MCA Notifies the date of commencement of Section 23 and Section 45 of Companies (Amendment) Act, 2020

The Ministry of Corporate Affairs (MCA) vide its Notification Date appointed the 24th March 2021 for commencement of Section 23 and Section 45 of the Companies (Amendment) Act, 2020.

Comparative Sections are as follows:-

S No. Section of the Companies (Amendment) Act, 2020 Section of the Companies Act,
2013
Particulars
1 Section 23 Section 124(7) Unpaid Dividend Account
2 Section 45 Section 247(3) Valuation by Registered Valuers

w.e.f. 24.03.2021, penalty has been reduced under section 124(7) and 247(3) of Companies Act, 2013 for failure in complying with the provisions under section 124 and contravention of the provisions of section 247 or the rules made thereunder respectively.

(A) Vide Section 23 of the Companies (Amendment) Act, 2020 Central Government amends the sub-section (7) of Section 124 of the Companies Act, 2013 and replace the provisions of the said sub-section as follows:-

“(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.”.

Section 124 of the Companies Act, 2013 deals with the Unpaid Dividend Account, and sub-section (7) of section 124 provides for the penalty in case of non-compliance of Section 124.

Earlier sub-section (7) of section 124 provides for fine of a minimum of Rs 5,00,000/- and maximum of Rs 25,00,000/- on the defaulting company and fine of minimum of Rs 1,00,000/- and maximum of Rs 5,00,000/- on the every officer of the company who is in default.

(B) Vide Section 45 of the Companies (Amendment) Act, 2020 Central Government amends Section 247 of the Companies Act, 2013 as follows:-

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.

Section 247(3) of the Companies Act, 2013 provides for the penalty in case of contraventions by the Registered Valuers. After commencement of Section 45 of the Companies (Amendment) Act, 2020 fine in case of contravention by the Registered Valuers has been amended to Rs 50,000/- only from the earlier “not less than Rs 25,000/- but which may extend up to Rs 1,00,000/-“.

Official Notification is as follows:-

MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 24th March, 2021

S.O. 1303(E).—In exercise of the powers conferred by sub-section (2) of section 1 of the Companies (Amendment) Act, 2020 (29 of 2020), the Central Government hereby appoints the 24th March, 2021 as the date on which the provisions of section 23 and section 45 of the said Act shall come into force.

[F. No. 1 /3 /2020-CL.I]
K. V. R. MURTY, Jt. Secy.

Also Read-

Title Notification No. Date
MCA broaden scope of reporting by Auditors in Audit report G.S.R. 206(E) 24/03/2021
Companies mandates to use software with audit trail of each transaction G.S.R. 205(E) 24/03/2021

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