The Companies (Amendment) Bill, 2020 was Introduced in Lok Sabha On 17th March 2020 and it was passed by Lok Sabha on 19th September 2020. Bill gets passed by Rajya Sabha on 22nd September 2020 and Assented by Honourable President on 28th September 2020 and bill gets notified as Companies Amendment Act, 2020. Article Compares Provision of Companies Act, 2013 with changes introduced in the same vide Companies Amendment Act, 2020 in Tabular Format-
| S.No. | Existing | Amendment | Change |
| 1. | Sec-2(52)-Definition of Listed Co.
“listed company” means a company which has any of its securities listed on any recognised stock exchange. |
Proviso inserted as under:
“Provided that such class of companies, which have listed or intend to list such class of securities, as may be prescribed in consultation with the Securities and Exchange Board, shall not be considered as listed companies.”. |
The Central Govt now has power to publish a list of specific class of companies which will not be covered in definition of listed company. Every company who has listed any security is now listed company after issue of list of companies by CG those company will come out of definition of listed company. |
| 2. | Section-8(11)- Formation of Companies with Charitable Objects:
If a company makes any default in complying with any of the requirements laid down in this section, the company shall, without prejudice to any other action under the provisions of this section, be punishable with fine which shall not be less than ten lakh rupees but which may extend to one crore rupees and the directors and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than twenty-five thousand rupees but which may extend to twenty-five lakh rupees, or with both |
“with imprisonment for a term which may extend to three years or” shall be omitted
“twenty-five lakh rupees, or with both”, the words “twenty-five lakh rupees” shall be substituted |
Imprisonment removed of three years and fine remail same. |
| 3. | Rectification of Name of Company clause (b) of sub-section (1) of section 16 sub-section (3) of section 16 | in sub-section (1), in clause (b), for the words “period of six months”, the words “period of three months” shall be substituted.
for sub-section (3), the following sub-section shall be substituted, namely: If a company is in default in complying with any direction given under sub-section (1), the Central Government shall allot a new name to the company in such manner as may be prescribed and the Registrar shall enter the new name in the register of companies in place of the old name and issue a fresh certificate of incorporation with the new name, which the company shall use thereafter |
Reduce the time limit for compliance in case of resemblance of trademark from 6 months to 3 months.
Now CG has power to allot name if company fails to comply the orders within timeline of 3 months. Existing penalty of fine of Rs.1000/- per day for company and fine of not less than Rs. 5000/- which may extend to Rs.100000/- in case of officer in default omitted by the amendment. |
| 4. | Public Offer and Private Placement | In section 23 of the principal Act, after sub-section (2) and before the Explanation, the following sub-sections shall be inserted:
“(3) Such class of public companies may issue such class of securities for the purposes of listing on permitted stock exchanges in permissible foreign jurisdictions or such other jurisdictions, as may be prescribed. The Central Government may, by notification, exempt any class or classes of public companies referred to in sub-section (3) from any of the provisions of this Chapter, Chapter IV, section 89, section 90 or section 127 and a copy of every such notification shall, as soon as may be after it is issued, be laid before both Houses of Parliament.” |
To allow certain class of companies for getting listed in foreign jurisdiction.
(To raise money from foreign markets) Allowing CG to exempt certain class of companies from the provisions of Sec-89 i.e. Beneficial Owner, Sec-90 and Sec-127. (To reduce compliance for those companies raising money from foreign market) |
| 5. | Matters to be Stated in Prospectus.
If a prospectus is issued in contravention of the provisions of this section, the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to three lakh rupees and every person who is knowingly a party to the issue of such prospectus shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than fifty thousand rupees but which may extend to three lakh rupees, or with both |
In section 26 of the principal Act, in sub-section (9):
(a) the words “with imprisonment for a term which may extend to three years or” shall be omitted; (b) for the words “three lakh rupees, or with both”, the words “three lakh rupees” shall be substituted. |
To omit the punishment of imprisonment in case a person is knowingly a party to issue of prospectus. |
| 6. | Securities to be Dealt with in Stock Exchanges.
If a default is made in complying with the provisions of this section, the company shall be punishable with a fine which shall not be less than five lakh rupees but which may extend to fifty lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than fifty thousand rupees but which may extend to three lakh rupees, or with both. |
In section 40 of the principal Act, in sub-section (5):
(a) the words “with imprisonment for a term which may extend to one year or” shall be omitted; (b) for the words “three lakh rupees, or with both”, the words “three lakh rupees” shall be substituted. |
To remove punishment of imprisonment in case of any default. |
| 7. | Variation of Shareholders’ Rights.
