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The Companies (Amendment) Act, 2020 got the assent of Hon’ble President as on September 28, 2020.On September 19, 2020 Lok Sabha passed the Companies (Amendment) Bill, 2020 and on September 22, 2020 it was passed by the Rajya Sabha. There are amendments in 61 sections in the Act and 4 sections have been newly inserted which includes the provisions for Producer Companies. In this write-up we shall compare the various sections of the Companies Act, 2013 with the Companies (Amendment) Act, 2020 for an overview.
KEY TAKEAWAYS OF THE COMPANIES (AMENDMENT) ACT, 2020:
This Act may be called the Companies (Amendment) Act, 2020.
Let us have a look at the amendments through the following table:
| SR. No. | Nature of Amendment | Companies Act, 2013 | Companies (Amendment) Act, 2020 |
| 1.
2. 1 1 |
Formation of Section 8 company | Section 8 – If default is done by directors or any other person in complying with the requirement imposed under section 8 of the act, such director shall be liable for fine of Rs. Minimum 25000; maximum of Rs. 25 lakhs or imprisonment of 3 years, or both. | Under section 3 of the Companies (Amendment) Act, 2020, provision of punishment with imprisonment is deleted. |
| 2. | Prospectus | Section 26(9) – if a prospectus is issued in contravention of the provision of the act by the company then such company shall be punishable with fine minimum of Rs. 50,000/- which may extend up to Rs. 3 lakhs and every person who is in default shall be punishable with fine minimum of Rs. 50,000/- which may extend up to Rs. 3 lakhs or imprisonment up to 3 years or both. | Under section 6 of the Companies (Amendment) Act, 2020, provision of punishment with imprisonment is deleted. |
| 3. | Securities to be Dealt with in Stock Exchanges | Section 40(5) – if any default is made by any company in complying with section, such company shall be punishable with fine minimum of Rs. 5 lakhs which may extend up to Rs. 50 lakhs and every person who is in default shall be punishable with fine minimum of Rs. 50,000/- which may extend up to Rs. 3 lakhs or imprisonment up to 1 year or both. | Under section 7 of the Companies (Amendment) Act, 2020, provision of punishment with imprisonment is deleted. |
| 4. | Variation of Shareholders’ Rights. | Section 48 – if any default is made by any company in complying with section, such company shall be punishable with fine minimum of Rs. 25,000/- which may extend up to Rs. 5 lakhs and every person who is in default shall be punishable with fine minimum of Rs. 50,000/- which may extend up to Rs. 3 lakhs or imprisonment up to 1 year or both. | Under section 8 of the Companies (Amendment) Act, 2020, provision of Punishment with fine and imprisonment for company and officers is deleted. |
| 5. | Transfer and Transmission of securities | Section 56(6) – if any default is made in complying with this section, such company shall be punishable with fine minimum of Rs. 25,000/- which may extend up to Rs. 5 lakhs every person who is in default shall be punishable with fine minimum of Rs. 10,000/- which may extend up to Rs. 1 lakh. | Under section 9 of the Companies (Amendment) Act, 2020, punishment with fine is reduced for both company and officers in default to Rs. 50,000/- |
| 6. | Rectification of register of members | Section 59 – if any default is made in complying with the order of the tribunal under this section than such company shall be punishable with fine minimum of Rs. 1 lakh which may extend up to Rs. 5 lakhs every person who is in default shall be punishable with fine minimum of Rs. 1 lakh which may extend up to Rs. 3 lakhs or imprisonment for a term of up to 1 year or both. | Under section 10 of the Companies (Amendment) Act, 2020, punishment with fine and imprisonment is deleted.
