No Notification Updates
Hope this new year begun with all new excitements and prospects. In this edition, we will discuss about the new amendments to Companies Act, namely, The Companies (Amendment) Ordinance, 2019 which came into force on 2nd Day of November 2018. Accordingly, the Companies (Amendment) Ordinance, 2018 will cease to operate on the 21st day of January, 2019. Considering the length of the article, the Notification section will be missing in this edition.
Saranya Deivasigamani,
CEO
THE COMPANIES (AMENDMENT) ORDINANCE, 2019
The Ministry of Law and Justice (Legislative Department) has issued the Companies (Amendment) Ordinance, 2019 to further amend the Companies Act, 2013, it shall be deemed to have come into force on the 2nd day of November, 2018. The Companies (Amendment) Bill, 2019 will replace the Companies (Amendment) Ordinance, 2018.| SN | Amendments | Comments |
| 2 | In section 2 of the Companies Act, 2013 (hereinafter referred to as the principal Act), in clause (41),— (a) The first proviso shall be substituted. (b) in the second proviso, for the words “Provided further that”, the words “Provided also that” shall be substituted. | Now the Foreign Subsidiary Companies shall follow a different financial year for consolidation of accounts with the approval of Central Government. |
| 10A | After section 10 of the principal Act, section 10A shall be inserted, for:— Commencement of business, etc. | 1. A company incorporated after the commencement of the Companies (Amendment) Ordinance, 2019 and having a share capital shall not commence any business or exercise any borrowing powers unless a) The directors file a declaration within a period of 180 days. b) Company has filed its verification of registered office 2. On default, the Company shall be liable to a penalty of fifty thousand rupees and every officer shall be liable to a penalty of one thousand rupees for each day during such default. 3. If the declaration is not filed within 180 days, the Registrar has reasonable cause to believe the Company is not carrying on any business or operation and initiate removal of Company from register or companies. |
| 12 | In section 12 of the principal Act, after sub-section (8), the sub-section (9) shall be inserted. | The Registrar may cause a physical verification of the registered office of the Company and initiate action for removal of the name of the Company. |
| 14 | In section 14 of the principal Act,— (i) in sub-section (1), the second proviso shall be substituted. (ii) in sub-section (2), the word “Tribunal”, the words “Central Government” shall be substituted. | Conversion of Public to Private Company has to obtain Central Government Order by making application. Provided any application pending before Tribunal as of the date of the Ordinance shall be disposed by the Tribunal in accordance with the provisions applicable to it before commencement. |
| 53 | In section 53 of the principal Act, sub-section (3)shall be substituted. | Penalty for not complying with the provisions shall extend upto amount equal to the amount raised through the issue of shares at a discount or five lakh rupees, whichever is less and the Company shall be liable to refund all monies received with interest at the rate of 12% p.a. from date of issue of such shares. |
| 64 | In section 64 of the principal Act, sub-section (2)shall be substituted. | Officer in default of sub-section (1) shall be liable to a penalty of 1,000 each day during such default continues, or five lakh rupees whichever is less. |
| 77 | In section 77 of the principal Act, in sub-section (1), the first and second provisos shall be substituted. | The Registrar may, on an application by the Company, allow such registration to be made (a) in case of charges created before the commencement of Ordinance within a period of 300 days of such creation; or (b) in case of charges created on or after the commencement of the Ordinance within a period of 60 days of such creation, on payment of such additional fees as may be prescribed. |
| 86 | Section 86 of the principal Act shall be numbered as sub-section (1) thereof and after sub-section (1) as so numbered, sub-section (2) shall be inserted. | Any wilfull false or incorrect information furnished knowingly to suppress material information required to be registered in accordance with the provisons of section 77 shall be liable for action under 447. |
| 87 | For section 87 of the principal Act shall be substituted. Rectification by Central Government in Register of charges. | The Central Government on being satisfied that (a) the omission to give intimation to the Registrar of the payment or satisfaction of a charge, within the time required under this Chapter; or (b) the omission or misstatement of any particulars, in any filing previously made to the Registrar with respect to any charge or modification thereof, the time for the giving of intimation of payment or satisfaction shall be extended or, as the case may require, that the omission or misstatement shall be rectified. |
| 90 | In section 90 of the principal Act,— (i) sub-section (9) sub-section shall be substituted. | The Aggrieved Company or the Person by the order of the Tribunal may make an application to the Tribunal for relaxation or lifting of the restrictions placed under sub-section (8), within a period of one year from the date of such order. |