Sec-48(5): Where any default is made in complying with the provisions of this section, the company shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees, or with both. |
In section 48 of the principal Act, sub-section (5) shall be omitted | Full penalty removed in case of non-compliance. |
| 8. | Transfer and Transmission of Securities Where any default is made in complying with the provisions of sub-sections (1) to (5), the company shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees and every officer of the company who is in default shall be punishable with fine which shall not be less than ten thousand rupees but which may extend to one lakh rupees. | In section 56 of the principal Act, for sub-section (6), the following sub-section shall be substituted, namely:-
“(6) Where any default is made in complying with the provisions of sub-sections (1) to (5), the company and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees.”. |
Reduced upper limit of penalty for company as well as officer in default. Now a fix penalty is there in form of fine. |
| 9. | Rectification of Register of Members.
Sec-59(5): If any default is made in complying with the order of the Tribunal under this section, the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than one lakh rupees but which may extend to three lakh rupees, or with both. |
In section 59 of the principal Act, sub-section (5) shall be omitted. | Omitted the full sub-section resulting in no penalty in case of default made in compliance of tribunal order.
As per Sec-59(3), the company has to comply the order of tribunal in 10 days of issue of order by the tribunal to register the transfer/ transmission and pay damages to the aggrieved party. |
| 10. | Further Issue of Share Capital (Right Issue)
Sec-62(1)(i): The offer shall be made by notice specifying the number of shares offered and limiting a time not being less than fifteen days and not exceeding thirty days from the date of the offer within which the offer, if not accepted, shall be deemed to have been declined; |
In section 62 of the principal Act, in sub-section (1), in clause (a), in sub-clause (i),
after the words “less than fifteen days”, the words “or such lesser number of days as may be prescribed” shall be inserted. |
Now the company are not required to give an offer period of 15-30 days for right issue.
This will help specially private limited companies to raise funds in a fast manner. |
| 11. | Notice to be given to Registrar for Alteration of Share Capital
Sec-64(2): Where any company fails to comply with the provisions of sub-section (1), such company and every officer who is in default shall be liable to a penalty of one thousand rupees for each day during which such default continues, or five lakh rupees whichever is less. |
In section 64 of the principal Act, in sub-section (2),—
(a) for the words “one thousand rupees”, the words “five hundred rupees” shall be substituted; (b) for the words “or five lakh rupees whichever is less”, the words “subject to a maximum of five lakh rupees in case of a company and one lakh rupees in case of an officer who is in default” shall be substituted. |
Reduced penalty from Rs.1000/- to Rs.500/- per day.
Reduced maximum limit for officer in default to Rs. 100000/- instead of Rs. 500000/- earlier. |
| 12. | Reduction of Share Capital
Sec-66(11): If a company fails to comply with the provisions of sub-section (4), it shall be punishable with fine which shall not be less than five lakh rupees but which may extend to twenty-five lakh rupees. |
In section 66 of the principal Act, sub-section (11) shall be omitted. | Removed penalty in case of non-compliance of publishing the order of tribunal for reduction of share capital in manner as directed by tribunal. |
| 13. | Power of Company to Purchase its Own Securities (Buy Back)
Sec-68(11): If a company makes any default in complying with the provisions of this section or any regulation made by the Securities and Exchange Board, for the purposes of clause (f) of sub-section (2), the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to three lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than one lakh rupees but which may extend to three lakh rupees, or with both. |
In section 68 of the principal Act, in sub-section (11):-
(a) the words “with imprisonment for a term which may extend to three years or” shall be omitted; (b) for the words “three lakh rupees , or with both”, the words “three lakh rupees” shall be substituted. |
Imprisonment taken off.
Due to removal of imprisonment only fine left so removal of word or with both. |
| 14. | Debentures
Sec-71(11):If any default is made in complying with the order of the Tribunal under this section, every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than two lakh rupees but which may extend to five lakh rupees, or with both. |
In section 71 of the principal Act, sub-section (11) shall be omitted. | Full penalty has been taken off.
