16 Key Changes vide Companies (Amendment) Act, 2015

The Companies (Amendment) Bill 2015 was  recently passed in Rajya Sabha on 13th May 2015 and was passed in Lok Sabha on 17.12.2014. Bill got assent of the president on 25.05.2015 and got published in official Gazette of India on 26^th May, 2015   and now known as Companies (Amendment) Act, 2015.

Given below is the Summary of 16 Key Amendment vide Companies (Amendment) Bill 2015

1. Omitting requirement for minimum paid up share capital, and consequential changes. (For ease of doing business) -[section 2(68)/2(71) of the Companies Act, 2013 (Act)].

2. Making common seal optional, and consequential changes for authorization for execution of documents. (For ease of doing business) -[sections 9, 12, 22, 46 and 223 of the Act].

3. Doing away with the requirement for filing a declaration by a company before commencement of business or exercising its borrowing powers.  (For ease of doing business)  -[Omission of section 11 of the Act and consequential change in section 248]

4. Prescribing specific punishment for deposits accepted under the new Act. To deal with defaults in repayment of depositor. (For protection of depositors’ interests) – [New Section 76A of the Act]

5. Prohibiting public inspection of Board resolutions filed in the Registry. (To provide for confidentiality of commercial interests discussed in resolutions) -[section 117(3) of the Act].

6. Including provision for setting off past losses/depreciation before declaring dividend for the year- (Standard prudential clause).[ section 123(1) of the Act]

7. Rectifying the requirement of transferring equity shares for which unclaimed/ unpaid dividend has been transferred to the Investor Education and Protection Fund (IEPF) even though subsequent dividend(s) has been claimed -[section 124(6) of the Act].

8. Enabling provisions to prescribe thresholds beyond which fraud shall be reported to the Central Government (below the threshold, it will be reported to the Audit Committee/ Board). Disclosures for the latter category also to be made in the Board’s Report. [ section 143(12) and 134(3) of the Act].

9. Empowering Audit Committee to give omnibus approvals for related party transactions on annual basis. (Align with SEBI policy and increase ease of doing business)– [section 177(4) of the Act].

10. Exemption u/s 185 (Loans to Directors) provided for loans to wholly owned subsidiaries and guarantees/securities on loans taken from banks by subsidiaries. (This was provided under the Rules but being included in the Act as a matter of abundant caution).[ section 185(1) of the Act].

11. Replacing ‘special resolution’ with ‘resolution’ for approval of related party transactions by non-related shareholders. (Balance the process for majority supported genuine commercial decisions) -[section 188(1) of the Act].

12. Related party transactions between holding companies and wholly owned subsidiaries exempted from the requirement of approval of non-related shareholders. -[section 188(1) of the Act].

13. Bail restrictions to apply only for offences relating to fraud u/s 447.  [section 212(6) of the Act].

14. Winding up cases to be heard by 2-member Bench instead of a 3-member Bench. – [section 419 of the Act].

15. Special Courts to try only those offences carrying imprisonment of two years or more. (Rationalization of jurisdiction, to let magistrates try minor violations, with the objective of speeding up disposal).[section 435 and 436 of the Act].

16. Rationalizing the procedure for laying draft notifications granting exemptions to various classes of companies or modifying provisions of the Act in Parliament, in order to ensure speedier issue of final notifications. (For a faster process of giving exemptions to classes of companies). [section 462 of the Act].