| 92 | In section 92 of the principal Act, sub-section (5) shall be substituted. | If any Company fails to file its annual return in time, such company and its every officer who is in default shall be liable to a penalty of 50,000 rupees and in case of continuing failure, with a further penalty of 100 rupees for each day during which such failure continues, subject to a maximum of five lakh rupees. |
| 102 | In section 102 of the principal Act, sub-section (5) shall be substituted. | if any default is made in complying with the provisions of this section, every promoter, director, manager or other key managerial personnel of the company who is in default shall be liable to a penalty of 50,000 rupees or five times the amount of benefit accruing to such person w.e.h. |
| 105 | In section 105 of the principal Act, in sub-section (3), for the words “punishable with fine which may extend to five thousand rupees”, the words “liable to a penalty of five thousand rupees” shall be substituted. | |
| 117 | In section 117 of the principal Act, sub-section (2) shall be substituted. | If any company fails to file the resolution or the agreement under sub-section (1) in time shall be liable to a penalty of one lakh rupees and in case of continuing failure, with a further penalty of 500 rupees for each day after the first during which such failure continues, subject to a maximum of 25 lakh rupees. |
| 121 | In section 121 of the principal Act, sub-section (3) shall be substituted. | If the Company fails to file the report under subsection (2) in time, it shall be liable to a penalty of one lakh rupees and in case of continuing failure, with a further penalty of 500 rupees for each day after the first during which such failure continues, subject to a maximum of 5 lakh rupees and every officer of the company who is in default shall be liable to a penalty which shall not be less than 25,000 rupees and in case of continuing failure, with a further penalty of 500 rupees for each day after the first during which such failure continues, subject to a maximum of one lakh rupees. |
| 137 | In section 137 of the principal Act, in sub-section (3),— (a) for the words “punishable with fine”, the words “liable to a penalty” shall be substituted; (b) for the portion beginning with “punishable with imprisonment”, and ending with “five lakh rupees or with both”, the words “shall be liable to a penalty of one lakh rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of five lakh rupees” shall be substituted. | |
| 170 | In section 140 of the principal Act, sub-section (3)shall be substituted. | If the Auditor does not comply with the provisions of sub-section (2), he or it shall be liable to a penalty of 50,000 rupees or an amount equal to the remuneration of the auditor, w.e.l, and in case of continuing failure, with a further penalty of 500 rupees for each day after the first during which such failure continues, subject to a maximum of 5 lakh rupees. |
| 157 | In section 157 of the principal Act, sub-section (2) shall be substituted. | If any Company fails to furnish the DIN under sub-section (1), it shall be liable to a penalty of 25,000 rupees and in case of continuing failure, with a further penalty of 100 rupees for each day after the first during which such failure continues, subject to a maximum of one lakh rupees, and every officer of the company who is in default shall be liable to a penalty of not less than 25,000 rupees and case of continuing failure, with a further penalty of 100 rupees for each day after the first during which such failure continues, subject to a maximum of one lakh rupees. |
| 159 | Section 159 of the principal Act, shall be substituted. Penalty for default of certain provisions | If any individual or director of a Company makes any default in complying with any of the provisions of section 152, 155 and 156, they shall be liable to a penalty which may extend to 5,000 rupees and where the default is a continuing one, with a further penalty which may extend to 500 rupees for each day after the first during which such default continues. |
| 164 | In section 164 of the principal Act, in sub-section (1), after clause (h), the following clause shall be inserted, namely:— “(i) he has not complied with the provisions of subsection (1) of section 165.”. | |
| 165 | In section 165 of the principal Act, in sub-section (6). for the portion beginning with “punishable with fine” and ending with “contravention continues”, the words “liable to a penalty of five thousand rupees for each day after the first during which such contravention continues” shall be substituted. | |
| 191 | In section 191 of the principal Act, sub-section (5) shall be substituted. | Default Director shall be liable to a penalty of one lakh rupees. |
| 197 | In section 197 of the principal Act, (a) sub-section (7) shall be omitted; (b) sub-section (15), the following sub-section shall be substituted. | If any person makes any default in complying with the provisions of this section, he shall be liable to a penalty of one lakh rupees and where any default has been made by a company, the company shall be liable to a penalty of 5 lakh rupees. |
| 203 | In section 203 of the principal Act, sub-section (5) shall be substituted. | If any Company makes any default in complying with the provisions of this section, shall be liable to a penalty of 5 lakh rupees and every director and KMP of the Company who is in default shall be liable to a penalty of 50,000 rupees and where the default is a continuing one, with a further penalty of 1,000 rupees for each day after the first during which such default continues but not exceeding 5 lakh rupees. |