In case default/ assets are less to pay off the debentures then on application made to tribunal for such matter the tribunal issue order to pay the debenture holders with interest thereon. |
| 15. | Punishment for Contravention (Charges)
Sec-86(1): If any company contravenes any provision of this Chapter, the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to ten lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both. |
In section 86 of the principal Act, for sub-section (1), the following sub-section shall be substituted, namely:-
“(1) If any company is in default in complying with any of the provisions of this Chapter, the company shall be liable to a penalty of five lakh rupees and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees.”. |
Fixed penalty in case of company and removal of imprisonment in case of officer in default. |
| 16. | Register of Members, etc
Sec-88(5): If a company does not maintain a register of members or debenture-holders or other security holders or fails to maintain them in accordance with the provisions of sub-section (1) or sub-section (2), the company and every officer of the company who is in default shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to three lakh rupees and where the failure is a continuing one, with a further fine which may extend to one thousand rupees for every day, after the first during which the failure continues. |
In section 88 of the principal Act, for sub-section (5), the following sub-section shall be substituted, namely:-
“(5) If a company does not maintain a register of members or debenture-holders or other security holders or fails to maintain them in accordance with the provisions of sub-section (1) or sub-section (2), the company shall be liable to a penalty of three lakh rupees and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees.”. |
Fixed penalty for company and reduced penalty for officer in default along with continuing penalty. |
| 17. | Declaration in Respect of Beneficial Interest in any Share
Sec-89(5): If any person fails, to make a declaration as required under sub-section (1) or sub-section (2) or sub-section (3), without any reasonable cause, he shall be punishable with fine which may extend to fifty thousand rupees and where the failure is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the failure continues. Sec-89(7): If a company, required to file a return under sub-section (6), fails to do so before the expiry of the time specified , the company and every officer of the company who is in default shall be punishable with fine which shall not be less than five hundred rupees but which may extend to one thousand rupees and where the failure is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the failure continues. |
In section 89 of the principal Act,—
(a) for sub-section (5), the following sub-section shall be substituted, namely:- “(5) If any person fails to make a declaration as required under sub-section (1) or sub-section (2) or sub-section (3), he shall be liable to a penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of two hundred rupees for each day after the first during which such failure continues, subject to a maximum of five lakh rupees.” (b) for sub-section (7), the following sub-section shall be substituted, namely:- “(7) If a company, required to file a return under sub-section (6), fails to do so before the expiry of the time specified therein, the company and every officer of the company who is in default shall be liable to a penalty of one thousand rupees for each day during which such failure continues, subject to a maximum of five lakh rupees in the case of a company and two lakh rupees in case of an officer who is in default.”; (c) after sub-section (10), the following sub-section shall be inserted, namely:- “(11) The Central Government may by notification, exempt any class or classes of persons from complying with any of the requirements of this section, except sub-section (10), if it is considered necessary to grant such exemption in the public interest and any such exemption may be granted either unconditionally or subject to such conditions as may be specified in the notification.”. |
Earlier the fine run on per day basis till the default is made good but now the maximum limit has been inserted for amount of Rs. 5,00,000/-.
Earlier the fine run on per day basis till the default is made good but now the maximum limit has been inserted for amount of Rs. 5,00,000/- and in case of continuing one to Rs. 2,00,000/-. CG to have power to exempt some companies for compliance under this section. (Discussed above also i.e. companies raising money from foreign market) |
| 18. | Register of significant beneficial owners in a company
If any person fails to make a declaration as required under sub-section (1), he shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than one lakh rupees but which may extend to ten lakh rupees or with both and where the failure is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the failure continues. If a company, required to maintain register under sub-section (2) and file the information under sub-section (4) or required to take necessary steps under sub-section (4A), fails to do so or denies inspection as provided therein, the company and every officer of the company who is in default shall be punishable with fine which shall not be less than ten lakh rupees but which may extend to fifty lakh rupees and where the failure is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which the failure continues. |
In section 90 of the principal Act,—
(a) for sub-section (10), the following sub-section shall be substituted, namely:- “(10) If any person fails to make a declaration as required under sub-section (1), he shall be liable to a penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of one thousand rupees for each day after the first during which such failure continues, subject to a maximum of two lakh rupees.”; (b) for sub-section (11), the following sub-section shall be substituted, namely:- “(11) If a company, required to maintain register under sub-section (2) and file the information under sub-section (4) or required to take necessary steps under sub-section (4A), fails to do so or denies inspection as provided therein, the company shall be liable to a penalty of one lakh rupees and in case of continuing failure, with a further penalty of five hundred rupees for each day, after the first during which such failure continues, subject to a maximum of five lakh rupees and every officer of the company who is in default shall be liable to a penalty of twenty-five thousand rupees and in case of continuing failure, with a further penalty of two hundred rupees for each day, after the first during which such failure continues, subject to a maximum of one lakh rupees.”. |
Removed the imprisonment, reduced fine from Rs. 1,00,000-10,00,000/- to Rs. 50,000/-.
Earlier the fine run on per day basis till the default is made good but now the maximum limit has been inserted for amount of Rs. 2,00,000/-. Reduced penalty of Rs.10,00,000- 25,00,000/- to Rs. 1,00,000/- and in case of continuing one from Rs.1000/- to Rs. 500/- per day subject to max. Rs.1,00,000/- |
| 19. | Annual Return
Section-92(5): (5) If any company fails to file its annual return under sub-section (4), before the expiry of the period specified therein, such company and its every officer who is in default shall be liable to a penalty of fifty thousand rupees and in case of continuing failure, with further penalty of one hundred rupees for each day during which such failure continues, subject to a maximum of five lakh rupees. Section-92(6): If a company secretary in practice certifies the annual return otherwise than in conformity with the requirements of this section or the rules made thereunder, he shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees. |
In section 92 of the principal Act:-
(a) in sub-section (5),— (i) for the words “fifty thousand rupees”, the words “ten thousand rupees” shall be substituted; (ii) for the words “five lakh rupees”, the words “two lakh rupees in case of a company and fifty thousand rupees in case of an officer who is in default” shall be substituted; (b) in sub-section (6), for the words “punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees”, the words “liable to a penalty of two lakh rupees” shall be substituted. |
Reduced penalty from Rs.50,000/- to Rs. 10,000/-.
