Article discusses Changes in Provisions related to Directors Responsibilities as amended by Companies (Amendment) Ordinance, 2019. It discusses amendments related to Declaration by the Director under New Section 10A, Punishment for contravention under Section 159, Number of Directorships, Payment to director for loss of office, etc., in connection with transfer of undertaking, property or shares, Overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy of profits and Appointment of key managerial personnel,
Companies (Amendment) Ordinance, 2019- Directors Responsibilities – Additional provisions & Changes
| Sr No. | Particulars | Under Section | Timelines and Penalty before amendment |
Timelines and Penalty after Companies (Amendment) Ordinance, 2019 |
| 1 | Declaration by the Director |
New Sec 10A | – | 1) Any company incorporated after the commencement of this ordinance shall not commence any business or exercise any borrowing powers unless :
(a) The director within 180 days makes a declaration which will be verified by the registrar that every subscriber to the memorandum has paid the value of shares agreed to be taken by him. (a) The Company has filed with the registrar a verification of its registered office. 2) Penalty: On Company: Any default in complying with the said will invite a fine of Rs. 50,000 to be paid by the company. On Officer : Shall be liable to a penalty of Rs 1,000/- for each day during which such default continues but not exceeding an amount of Rs 1,00,000/- 3) Where no declaration has been filed with the registrar within a period of 180 days of the date of Incorporation of the company and the Registrar has reasonable cause to believe that the company is not carrying on any business or operation, he may without any prejudice, initiate action for removal of the name of the company from the register of companies under Chapter XVIII |
| 2. | Punishment for contravention |
Sec 159 | If any individual or director of a company, contravenes any of the provisions of Sec 152 (Appointment of Director), Sec 155 (Prohibition to obtain more than one DIN) and Sec 156 ( Director to intimate DIN), then such individual or director shall be punishable with imprisonment for a term which may extend to six months or with fine which may extend to Rs 50,000/- and where the contravention is a continuing one, with a further fine which may extend to Rs 500/- for every day after the first during which the contravention continues. | This section shall be substituted, namely :-
If any individual or director of a company, makes any default in complying with any of the provisions of Sec 152 (Appointment of Director), Sec 155 (Prohibition to obtain more than one DIN) and Sec 156 (Director to intimate DIN), such individual or director of the company shall be liable to a penalty which may |
| 3. | Number of Directorships |
Sec 165 | No person, shall hold office as a director, including alternate directorship, in more than twenty companies at the same time: Provided that the maximum number of public companies in which a person can be appointed as a director shall not exceed ten.
Penalty : If a person accepts an appointment as a director in contravention of the Act, he shall be punishable with fine which shall not be less than Rs 5,000/- but which may extend to Rs 25,000/- for every day after the first during which the contravention continues. |
No person, shall hold office as a director, including alternate directorship, in more than twenty companies at the same time: Provided that the maximum number of public companies in which a person can be appointed as a director shall not exceed ten.Penalty : If a person accepts an appointment as a director in contravention of the Act, he shall be liable to a penalty of Rs 5,000/- for each day after the first during which the contravention continues. New Clause (i) inserted in Section 164 (1) states that, A person shall not be eligible for appointment as a director of a company if he has not complied with the provisions of section 165. |
| 4. | Payment to director for loss of office, etc., in connection with transfer of undertaking, property or shares |
Sec 191(5) | If a director of the company contravenes the provisions of this section 191, such director shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to Rs.1,00,000/-. | Subsection (5) shall be substituted, namely :
If a director of the company makes any default in complying with the provisions of this section, such director shall be Liable to a penalty of Rs 1,00,000/- |
| 5. | Overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy of profits |
Sec 197 (7) & (15) | Sub- Section (7) – Notwithstanding anything contained in any other provision of this Act but subject to the provisions of this section, an independent director shall not be entitled to any stock option and may receive remuneration by way of fees provided under sub-section (5), reimbursement of expenses for participation in the Board and other meetings and profit related commission as may be approved by the members.
Sub – Section (15) -If any person contravenes the provisions of this section, he shall be punishable with fine which shall not be less than Rs 1,00,000/- but which may extend to Rs 5,00,000/-. |
Sub – Section (7) has been omitted. Sub – Section (15) shall be substituted, namely: If any person makes any default in complying with the provisions of this section, he shall be Liable to a penalty of Rs 1,00,000/- and where any default has been made by a company, the company shall be liable to a penalty of Rs.5,00,000/- |
| 6. | Appointment of key managerial personnel |
Sec 203(5) | If a company contravenes the provisions of this section, the company shall be punishable with fine which shall not be less than Rs.1,00,000/- but which may extend to Rs.5,00,000/- and every director and key managerial personnel of the company who is in default shall be punishable with fine which may extend to Rs. 1,000/- for every day after the first during which the contravention continues. | Sub – Section (5) shall be substituted, namely:
If any company makes any default in complying with the provisions of this section, such company shall be liable to a |
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