Companies Amendment Bill: Highlights

Companies Amendment Bill: Highlights

Question : One of the most recent amendments to the Constitution is the Companies Amendment Bill. Highlight the amendments brought about by this Bill.

Companies Amendment Bill has made certain amendments to the Companies Act 2013 which are as follows:

• Omission of requirement for minimum paid up share capital and resulting changes for improving ease of doing business

• Creating common seal and changes in authorisation for execution of documents was modified for ease of doing business

• Specific punishments prescribed for deposits to be accepted under the new Act, thereby undoing an omission

• Prohibition of public inspection of Board resolutions filed in Registry to meet corporate demand

• Inclusion of provision for writing off past losses/depreciation prior to declaration of dividend under the fiscal

• Rectification of the requirement of transfer of equity shares for which unclaimed/unpaid dividend has been transferred to the IEPF though subsequent dividends have been claimed

• Enabling of provisions for prescribing thresholds over which fraud should be reported to Central government and below to the Audit Committee; Disclosure for the latter’s category will also be made via the Board’s Report

• Exemption u/s 185 or Loan to Directors provides for loans to wholly owned subsidiaries and guarantees/securities on loans received from banks by subsidiaries

• Empowerment of Audit Committee to provide omnibus approval for party transactions on a yearly basis

• Replacement of special resolution with ordinary resolution for approving related party transactions by non-related shareholders

• Exemption of related party transactions between holding companies and completely owned subsidiaries from requirement of approval of non-related shareholders

• Bail restrictions apply for offence relating to frauds under section 447

• Closure of cases heard by 2 member, not 3 member bench

• Special Courts to try only those offences which carry jail term of 2 years or more

Facts and Stats

• The Companies Act 2013 was notified on 29 August 2013.

• From the 470 sections in the Act, 283 sections and 22 sets of rules corresponding to such sections have been enforced

• Around 16 amendments have been made to the Companies Act 2013 through the Companies (Amendment) Bill 2014

• The Companies Amendment Bill 2014 was recently ratified by the RS

• An expert committee has been constituted for finding out areas where the amendments are not conducive to ease of doing business