And in case of continuous default also penalty reduced from Rs. 5,00,000/- to Rs. 2,00,000/-. |
| 20. | Proxies
Section-105(5): If for the purpose of any meeting of a company, invitations to appoint as proxy a person or one of a number of persons specified in the invitations are issued at the company’s expense to any member entitled to have a notice of the meeting sent to him and to vote thereat by proxy, every officer of the company who knowingly issues the invitations as aforesaid or wilfully authorises or permits their issue shall be punishable with fine which may extend to one lakh rupees: |
In section 105 of the principal Act, in sub-section (5): –
(a) for the words “who knowingly issues the invitations as aforesaid or wilfully authorises or permits their issue shall be punishable with fine which may extend to one lakh rupees”, the words “who issues the invitation as aforesaid or authorises or permits their issue, shall be liable to a penalty of fifty thousand rupees” shall be substituted; (b) in the proviso, for the word “punishable”, the word “liable” shall be substituted |
Reduced penalty from Rs. 1,00,000/- to Rs. 50,000/-. |
| 21. | Resolutions and Agreements to be filed
Section-117(2): If any company fails to file the resolution or the agreement under sub-section (1) before the expiry of the period specified therein, such company shall be liable to a penalty of one lakh rupees and in case of continuing failure, with further penalty of five hundred rupees for each day after the first during which such failure continues, subject to a maximum of twenty-five lakh rupees and every officer of the company who is in default including liquidator of the company, if any, shall be liable to a penalty of fifty thousand rupees and in case of continuing failure, with further penalty of five hundred rupees for each day after the first during which such failure continues, subject to a maximum of five lakh rupees. Provided further that nothing contained in this clause shall apply to a banking company in respect of a resolution passed to grant loans, or give guarantee or provide security in respect of loans under clause (f) of sub-section (3) of section 179 in the ordinary course of its business; and. |
In section 117 of the principal Act,—
(i) for sub-section (2), the following sub-section shall be substituted, namely:— “(2) If any company fails to file the resolution or the agreement under sub-section (1) before the expiry of the period specified therein, such company shall be liable to a penalty of ten thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of two lakh rupees and every officer of the company who is in default including liquidator of the company, if any, shall be liable to a penalty of ten thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of fifty thousand rupees.”; (ii) in sub-section (3), in clause (g), for the second proviso, the following proviso shall be substituted, namely:— “Provided further that nothing contained in this clause shall apply in respect of a resolution passed to grant loans, or give guarantee or provide security in respect of loans under clause (f) of sub-section (3) of section 179 in the ordinary course of its business by,— (a) a banking company; (b) any class of non-banking financial company registered under Chapter IIIB of the Reserve Bank of India Act, 1934, as may be prescribed in consultation with the Reserve Bank of India; (c) any class of housing finance company registered under the National Housing Bank Act, 1987, as may be prescribed in consultation with the National Housing Bank; and”. |
Reduced penalty from Rs. 1,00,000/- to Rs. 10,000/- and in case of continuing default from Rs.500/- to Rs. 100/- per day. Subject to maximum from Rs.25,00,000 to Rs. 2,00,000/-.
Exclusive list of the types of company provided for classes of company who shall not be required to file the form under this section. |
| 22. | Unpaid Dividend
Section-124(7): If a company fails to comply with any of the requirements of this section, the company shall be punishable with fine which shall not be less than five lakh rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees. |
In section 124 of the principal Act, for sub-section (7), the following sub-section shall be substituted, namely: –
“(7) If a company fails to comply with any of the requirements of this section, such company shall be liable to a penalty of one lakh rupees and in case of continuing failure, with a further penalty of five hundred rupees for each day after the first during which such failure continues, subject to a maximum of ten lakh rupees and every officer of the company who is in default shall be liable to a penalty of twenty-five thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of two lakh rupees.”. |
Reduced penalty of Rs. 5,00,000/- to Rs. 1,00,000/- and in case of continuing default from Rs. 25,00,000/- to Rs. 10,00,000/-. |
| 23. | Books of Account
Section-128(6): If the managing director, the whole-time director in charge of finance, the Chief Financial Officer or any other person of a company charged by the Board with the duty of complying with the provisions of this section, contravenes such provisions, such managing director, whole-time director in charge of finance, Chief Financial officer or such other person of the company shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees or with both. |
In section 128 of the principal Act, in sub-section (6),:-
(a) the words “with imprisonment for a term which may extend to one year or” shall be omitted; (b) the words “or with both” shall be omitted. |
Due to removal of imprisonment only fine left so removal of word or with both. |
| 24. | Financial Statement | After section 129 of the principal Act, the following section shall be inserted, namely:-
“129A. The Central Government may, require such class or classes of unlisted companies, as may be prescribed, (a) to prepare the financial results of the company on such periodical basis and in such form as may be prescribed; (b) to obtain approval of the Board of Directors and complete audit or limited review of such periodical financial results in such manner as may be prescribed; and (c) file a copy with the Registrar within a period of thirty days of completion of the relevant period with such fees as may be prescribed.”. |
The act has provided the power to central government to specify the class of companies who will be required to prepare their financials on periodical basis. |
| 25. | Financial Statement, Board’s Report, etc.
