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Companies (Amendment) Bill 2020
Companies (Amendment) Bill 2020
Recently, the Government of India (GoI) introduced the Companies (Amendment) Bill 2020 to further amend the Companies Act 2013 in the Lok Shaba. The main objective of the introduction of this Bill 2020 is to legalize some provisions of the Act (based on their gravity) and improve ease of doing business. The present article highlights the vital amendments carried out vide the Companies (Amendment Bill) 2020.
Key Amendments in Companies Amendment Bill 2020
Key Amendments introduced vide the Companies Amendment Bill 2020 are listed hereunder:
- The proviso has been inserted in section 2(52) [please note section 2(52) covers the definition of ‘listed company’]. As per the newly inserted proviso, the Central Government (after consultation with the Securities and Exchange Board) can exclude a certain class of companies from the definition of ‘listed company.’
- New Chapter XXIA has been inserted relating to ‘Producer Companies.’
- Section 403 amended to relax provisions relating to charging higher additional fees. As per the amendment, in case of default on two or more occasions in the filing, recording, submitting, or registering of documents, facts, or information. The same shall be submitted, filed, recorded, or registered on payment of the prescribed higher additional fee.
- Periodical Financial Results:
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- New section 129A has been inserted, which contains provisions of ‘Periodical Financial Results.’
- As per the new section, the Central Government may require the specified class of unlisted company to do the following–
- To prepare the financial results on a periodical basis in the prescribed form;
- To obtain Board of Director’s approval and complete audit/limited review of periodical financial result in a prescribed manner; and
- To file a copy of the periodical financial result, with the Registrar, within a period of 30 days of completion of the relevant period and on payment of prescribed fees.
- Various amendments under section 135–Corporate Social Responsibility:
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- If the company spends an amount in additional of the requirements provided under section 135(5), then such a company may set off the excess amount against the requirement to spend under section 135(5) for the prescribed number of succeeding financial years and in a prescribed manner.
- In case the company defaults in complying with the provisions of section 135(5) and section 135(6), then:
- The company will be liable to pay lower of the following amount as a penalty-
- Twice the amount which is required to be transferred by the company to the fund (as specified in Schedule VII) or the Unspent Corporate Social Responsibility Account; or
- INR 1 Crore.
- Every officer (if in default) of the company will be liable to pay lower of the following amount as a penalty:
- One-tenth of the amount which is required to be transferred by the company to the fund (as specified in Schedule VII) or the Unspent Corporate Social Responsibility Account; or
- INR 20 Lakhs.
- In case the company has Corporate Social Responsibility spending obligation up to INR 50 Lakhs, such company shall not be required to constitute the Corporate Social Responsibility Committee.
- The company will be liable to pay lower of the following amount as a penalty-
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Amendments for Penalty
The following table mentions the penalty or punishment as per Companies Amendment Bill 2020:
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Relevant Section |
Amendment |
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Section 86 (punishment for contravention)
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In case the company defaults in complying with any provisions of the chapter, then:
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Section 88 (Register of Members etc.) |
If the company defaults in maintaining a register of members or register of debenture-holders or register of other security holders, then:
|
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Section 89 (Declaration in respect of the Beneficial interest in any share) |
If the taxpayer fails to comply with provisions of section 89(1) or section 89(2) or section 89(3), then:
When a company fails to file the return as required under section 89(6), then-
|
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Section 90 (Register of significant beneficial owners in a company) |
In case the person fails to make a declaration as required under section 90(1), then a penalty of Rs.50,000 shall apply. In case of continuous failure, a penalty would be levied at Rs.1,000 per day, maximum up to Rs.2 Lakhs. When a company defaults in maintaining register under section 90(2) or defaults in filing information required under section 90(4) or defaults in taking necessary steps under section 90(4A), then-
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| Section 117 (Filing Resolutions and Agreements) | In case the company fails to file the resolutions and agreements as required under section 117(1), then-
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Section 124 (Unpaid Dividend Account) |
In case the company fails to comply with any of the provisions of section 124, then-
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| Section 134 (Financial Statement, Board’s Report, etc.) | If a company defaults in complying with provisions of section 134, then-
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Section 143 (Maintaining Auditing Standards and Powers and Duties of Auditors) |
In case any auditor/cost accountant or company secretary doesn’t comply with any provisions of section 143(12), then-
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| Section 172 (Punishment) | In case the company defaults in complying with any of the provisions of this chapter (for which no specific penalty or punishment is provided), then-
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| Section 187 (Investments of the Company to be held in its Name) | In case the company defaults in complying with any of the provisions of section 187, then-
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Section 232 (Merger and Amalgamation of Companies) |
In case the company defaults in complying with any of the provisions of section 232(5), then-
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To know more about the Bill 2020, Scroll Down:
Companies-Amendment-Bill-2020