|
| 7. | Notice to be given to Registrar for alteration of share capital | Section 64- If any company fails to file notice to registrar in respect of alteration, increase or redemption of share capital along with an altered MOA of the company within time specified under the act, then such company and any officer who is in default shall be liable for fine of Rs. 1,000/- per day during which such failure continues subject to maximum amount of fine shall be Rs. 5 lakhs. | Under section 12 of the Companies (Amendment) Act, 2020, punishment with fine is reduced to Rs. 500/- every day and maximum amount of fine to 1 lakh. |
| 8. | Reduction of share capital | Section 66(11) – If any company fails to comply with section 66 (4) of the companies act, 2013 such company shall be liable for fine between Rs. 5 lakhs to Rs. 25 lakhs. | Under section 13 of the Companies (Amendment) Act, 2020, punishment with fine is deleted. |
| 9. | Power of company to purchase its own securities | Section 68 (11) – If any company fails to comply with this section and any regulations made by the SEBI, with regards to section 68 (2) (f), then such company and officers in default shall be liable for fine between Rs. 1 lakh to Rs. 3 lakhs, and every officer who is in default shall be liable for imprisonment of up to 3 years or both. | Under section 14 of the Companies (Amendment) Act, 2020, punishment with imprisonment is deleted. |
| 10. | Debentures | Section 71 (11) – If any company makes default in complying with the order of the Tribunal under this section, then officer of the Company who is in default shall be liable for fine between Rs. 2 lakhs to Rs. 5 lakhs, or imprisonment of up to 3 years or both. | Under section 15 of the Companies (Amendment) Act, 2020, punishment with fine and imprisonment is deleted. |
| 11. | Punishment for contravention | Section 86 of the act says that if any company contravenes the provision of chapter VI relating to registration of charges than such company shall be punishable with fine minimum of Rs. 1 lakh which may extend up to Rs. 10 lakhs every person who is in default shall be punishable with fine minimum of Rs. 25,000/- which may extend up to Rs. 1 lakh or imprisonment for a term of up to 6 month or both | Under section 16 of the Companies (Amendment) Act, Punishment with fine for company shall be Rs. 5 lakhs and for officers shall be of Rs. 50,000/- and punishment with imprisonment is deleted. |
| 12. | Registers | Section 88 – if a company fails to maintain register of shareholders and debenture holders or does not maintain register as per the provision of act, such company and officer who is in default shall be punishable with fine minimum of Rs. 50,000/- lakh which may extend up to Rs. 3 lakhs and where the failure continues, a further fine which may extend 1,000/- every day during which the failure continues | Under section 17 of the Companies (Amendment) Act, fine has changed, for company such fine shall be Rs. 3 lakhs and every officer in default shall be liable for an amount of Rs. 50,000/- |
| 13. | Declaration in respect of beneficial interest in any share | Section 89(7) – If any company fails to file a return under section 89(6) within the time specified, the company and the officer in default shall be liable for an of Rs. 1,000/- per day till the failure continues. | Under section 18 of the Companies (Amendment) Act, 2020 the company and the officer in default shall be liable for an of Rs. 1,000/- per day subject to maximum penalty shall be Rs. 5 lakhs and 2 lakhs for company and officer in default respectively |
| 14. | Register of significant beneficial owners in a company | Section 90(10) – if any person fails to make declaration of significant beneficial owner under section 90 such person shall be liable for penalty for an amount minimum of Rs. 1 lakh which can extend up to Rs. 10 lakhs, and where the failure continues, a further fine which may extend 1,000/- every day DRING WHICH THE FAILURE CONTINUES. | Under section 19 of the Companies (Amendment) Act, 2020 penalty has been reduces to Rs. 50,000/-, with a further penalty of Rs. 1,000/- every day during which failure continues, subject to maximum penalty of Rs. 2 lakhs. |
| 15. | Annual return | Section 92 – if a PCS makes default in certifying the annual return, such PCS shall be liable for penalty of minimum of Rs. 50,000/- which may extend up to Rs. 5 lakhs. | Under Section 20 of the Companies (Amendment) Act, 2020 penalty for such default is Rs. 2 lakhs. |
| 16. | Proxies | Section 105(5) – if any person is entitled to attend meeting at the company’ expenses, and officer of the company knowingly invites him as a proxy such officer who is in default shall be liable for a penalty of Rs. 1 lakh. | Under section 21 of the companies (Amendment) Act, 2020 such penalty is reduced to 50,000/- |