Section-134(8): If a company contravenes the provisions of this section, the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both. |
In section 134 of the principal Act, for sub-section (8), the following sub-section shall be substituted, namely: –
“(8) If a company is in default in complying with the provisions of this section, the company shall be liable to a penalty of three lakh rupees and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees.”. |
Penalty has been reduced from Rs.25,00,000/- to Rs.3,00,000/- and in case of officer in default removed the imprisonment and removed Rs.5,00,000/- penalty. |
| 26. | Corporate Social Responsibility
Sec-135(7): If a company contravenes the provisions of sub-section (5) or sub-section (6), the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to twenty-five lakh rupees and every officer of such company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both. |
In section 135 of the principal Act:-
(a) in sub-section (5), after the second proviso, the following proviso shall be inserted, namely: – “Provided also that if the company spends an amount in excess of the requirements provided under this sub-section, such company may set off such excess amount against the requirement to spend under this sub-section for such number of succeeding financial years and in such manner, as may be prescribed.”; (b) for sub-section (7), the following sub-section shall be substituted, namely:— “(7) If a company is in default in complying with the provisions of sub-section (5) or sub-section (6), the company shall be liable to a penalty of twice the amount required to be transferred by the company to the Fund specified in Schedule VII or the Unspent Corporate Social Responsibility Account, as the case may be, or one crore rupees, whichever is less, and every officer of the company who is in default shall be liable to a penalty of one-tenth of the amount required to be transferred by the company to such Fund specified in Schedule VII, or the Unspent Corporate Social Responsibility Account, as the case may be, or two lakh rupees, whichever is less.”; (c) after sub-section (8), the following sub-section shall be inserted, namely: – “(9) Where the amount to be spent by a company under sub-section (5) does not exceed fifty lakh rupees, the requirement under sub-section (1) for constitution of the Corporate Social Responsibility Committee shall not be applicable and the functions of such Committee provided under this section shall, in such cases, be discharged by the Board of Directors of such company.” |
Inserted new provision that in case company spends more than CSR obligation then the set off the same will be allowed in the subsequent year.
Changed the amount of penalty as twice the amount to be spend as CSR and taken off the imprisonment. The requirement of CSR committee has been taken off in case the CSR amount to be spend does not exceed Rs. 50,00,000/- |
| 27. | Copy of Financial Statement to be filed with registrar
Section-137(3): If a company fails to file the copy of the financial statements under sub-section (1) or sub-section (2), as the case may be, before the expiry of the period specified therein, the company shall be liable to a penalty of one thousand rupees for every day during which the failure continues but which shall not be more than ten lakh rupees, and the managing director and the Chief Financial Officer of the company, if any, and, in the absence of the managing director and the Chief Financial Officer, any other director who is charged by the Board with the responsibility of complying with the provisions of this section, and, in the absence of any such director, all the directors of the company, shall be shall be liable to a penalty of one lakh rupees and in case of continuing failure, with further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of five lakh rupees. |
In section 137 of the principal Act, in sub-section (3): –
(a) for the words “one thousand rupees for every day during which the failure continues but which shall not be more than ten lakh rupees”, the words “ten thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day during which such failure continues, subject to a maximum of two lakh rupees,” shall be substituted; (b) for the words “one lakh rupees”, the words “ten thousand rupees” shall be substituted; (c) for the words “five lakh rupees”, the words “fifty thousand rupees” shall be substituted. |
Reduced continuing penalty in case of continuing default of Rs. 1000/- per day to Rs. 100/- per day and total penalty from Rs.10,00,000/- to Rs.2,00,000/-.
