Key Changes proposed in the Companies (Amendment) Bill, 2019, which are in addition to the changes made though Ordinance w.e.f. 02.11.2018
1. Section 26– Matters to be stated in prospectus
The requirement of registration of prospectus to be replaced with filing of prospectus with the Registrar.
2. Section 29 – Public offer of securities to be in dematerialised form
Private companies have been included in the ambit of section 29, so mandatory demat provisions may be made applicable on private companies aswell by changes in rules.
3. Section 35– Civil liability for mis-statements in prospectus
The copy of the prospectus shall be filed with the Registrar instead of delivery for registration.
4. Section 90– Register of significant beneficial owners in a company
The company shall take necessary steps to identify an individual who is a SBO. Failure to take necessary steps shall be punishable.
Sub-section (9A) inserted to provide the power to the Central Government to make rules for the purposes of this section.
5. Section 132– Constitution of National Financial Reporting Authority
NFRA to perform its functions through such divisions as may be prescribed by the Central Government.
Executive body of NFRA shall consist of the Chairperson and full-time Members for efficient discharge of its certain functions.
Debarring of the member or firm by NFRA in case professional or other misconduct is proved.
6. Section 135– Corporate Social Responsibility
Unspent amounts to be carried forward to a special account (Unspent CSR Account) to be spent within three financial years and transfer thereafter to the Fund specified in Schedule VII, in case of an ongoing project.
Unspent amounts to the Fund specified under Schedule VII, in other cases.
Penal provisions inserted. The company shall be punishable with fine which shall not be less than Rs. 50,000 but which may extend to Rs. 25 lakh and every officer of such company who is in default shall be punishable with imprisonment for a term which may extend to 3 years or with fine which shall not be less than Rs. 50,000 but which may extend to Rs. 5 lakh, or with both.
MCA empowered to give general or special directions to a company or class of companies as it considers necessary to ensure compliance of provisions of this section.
7. Section 212– Investigation into affairs of Company by Serious Fraud Investigation Office
Any officer not below the rank of Assistant Director of Serious Fraud Investigation Office (SFIO), if so authorised, may arrest any person in accordance with the provisions of this section.
The person so arrested may be taken to a Special Court or Judicial Magistrate or Metropolitan Magistrate within 24 hours of his arrest.
Where an investigation report submitted by SFIO states that a fraud has taken place and any director, KMP or officer has taken undue advantage or benefit, then the Central Government may file an application before the Tribunal with regard to disgorgement and such director, KMP or officer may be held personally liable without any limitation of liability.
8. Section 241- Application to Tribunal for relief in cases of oppression, etc.
CG to prescribe such company or class of companies in respect of which, applications under such sub-section, shall be made before the Principal Bench of NCLT and shall be dealt with by such Bench.
In certain circumstances, the CG may refer the matter and request to the Tribunal to inquire into the case and record a decision about whether the person is a fit and proper person to hold the office of director or any other office connected with the conduct and management of any company.
9. Section 242- Powers of Tribunal
In matters under section 241, the Tribunal shall record its decision stating specifically as to whether or not the respondent is a fit and proper person to hold the office of director or any other office connected with the conduct and management of any company.
10. Section 243- Consequence of termination or modification of certain agreements
The person who is not a fit and proper person pursuant to section 242 shall not hold the office of a director or any other office connected with the conduct and management of the affairs of any company for a period of five years from the date of the decision of the Tribunal.
CG may, with the leave of the Tribunal, permit such person to hold any such office before the expiry of the said period of five years.
The person so removed from the office of a director or any other office connected with the conduct and management of the affairs of the company shall not be entitled to, or be paid, any compensation for the loss or termination of office.
11. Section 272- Power of Court to stay or restrain proceedings
Registrar allowed to present a petition of winding up on the ground that it is just and equitable to do so under clause (e) of section 271.
12. Section 398- Provisions relating to filing of applications, documents, inspection, etc., in electronic form
Prospectus not required to be registered by the Registrar.
DISCLAIMER: THE ARTICLE IS BASED ON THE RELEVANT PROVISIONS AND AS PER THE INFORMATION EXISTING AT THE TIME OF THE PREPARATION.IN NO EVENT I SHALL BE LIABLE FOR ANY DIRECT AND INDIRECT RESULT FROM THIS ARTICLE. THIS IS ONLY A KNOWLEDGE SHARING INITIATIVE.
THE AUTHOR CAN BE REACHED AT VINAYAK.CHARU@GMAIL.COM