| 17. | Resolutions and agreements to be filed | Section 117 – if any company fails to file resolution or agreement with the registrar with the time specified by the act, such company shall be liable of an amount minimum of Rs. 1 lakh subject to maximum limit of Rs. 25 Lakhs, and every person who is in default shall be liable of an amount minimum of Rs. 50,000/- subject to maximum limit of Rs. 5 Lakhs | Under section 22 of the Companies (Amendment) Act, 2020 penalty for such default is reduced. For company penalty shall be Minimum Of rs. 10,000/- which may extend up to Rs. 2 lakhs, and officer in default shall be liable for an amount minimum of Rs. 10,000 which can extend up to Rs. 50,000/- |
| 18. | Books of account, etc., to be kept by company | Section 128 – if any officer contravenes the provision of this section, such person shall be liable for penalty for an amount minimum of Rs. 50,000/- subject to maximum limit would be 5 lakhs or imprisonment of 1 year or both | Under section 24 of the Companies (Amendment) Act, 2020, Punishment with imprisonment is deleted. |
| 19. | Financial statement, Board’s report, etc. | Section 134 – if any company fails to comply with the provision pertaining to signing of financial statement, board report etc. than such company shall be punishable with fine minimum of Rs. 50,000/- which may extend up to Rs. 25 lakhs every person who is in default shall be punishable with fine minimum of Rs. 50,000/- which may extend up to Rs. 5 lakh or imprisonment for a term of up to 3 years or both | Under section 26 of the Companies (Amendment) Act, 2020 penalty shall be Rs. 3 lakhs and 50,000/- for company and person in default respectively. |
| 20. | Copy of financial statement to be filed with Registrar | Section 137 – if any company fails to file copy of the financial statement with registrar within the time specified, than such company shall be punishable with Rs. 1,000/- every day during which such failure continues subject to maximum of Rs. 10 lakhs and the MD, CFO of the company and any other person who is in default shall be liable for an amount minimum of Rs. 1 lakh which may extend to 5 lakhs or imprisonment of up to 6 months or both. | Under section 28 of the Companies (Amendment) Act, 2020 penalty for such failure has reduced For company penalty shall be Rs. 100/-every day during which failure continues, which may extend up to Rs. 2 lakhs, and officer in default shall be liable for an amount of Rs. 10,000 which can extend up to Rs. 50,000/- punishment with imprisonment is deleted. |
| 21. | Copy of financial statement to be filed with Registrar
|
Section 140 – if any auditor fails to files his resignation to the registrar within the time specified, such auditor shall be liable for penalty of Rs. 5 lakhs | Under section 29 of the Companies (Amendment) Act, 2020 penalty for such failure has reduced to Rs. 2 lakhs. |
| 22. | Powers and duties of auditors and auditing standards | Section 143 (9) – if any auditor, cost accountant or PCS fails to comply with the provision of this section relating to fraud, such officer shall be liable for punishment for an amount minimum of Rs. 1 lakh subject to maximum of Rs. 25 lakhs. | Under section 30 of the companies (Amendment) Act, 2020 penalty is divided as under:
In case of a listed company: Rs. 5 lakh; In case of any other company: Rs. 1 lakh. |
| 23. | Punishment for contravention | Section 147- If any of the provision of section 139 to section 146 is contravened then the company shall be liable for punishment between Rs. 25,000/- to Rs 5 lakhs. Every officer in default shall be liable for punishment between Rs. 10,000/- to Rs 1 lakh or imprisonment of up to 1 year. | Under section 31 of the companies (Amendment) Act, 2020, punishment with imprisonment is deleted. |
| 24. | Number of directorships | Section 165- If any person holds office as a director more than specified limit then such officer shall be liable for fine of Rs. 5,000/- every day for which such violation continues subject to maximum of Rs. 2 lakhs. | Under section 33 of the companies (Amendment) Act, 2020, punishment with fine is reduced to 2,000/- per day. |
| 25. | Vacation of office of director | Section 167 (2)- If any person functions as a director even after knowing about his disqualification to hold office, such person shall be liable for fine minimum of Rs 1 lakh which may extend up to Rs. 5 lakhs or imprisonment of up to 1 year. | Under section 34 of the companies (Amendment) Act, 2020 punishment with imprisonment is deleted. |
| 26. | Punishment | Section 172 – If a company contravenes any of the provision of Chapter XI 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 between Rs. 50,000 to Rs. 5 lakh | Under Section 35 of the companies (Amendment) Act, 2020 the company and every officer of the company who is in default shall be liable to a penalty of Rs.50,000, and in case of continuing failure, with a further penalty of five hundred rupees for each day, subject to a maximum of Rs.3 lakh in case of a company and Rs.1 lakh in case of an officer who is in default |