Reduced penalty from Rs. 1,00,000/- to Rs.10,000/-. Reduced penalty from Rs. 5,00,000/- to Rs.50,000/-. |
| 28. | Removal, resignation of auditor and giving of special notice
Section-140(3): If the auditor does not comply with the provisions of sub-section (2), he or it shall be liable to a penalty of fifty thousand rupees or an amount equal to the remuneration of the auditor, whichever is less, and in case of continuing failure, with further penalty of five hundred rupees for each day after the first during which such failure continues, subject to a maximum of five lakh rupees. |
In section 140 of the principal Act, in sub-section (3), for the words “five lakh rupees”, the words “two lakh rupees” shall be substituted. | Reduced penalty from Rs. 5,00,000/- to Rs.2,00,000/-. |
| 29. | Powers and Duties of Auditors
Section-143(15): If any auditor, cost accountant or company secretary in practice do not comply with the provisions of sub-section (12), he shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees. |
In section 143 of the principal Act, for sub-section (15), the following sub-section shall be substituted, namely:— “(15) If any auditor, cost accountant, or company secretary in practice does not comply with the provisions of sub-section (12), he shall,—
(a) in case of a listed company, be liable to a penalty of five lakh rupees; and (b) in case of any other company, be liable to a penalty of one lakh rupees.” |
Specified the penalty separately for listed company and other company. |
| 30. | Punishment for Contravention
Section-147(1): If any of the provisions of sections 139 to 146 (both inclusive) is contravened, the company shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than ten thousand rupees but which may extend to one lakh rupees, or with both. (2) If an auditor of a company contravenes any of the provisions of section 139, section 143, section 144 or section 145, the auditor shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees 1[or four times the remuneration of the auditor, whichever is less. |
In section 147 of the principal Act:-
(a) in sub-section (1),— (i) the words “with imprisonment for a term which may extend to one year or” shall be omitted; (ii) for the words “one lakh rupees, or with both”, the words “one lakh rupees” shall be substituted; (b) in sub-section (2), the word and figures, “section 143” shall be omitted. |
Imprisonment removed off but penalty remained same. Penalty under this section u/s 143 removed.
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| 31. | Remuneration of Independent Director
Section-149(9): Notwithstanding anything contained in any other provision of this Act, but subject to the provisions of sections 197 and 198, an independent director shall not be entitled to any stock option and may receive remuneration by way of fee provided under sub-section (5) of section 197, reimbursement of expenses for participation in the Board and other meetings and profit related commission as may be approved by the members. |
In section 149 of the principal Act, in sub-section (9), the following proviso shall be inserted, namely:—
“Provided that if a company has no profits or its profits are inadequate, an independent director may receive remuneration, exclusive of any fees payable under sub-section (5) of section 197, in accordance with the provisions of Schedule V.” |
This proviso will allow the Independent Director to take remuneration in case of no profit or inadequate profit as per Schedule-V. |
| 32. | Number of Directorship
Section-165(6): If a person accepts an appointment as a director in contravention of sub-section (1), he shall be liable to a penalty of five thousand rupees for each day after the first during which such contravention continues |
In section 165 of the principal Act, for sub-section (6), the following sub-section shall be substituted, namely:-
“(6) If a person accepts an appointment as a director in violation of this section, he shall be liable to a penalty of two thousand rupees for each day after the first during which such violation continues, subject to a maximum of two lakh rupees.” |
Reduced penalty from Rs. 5000/- per day to Rs. 2,000/- and maximum limit prescribed for penalty which was not their earlier Rs.2,00,000/-
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| 33. | Vacation of Office of Director
Section-167(2): If a person, functions as a director even when he knows that the office of director held by him has become vacant on account of any of the disqualifications specified in subsection (1), he shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees, or with both. |
In section 167 of the principal Act, in sub-section (2),— (a) the words “with imprisonment for a term which may extend to one year or” shall be omitted; (b) for the words “five lakh rupees, or with both”, the words “five lakh rupees” shall be substituted. |
Imprisonment removed off but penalty remained same.
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| 34. | Punishment
Section-172: If a company contravenes any of the provisions of this Chapter and for which no specific punishment is provided therein, the company and every officer of the company who is in default shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees. |
For section 172 of the principal Act, the following section shall be substituted, namely:—
“172. If a company is in default in complying with any of the provisions of this Chapter and for which no specific penalty or punishment is provided therein, the company and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees, and in case of continuing failure, with a further penalty of five hundred rupees for each day during which such failure continues, subject to a maximum of three lakh rupees in case of a company and one lakh rupees in case of an officer who is in default.”. |
Reduced penalty from Rs. 5,00,000/- to Rs. 3,00,000/- for company and Rs. 1,00,000/- for officer in default.
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| 35. | Nomination & Rem Committee and Stakeholder Griev. Comm.
