under this Act with imprisonment of two years or more” shall be substituted; (ii) the following proviso shall be inserted, namely:—“Provided that all other offences shall be tried, as the case may be, by a Metropolitan Magistrate or a Judicial Magistrate of the First Class having jurisdiction to try any offence under this Act or under any previous company law.”.
22. 436 Offences triable by Special Courts (a) all offences under this Act shall be triable only by the Special Court established for the area in which the registered office of the company in relation to which the offence is committed or where there are more Special Courts than one for such area, by such one of them as may be specified in this behalf by the High Court concerned; In section 436 of the principal Act, in sub-section (1), in clause (a), for the words”all offences under this Act”, the words, brackets and figures “all offences specified under sub-section (1) of section 435″ shall be substituted
23. 462 Power to exempt class or classes of companies from provisions of this Act  (2) A copy of every notification proposed to be issued under sub-section (1), shall be laid in draft before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if,before the expiry of the session immediately following the session or the successive sessionsaforesaid, both Houses agree in disapproving the issue of the notification or both Housesagree in making any modification in the notification, the notification shall not be issued or, as the case may be, shall be issued only in such modified form as may be agreed upon by both the Houses. In section 462 of the principal Act, for sub-section (2), the following sub-sections shall be substituted, namely:—‘‘(2) A copy of every notification proposed to be issued under sub-section (1), shall be laid in draft before each House of Parliament, while it is in session, for a total period of thirty days, and if, both Houses agree in disapproving the issue of notification or both Houses agree in making any modification in the notification, the notification shall not be issued or, as the case may be, shall be issued only in such modified form as may be agreed upon by both the Houses.(3) In reckoning any such period of thirty days as is referred to in sub-section (2), no account shall be taken of any period during which the House referred to in subsection(2) is prorogued or adjourned for more than four consecutive days.(4) The copies of every notification issued under this section shall, as soon as may be after it has been issued, be laid before each House of Parliament.”.

 



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20 thoughts on “THE COMPANIES (AMENDMENT) ACT, 2015 – Highlights

  1. Hi Meenal,
    Greetings. I am in the process of Incorporation and filed INC 1 for name approval. Now I want to establish Operation Office in Bangalore. In forms Registered Address mentioned is Raipur (Chhattisgarh). Please tell wht to do.

    • If you have specified registered office as Raipur, while incorporation you cannot change state because once you pre fill the SRN of name application, the system will automatically show state as Chattisgarh. You can either show your registered office in Raipur and operation office in Bangalore after incorporation. Company can have many operational offices situated in other states different from registered address. If you do’t want Raipur as registered office then you will have to apply for fresh name.

    • Very well Meenal. Thanks, please also tell me what and how to do for establishing Branch Office. 2nd MCA has rejected form INC-1 due to Trade Mark used by other on the proposed name given by me and I have to submit NOC and propose fresh 6 name for approval. Can I change registered address in the re submission form. Please reply.

      Regards
      Sultan

  2. 3 Directors In Pvt Ltd Co, 2 residing in UK and 1 in India, whether quarterly/Annual General meetings on audio/vedio permitted?

    • Board meeting on Audio or video is permitted. Annual General meeting shall be held in India where registered office of company is situated and not any other state and in that meeting proper quorum must be present.

  3. Maam, is it mandatory to submit the paid up capital through cheque by each director? Can we show the paidup capital as cash without deposit it in bank account?

  4. Mam,

    Is it required to commencement of business certificate for public limited company which is registered on Jan 2016,

  5. Nice info mam,

    mam i want to know the procedure to open the branch office by a pvt ltd company in India anywhere.

  6. 1-Pl advice whether directors are not liable to deposit required shares as per authorised capital in company account.

    2- How to get soft copies of different type of companies while formation.

    Regards
    CMA Md Shakil

  7. nice article, thanks

  8. maam,
    my company is incorporated on 08 May 2015, Should i go for commencement certificate ???

    And maam thanks for your pricious blog, your blog helps me lot. I incorporate company by following steps given in your incorporation blog 🙂

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