| 27. | Nomination and Remuneration Committee and Stakeholders Relationship Committee | Section 178(8) – In case of any contravention of the provisions of section 177 and 178, the company shall be punishable with fine between Rs.1 lakh to Rs.5 lakh and every officer of the company who is in default shall be punishable with imprisonment for maximum one year or with fine between Rs.25,000 to Rs.1 lakh or both:
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Under Section 36 of the companies (Amendment) Act, 2020 the company shall be liable to a penalty of Rs.5 lakh and every officer of the company who is in default shall be liable to a penalty of Rs.1 lakh |
| 28. | Disclosure of interest by director | Section 184(4) – If a director of the company contravenes the provision of this section, such director shall be punishable with imprisonment for maximum 1 year or with fine up to Rs,1 lakh, or with both | Under Section 37 of the companies (Amendment) Act, 2020 such director shall be liable to penalty of Rs.1 lakh |
| 29. | Investments of company to be held in its own name | Section 187(4) – If any company contravenes the provision of this section, such company shall be punishable with fine between Rs. 25,000 to Rs. 25 lakhs, any director who is in default shall be liable for fine between Rs. 25,000 to Rs. 1 lakh or imprisonment for up to 6 months or both. | Under section 38 of the companies (Amendment) Act, 2020, company shall be liable for penalty of Rs. 5 lakhs and officer in default shall be liable for a penalty for Rs. 50,000/- |
| 30. | Related party transactions | Section 188 (5)- Any director who had entered or authorized any contract or arrangements in violation of this section such director shall be liable for punishment such as under
|
Under section 39 of the companies (Amendment) Act, 2020, director shall be liable for penalty such as under:
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| 31. | Secretarial Audit for Bigger Companies | Section 204 (4) – If any company, any officer of the company or PCS contravenes the provision of the section, such company. Officer or PCS shall be liable or fine between Rs. 1 lakh to Rs. 5 lakhs. | Under section 41 of the companies (Amendment) Act, 2020, penalty is imposed of Rs. 2 lakhs on every defaulting person and company |
| 32. | Merger and Amalgamation of companies | Section 232(8) – If a transferor company or a transferee company contravenes the provisions of this section, such companies, as the case may be, shall be punishable with fine between Rs.1 lakh to Rs. 25 lakh and every officer of such companies who is in default, shall be punishable with imprisonment for maximum 1 year or with fine between Rs.1 lakh to Rs.3 lakh, or with both | Under Section 42 of the companies (Amendment) Act, 2020, If a company fails to comply with this section, the company and every officer of the company who is in default shall be liable to a penalty of Rs. 20,000/-, and where the failure is a continuing one, with a further Penalty of Rs 1,000/- for each day after the first during which such failure continues, subject to a maximum of Rs. 3 lakhs. |
| 33. | Powers of Tribunal | Section 242 (8)- If any officer of the company contravenes the order of NCLT regarding alteration of AOA and MOA, such officer shall be liable for a fine between Rs. 25,000 to Rs. 1 lakh or imprisonment for up to 6 months or both. | Under section 43 of the companies (Amendment) Act, 2020, punishment with imprisonment is deleted. |
| 34. | Consequences of termination or modification of certain agreements | Section 243(2) – If any person knowingly acts as a MD, or any director of the company in contravention of the provisions of section 243(1)(b) and section 243(1A), such person who is in default shall be liable for fine up to Rs. 5 lakhs or imprisonment of up to 6 months or both. | Under section 44 of the companies (Amendment) Act, 2020, punishment with imprisonment is deleted. |
| 35. | Promoters, directors, etc., to cooperate with Company Liquidator during winding up | Section 284 – If any person required to assist or cooperate with the Company Liquidator and fails to discharge his obligations, shall be punishable with imprisonment of up to 6 months or fine of Rs. Up to 50000/- or both. | Under section 46 of the Companies (Amendment) Act, 2020, punishment with imprisonment and fine is deleted |
| 36. | Dissolution of company by Tribunal | Section 302 – If the Company Liquidator makes a default in forwarding a copy of the order to the Registrar within the period of 30 days, such person shall be punishable with a fine of Rs. 5000 per day for which such default continues. | Under section 47 of the Companies (Amendment) Act, 2020, punishment with fine is deleted |
| 37. | Prosecution of delinquent officers and members of company | Section 342 – if any prosecution instituted against any officer or liquidator of the company and such person is defaulted for non-corporation in connection with the prosecution than such person shall be liable for a fine minimum of Rs. 25000 up to Rs. 1 lakh. | Under section 48 of the Companies (Amendment) Act, 2020, punishment with fine is deleted |