Section-178(8): In case of any contravention of the provisions of section 177 and this section, the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both: |
In section 178 of the principal Act, in sub-section (8), for the words
“punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both”, the words “liable to a penalty of five lakh rupees and every officer of the company who is in default shall be liable to a penalty of one lakh rupees” shall be substituted. |
Removed imprisonment and penalty fixed in upper limit. |
| 36. | Disclosure of Interest by Director
Section-184(4): If a director of the company contravenes the provisions of sub-section (1) or subsection (2), such director shall be punishable with imprisonment for a term which may extend to one year or with fine which 4[Omitted] may extend to one lakh rupees, or with both. |
In section 184 of the principal Act, in sub-section (4), for the words
“punishable with imprisonment for a term which may extend to one year or with fine which may extend to one lakh rupees, or with both”, the words “liable to a penalty of one lakh rupees” shall be substituted. |
Imprisonment removed off but penalty remained same.
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| 37. | Investment by company to be held on its own name
Section-187(4): If a company contravenes the provisions of this section, the company shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both. |
In section 187 of the principal Act, for sub-section (4), the following sub-section shall be substituted, namely:— “(4) If a company is in default in complying with the provisions of this section, the company shall be liable to a penalty of five lakh rupees and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees.”. |
Imprisonment removed off but penalty reduced from Rs. 25,00,000/- to Rs. 5,00,000/- in case of company and from Rs. 1,00,000/- to Rs. 50,000/- in case of officer in default. |
| 38. | Related Party Transactions
Section-188(5): Any director or any other employee of a company, who had entered into or authorised the contract or arrangement in violation of the provisions of this section shall,— (ii) In case of any other company, be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees. |
In section 188 of the principal Act, in sub-section (5),—
(a) in clause (i), for the words “punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees, or with both”, the words “liable to a penalty of twenty-five lakh rupees” shall be substituted; (b) in clause (ii), for the words “punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees”, the words “liable to a penalty of five lakh rupees” shall be substituted. |
Removed imprisonment and increased the amount of penalty from Rs. 5,00,000/- to Rs. 25,00,000/- in case of listed co. Removed the minimum penalty limit. |
| 39. | Overall maximum managerial rem and mgr. rem. In case of absence or inadequate profits
Section-197: Notwithstanding anything contained in sub-sections (1) and (2), but subject to the provisions of Schedule V, if, in any financial year, a company has no profits or its profits are inadequate, the company shall not pay to its directors, including any managing or wholetime director or manager, by way of remuneration any sum exclusive of any fees payable to directors under sub-section (5) hereunder except in accordance with the provisions of Schedule V |
In section 197 of the principal Act, in sub-section (3), after the words “whole-time director or manager,”, the words “or any other non-executive director, including an independent director” shall be inserted. | Included independent director so as to give effect to the amendment made in section-149(9). |
| 40. | Secretarial Audit
Section-204(4): If a company or any officer of the company or the company secretary in practice, contravenes the provisions of this section, the company, every officer of the company or the company secretary in practice, who is in default, shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees |
In section 204 of the principal Act, in sub-section (4), for the words
“punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees”, the words “liable to a penalty of two lakh rupees” shall be substituted. |
Reduced the penalty from Rs.5,00,000/- to Rs.1,00,000/- |
| 41. | Merger and Amalgamation of Companies
Section-232(8): If a transferor company or a transferee company contravenes the provisions of this section, the transferor company or the transferee company, as the case may be, shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees and every officer of such transferor or transferee company who is in default, shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than one lakh rupees but which may extend to three lakh rupees, or with both. |
In section 232 of the principal Act, for sub-section (8), the following sub-section shall be substituted, namely:— “(8) If a company fails to comply with sub-section (5), the company and every officer of the company who is in default shall be liable to a penalty of twenty thousand rupees, and where the failure is a continuing one, with a further penalty of one thousand rupees for each day after the first during which such failure continues, subject to a maximum of three lakh rupees.”. | Removed imprisonment and uniformed the penalty for company and officer reducing the upper penalty for companies from Rs. 25,00,000/- to Rs. 3,00,000/-. |
| 42. | Powers of Tribunal
Section-242(8): If a company contravenes the provisions of sub-section (5), the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both. |
In section 242 of the principal Act, in sub-section (8):-
(a) the words “with imprisonment for a term which may extend to six months or” shall be omitted; (b) for the words “one lakh rupees, or with both”, the words “one lakh rupees” shall be substituted. |
Removed imprisonment but all other remain the same. |
| 43. | Consequences of termination and modification of certain agreements
Section-243(2): Any person who knowingly acts as a managing director or other director or manager of a company in contravention of clause (b) of sub-section (1) or sub-section (1A), and every other director of the company who is knowingly a party to such contravention, shall be punishable with imprisonment for a term which may extend to six months or with fine which may extend to five lakh rupees, or with both. |
In section 243 of the principal Act, in sub-section (2),—
(a) the words “with imprisonment for a term which may extend to six months or” shall be omitted; (b) for the words “five lakh rupees, or with both”, the words “five lakh rupees” shall be substituted. |
Removed imprisonment but all other remain the same. |
| 44. | Valuation by registered valuer
Section-247(3): If a valuer contravenes the provisions of this section or the rules made thereunder, the valuer shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees: |
In section 247 of the principal Act, in sub-section (3), for the words “punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees”, the words “liable to a penalty of fifty thousand rupees” shall be substituted. | Reduced penalty from Rs.1,00,000/- to Rs. 50,000/-. |
| 45. | Promoters, directors etc to cooperate with company liquidator
Section-284(2): Where any person, without reasonable cause, fails to discharge his obligations under sub-section (1), he shall be punishable with imprisonment which may extend to six months or with fine which may extend to fifty thousand rupees, or with both. |
In section 284 of the principal Act, for sub-section (2), the following sub-sections shall be substituted, namely:— “(2) If any person required to assist or cooperate with the Company Liquidator under sub-section (1) does not assist or cooperate, the Company Liquidator may make an application to the Tribunal for necessary directions.
