The President of India has, on 2nd November 2018, promulgated Companies (Amendment) Ordinance, 2018 (“Ordinance”) to amend certain provisions of the Companies Act, 2013 (“Companies Act”). The Ordinance, which came into force on the same date, has made over thirty amendments to the Companies Act.
The amendments introduce changes to improve compliance and corporate governance, and have modified penalties leviable for various offences. One of the objectives is to reduce the burden of routine matters before national company law tribunals established under the Companies Act, and strengthen enforcement against serious offences.
key Highlights
- A new provision- Commencement of Business, etc. has been incorporated which requires the company to file with the Registrar that every subscriber to the memorandum has paid the value of the shares as agreed. The declaration must be filed within 180 days of incorporation in prescribed form. Non-filing will attract penalty of Rs. 50,000 for a Company and Rs.1,000 for Officer in Default for each day up to a maximum limit of Rs.1 lakh and may result in removal of the company name from the Register of Companies. The provision also requires a verification of registered office of such company.
- Increase in the pecuniary jurisdiction of the Regional Director, such that he is now empowered to compound offences that are punishable with fine of up to Rs. 25,00,000/- as against the earlier limit of Rs. 5,00,000/-
- The central government has been empowered to approve alteration of articles of association for conversion of public company into a private company
- Furnishing of false or incorrect information or knowingly suppressing any material information with respect to registration of charges will attract penalty for fraud under the Act.
- In case of failure to file annual return, Company and officer-in-default will be liable to a penalty of Rs.50,000 and in case of continuing default, further penalty of Rs.100 for each day up to maximum Rs.5 lakhs will be imposed. No imprisonment will be imposed in such cases.