| 38. | Disposal of books and papers of company | Section 347 – if any person contravenes directions of the Central Government in relation to disposal of books and papers of the Company which has been wound up, such person shall be liable for a fine of Rs. 50000 or imprisonment up to 6 months or both | Under section 49 of the Companies (Amendment) Act, 2020, punishment with imprisonment is deleted |
| 39. | Company Liquidator to deposit monies into scheduled bank | Section 348 – if a Company Liquidator, who is an Insolvency Professional, is in default in complying with the provisions of the section, the default will be deemed to be a contravention of the IBC, 2016 and the rules and regulations made thereunder, shall be liable for punishment with imprisonment for a term which may extend to six months or with fine which may extend to one lakh rupees, or with both. | Under section 50 of the Companies (Amendment) Act, 2020, punishment with imprisonment and fine is deleted |
| 40. | Powers of Tribunal to Declare Dissolution of Company Void | Section 356(2) – if tribunal has ordered for dissolution of the company, it is the duty of Company Liquidator or the person on whose application the order was made to file a certified copy of the order within thirty days after the making of the order or such further time as the tribunal may allow, failing which such person shall be liable for fine which may extend to ten thousand rupees for every day during which the default continues. | Under section 51 of the Companies (Amendment) Act, 2020, punishment with fine is deleted. |
| 41. | Punishment for contravention – Foreign companies | Section 392 – If a Foreign Company contravenes the provisions of Chapter XXII relating to ‘Companies Incorporated outside India’, every officer who is in default shall be punishable with imprisonment for maximum 6 months or with fine between Rs. 25,000 to Rs. 5 lakhs, or with both | Under Section 54 of the Companies (Amendment) Act, 2020, punishment with imprisonment is deleted |
| 42. | Power of the central government to direct companies to furnish information or statistics | Section 405(4) – if any company fails to comply with an order made under this section, or knowingly furnishes any incorrect or incomplete information or statistics in any material aspect shall be punishable with fine up to Rs. 25,000 and every officer of the company who is in default shall be punishable with imprisonment for maximum 6 months or with fine between Rs.25,000 to Rs. 3 lakhs, or with both | Under Section 57 of the Companies (Amendment) Act, 2020, fine is substituted with penalty of Rs.20,000 and in case of continuing failure, a further penalty of Rs.1,000 for each day the failure continues, subject to maximum of Rs.3 lakhs |
| 43. | Compounding of certain offences | Section 441(5) – if any officer or other employee of the company who fails to comply with any order made by the tribunal or the regional director or any officer authorized by the central government shall be punishable with imprisonment of maximum 6 months or fine of maximum Rs.1 lakh, or with both | Under Section 61 of the Companies (Amendment) Act, 2020, punishment with imprisonment is deleted and maximum fine is twice the amount provided in the corresponding section in which punishment for such offence is provided |
| 44. | Punishment where no specific penalty or punishment is specified | Section 450 – if a company or any officer of the company or any other person contravenes the provision of this Act, for which no penalty or punishment is provided elsewhere in the act, the Company and any officer of the company who is in default shall be punishable with fine of up to Rs. 10000 and where the contravention is continuing one, with a further fine which may extend to Rs. 1,000 for every day after the first during which the contravention continues. | Section 63 of the Companies (Amendment) Act, provides that a company and every officer of the company who is in default shall be punishable with fine of up to Rs. 10000 and where the contravention is continuing one, with a further fine which may extend to Rs. 1,000 for every day after the first during which the contravention continues, subject to a maximum of Rs. 2 lakhs for a defaulting company and Rs. 50000/- for a defaulting officer. |
CONCLUSION:
It is evident from the Amendment Act that the major amendments are done with respect to decriminalization of offences and lightening the penalties. Besides, there are also amendments with regards to the provisions of CSR, remuneration of non-executive director, definition of listed company and producer companies.
SOURCE:
- http://ebook.mca.gov.in/
- https://taxguru.in/company-law/17-provisions-companies-amendment-act-2020-wef-21-12-2020.html
- https://taxguru.in/company-law/companies-amendment-act-2020.html
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