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Pallavi Singh

Companies Amendment Act, 2015 which came into effect from 29th May, 2015 principally aimed at the ease of doing business and brought some landmark changes with it in the newly effected Companies Act, 2013. Some of these amendments will provide the necessary relief to Corporates, and also bring certainty to certain other relaxations that were earlier provided through the rules accompanying the Act.

The Act highlights some key issues and challenges as well, besides bringing some relief to the Corporates. It has served everyone their requisite scoops; starting from the investor point of view it has brought some hefty punishments in violation to acceptance of deposits norms; from the corporate point of view it has sought to address confidentiality and privacy concerns of the business with respect to inspection of resolutions relating to power of board being no more available for inspection; to empowering of auditors by providing them with omnibus approvals in case of related party transactions; to providing of threshold limits for reporting of transactions related to fraud.

Thus the Amendment Act seeks to bring an all quadrant changes to address the key areas which required certain revision and modification in order to make the Act more comprehensive and exhaustive.


1. The requirement of the minimum paid up share capital of the private and public company which was Rs. 1,00,000 and Rs. 5,00,000 earlier has been done away with. There are no such requirements anymore; it has been done to bring the ease in doing business.

2. Section 11 of Companies Act, 2013 had the requirement of for filing declaration by the company before commencement of business or exercising its borrowing powers has been omitted.

3. The provision with regard to the company to have common seal has been made optional.

4. Specific Punishment in terms of Section 73 and 76 which deals with “Prohibition on Acceptance of deposits from public” and “Acceptance of deposit from public by certain companies” has been introduced by inserting a new Section 76 A., which elaborates as follows:

  •  Company in addition to the amount of payment of deposit or part thereof and the interest due, be punishable with a fine shall not be less than Rs. 1 crore but which may extend to Rs. 10 crore.
  • Every officer in default shall be punishable with imprisonment which may extend to 7 years or with fine not less than Rs 25 lakh but which may extend to Rs.2 crore, or with both.

5. As per the provision of Section 117 (g), all the resolutions passed in respect of Section 179(3), which elaborates on the powers of the Board exercised on behalf of the company by means of resolutions passed at the meeting of Board, had to be filed with Registrar within 30 days of passing of the Public inspection of such resolution has been prohibited now as a new proviso has been inserted after Clause g of 117(3), “no person shall be entitled under Section 399 to inspect or obtain copies of such resolution.

6. Section 123 of the Act, illustrates on “Declaration of Dividend”, which did not have any provision of writing off previous loss as the earlier Act, 1956. But now inserts a new proviso after third proviso of Section 123 (1), “Provided also that no company shall declare dividend unless carried over previous losses and depreciation not provided in the previous year or years are set off against profit of the company for the current year”.

7. Section 124 that relates to Unpaid Dividend Account has now been rectified to include that the equity shares would be transferred only in the case where the dividend remains unpaid or unclaimed for a continuous period of seven years.

8. The Act under Section 143 provided for the fraud, if found by the auditor during the course of performance of his duties, to be reported by him to Central Government has come up with a new threshold limits, which provides a limit up to which the fraud shall be reported to the Audit Committee constituted under Section 177 and be disclosed in its Board’s report and fraud above the prescribed limit to be reported to Central Government. The limits are yet to be decided.

9. The exemptions in regard of Section 185, Loan to Directors, i.e. any loan made or guarantee given or security provided by a holding company to its wholly owned subsidiary and any guarantee or security given in respect of loan given by Bank or Financial Institution is exempted from the provisions of this section, provided such loans are utilised by the subsidiary company for its principal business activities, were provided in its rules have now been included in the Act itself as a matter of substantial importance and profuse vigilance.

10. The Amendment Act empowers Audit Committee to give omnibus approvals for Related Party Transactions, proposed to be entered into by the company, subject to such conditions as may be prescribed.

Omnibus approval means a complete, comprehensive and exhaustive approval.

11. Section 188 provides for Related Party Transactions, contained the provision that no company having the prescribed paid up share capital, or transactions shall be entered into except the prior approval of company by special resolution, has been substituted with ordinary resolution.

A new exemption has also been introduced that exempts related party transactions between holding and wholly subsidiaries from the requirement of approval of non-related shareholders. Thus, there is no need to pass any resolution at general meeting.

12. Restrictions to bail, now applies only to Offences Related to Fraud under Section 447.

13. The cases of winding up shall be heard by 2 member bench instead of 3 member bench, i.e. out of two members, one shall be Judicial Member and other be Technical member.

14. Special Courts are to only try offences carrying imprisonment of two years or more.

15. The procedure for laying draft notifications granting exemptions to various classes of companies have now been rationalized.

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June 2024