(3) On receiving an application under sub-section (2), the Tribunal shall, by an order, direct the person required to assist or cooperate with the Company Liquidator to comply with the instructions of the Company Liquidator and to cooperate with him in discharging his functions and duties.”. |
Removed imprisonment and if the person appointed to assist the Company Liquidator does not assist
then the Company Liquidator may make an application to the Tribunal for necessary directions. To provide that the Tribunal may direct such person to comply with the directions of the Company Liquidator. |
| 46. | Dissolution of company by Tribunal
Section-302(3): A copy of the order shall, within thirty days from the date thereof, be forwarded by the Company Liquidator to the Registrar who shall record in the register relating to the company a minute of the dissolution of the company. |
In section 302 of the principal Act,— (a) for sub-section (3), the following sub-section shall be substituted, namely:— “(3) The Tribunal shall, within a period of thirty days from the date of the order,— (a) forward a copy of the order to the Registrar who shall record in the register relating to the company a minute of the dissolution of the company; and (b) direct the Company Liquidator to forward a copy of the order to the Registrar who shall record in the register relating to the company a minute of the dissolution of the company.”; (b) sub-section (4) shall be omitted. | Now copy of the order of dissolution will be forwarded by tribunal to Registrar and tribunal will also direct the company liquidator to send the order to Registrar. |
| 47. | Prosecution of Delinquent Officers and Members of Company
Section-342(6): If a person fails or neglects to give assistance required by sub-section (5), he shall be liable to pay fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees. |
In section 342 of the principal Act, sub-section (6) shall be omitted. | Penalty provision omitted. |
| 48. | Disposal of Books and Papers of Company
Section-347(4): If any person acts in contravention of any rule framed or an order made under sub-section (3), he shall be punishable with imprisonment for a term which may extend to six months or with fine which may extend to fifty thousand rupees, or with both. |
In section 347 of the principal Act, in sub-section (4),—
(a) the words “with imprisonment for a term which may extend to six months or” shall be omitted; (b) for the words “fifty thousand rupees, or with both”, the words “fifty thousand rupees” shall be substituted. |
Removed imprisonment and penalty remained the same. |
| 49. | Information as of pending litigation
Section-348(6): If a Company Liquidator contravenes the provisions of this section, the Company Liquidator shall be punishable with fine which may extend to five thousand rupees for every day during which the failure continues. |
In section 348 of the principal Act,— (a) for sub-section (6), the following sub-section shall be substituted, namely:— “(6) Where a Company Liquidator, who is an insolvency professional registered under the Insolvency and Bankruptcy Code, 2016 is in default in complying with the provisions of this section, then such default shall be deemed to be a contravention of the provisions of the said Code, and the rules and regulations made thereunder for the purposes of proceedings under Chapter VI of Part IV of that Code.”; (b) sub-section (7) shall be omitted. | Removal of penal provision under this act and |
| 50. | Powers of Tribunal to Declare Dissolution of Company Void
Section-356(2): It shall be the duty of the Company Liquidator or the person on whose application the order was made, within thirty days after the making of the order or such further time as the Tribunal may allow, to file a certified copy of the order with the Registrar who shall register the same, and if the Company Liquidator or the person fails so to do, the Company Liquidator or the person shall be punishable with fine which may extend to ten thousand rupees for every day during which the default continues. |
In section 356 of the principal Act, for sub-section (2), the following sub-section shall be substituted, namely:— “(2) The Tribunal shall— (a) forward a copy of the order, within thirty days from the date thereof, to the Registrar who shall record the same; and
(b) direct the Company Liquidator or the person on whose application the order was made, to file a certified copy of the order, within thirty days from the date thereof or such further period as allowed by the Tribunal, with the Registrar who shall record the same.”. |
Now copy of the order of dissolution will be forwarded by tribunal to Registrar and tribunal will also direct the company liquidator to send the order to Registrar.
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| 51. | After section 378 of the principal Act, the following Chapter shall be inserted, namely:—
Full Chapter |
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