| 238 | In section 238 of the principal Act, in sub-section (3), for the words “punishable with fine which shall not be less than twenty-five thousand rupees but which may extend | |
| 157 | case of continuing failure, with a further penalty of 100 rupees for each day after the first during which such failure continues, subject to a maximum of one lakh rupees. | |
| 159 | Section 159 of the principal Act, shall be substituted. Penalty for default of certain provisions | If any individual or director of a Company makes any default in complying with any of the provisions of section 152, 155 and 156, they shall be liable to a penalty which may extend to 5,000 rupees and where the default is a continuing one, with a further penalty which may extend to 500 rupees for each day after the first during which such default continues. |
| 164 | In section 164 of the principal Act, in sub-section (1), after clause (h), the following clause shall be inserted, namely:— “(i) he has not complied with the provisions of subsection (1) of section 165.”. | |
| 165 | In section 165 of the principal Act, in sub-section (6). for the portion beginning with “punishable with fine” and ending with “contravention continues”, the words “liable to a penalty of five thousand rupees for each day after the first during which such contravention continues” shall be substituted. | |
| 191 | In section 191 of the principal Act, sub-section (5) shall be substituted. | Default Director shall be liable to a penalty of one lakh rupees. |
| 197 | In section 197 of the principal Act, (a) sub-section (7) shall be omitted; (b) sub-section (15), the following sub-section shall be substituted. | If any person makes any default in complying with the provisions of this section, he shall be liable to a penalty of one lakh rupees and where any default has been made by a company, the company shall be liable to a penalty of 5 lakh rupees. |
| 203 | In section 203 of the principal Act, sub-section (5) shall be substituted. | If any Company makes any default in complying with the provisions of this section, shall be liable to a penalty of 5 lakh rupees and every director and KMP of the Company who is in default shall be liable to a penalty of 50,000 rupees and where the default is a continuing one, with a further penalty of 1,000 rupees for each day after the first during which such default continues but not exceeding 5 lakh rupees. |
| 238 | In section 238 of the principal Act, in sub-section (3), for the words “punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees”, the words “liable to a penalty of one lakh rupees” shall be substituted. | |
| 248 | In section 248 of the principal Act, in sub-section (1) (a) in clause (c), for the word and figures “section 455,”, the words and figures “section 455; or” shall be substituted; (b) after clause (c) and before the long line, clauses (d) and (e) shall be inserted. | The Subscribers to the memorandum have not paid the subscription and a declaration to this effect has not been filed within 180 days of its incorporation under sub-section (1) of section 10A; or The Company is not carrying on any business or operations, as revealed after the physical verification carried out under sub-section (9) of section 12. |
| 441 | In section 441 of the principal Act,— (a) in sub-section (1), in clause (b), for the words “does not exceed five lakh rupees”, the words “does not exceed twenty-five lakh rupees” shall be substituted; (b) sub-section (6), shall be substituted. | Notwithstanding anything contained in the Code of Criminal Procedure, 1973, any offence which is punishable under this Act with imprisonment only or with imprisonment and also with fine shall not be compoundable. |
| 446B | In section 446B of the principal Act, for the portion beginning with “punishable with fine” and ending with “specified in such sections”, the words “liable to a penalty which shall not be more than one half of the penalty specified in such sections” shall be substituted. | |
| 447 | In section 447 of the principal Act, in the second proviso, for the words “twenty lakh rupees”, the words “fifty lakh rupees” shall be substituted. | |
| 454 | In section 454 of the principal Act, — (i) sub-section (3), (4), (8) shall be substituted. (ii) for the words “does not pay the penalty”, the words, brackets and figures “fails to comply with the order made under sub-section (3) or subsection (7), as the case may be,” shall be substituted. | The penalties posed on the Company and Director has been extended to Company, Directors and Other parties. |
| 454A | After section 454 of the principal Act, the following section shall be inserted, namely:— 454A. Penalty for repeated default. | Where a Company or an officer of a company or any other person having already been subjected to penalty for default under any provisions of this Act, again commits such default within a period of 3 years from the date of order imposing such penalty passed by the adjudicating officer or the RD, as the case may be, it or he shall be liable for the second or subsequent defaults for an amount equal to twice the amount of penalty provided for such default under the relevant provisions of this Act. |
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