Companies Amendment Ordinance sent for Presidential Assent

Companies Amendment Ordinance sent for Presidential Assent :

The Union Cabinet on Thursday approved promulgating an ordinance to amend the Companies Act, same have forwarded for Presidential Assent This ordinance is aiming many major corporate governance reforms. Following are the basic point.  

1. Decriminalization of over 80 offences.

The committee also recommended shifting 16 of 81compoundable offencesfrom the jurisdiction of special courts to an in-house e-jurisdiction framework, where defaults could be penalised by the adjudicating officer under the registrar of companies. These offences relate to non-filing of annual returns, not providing permanent account numbers, not providing registered address in the letterhead, not giving director identification number, etc. The remaining 65 offences of serious nature will continue to be under the jurisdiction of special courts due to their potential misuse, the recommendations stated.

2. Transparency and stringent norms in Disclosure of Beneficial Interest. Once a company obtains restrictions under Section 90 (7) relating to significant beneficial ownership, in respect of shares whose ownership remains undetermined, such shares should be transferred to the Investor Education and Protection Fund if the rightful owner does not claim ownership within a year.

 

3. Simplifying penalties for minor offences, System of e-adjudication wherein ROC shall send online show cause notice.

 

4. To bring Definition of Shell Companies since there is no specific definition of a shell company under the Companies Act 2013. To tackle the aspect of money laundering via shell companies,

 

5. Section 11 - Requirements of Obtaining Certificate of Commencement of Business.

 

6. Section 12 - Non-Maintenance of Registered Office to be a ground for striking off of the Company.

 

7. Section 73 to 76 & Deposit Rules- An e-form to be introduced for reporting transactions which are exempted deposits.

 

8. Section 77, 78 & 87 To reduce the time-limit for filing documents related to creation, modification and satisfaction of charges and stringent penal provisions for non-reporting. Maximum time period for registration/modification of charges to be 30 days + additional 30 days. Further condonation to be done in 60 days. After total of 120 days Charge Cannot be Registered.

 

9. Section 149 To cap independent directors remuneration, steps to improve independence of independent directors and bring measures to curb shell companies besides help de-clog the National Company Law Tribunal.

 

10. Section 441 - Compounding Threshold for going to NCLT to be revised to 5 lakhs to 25 lakhs.

Prior permission of Special Court not required for Compounding of offences punishable with imprisonment or fine or with both by NCLT. Minimum Compounding fee shall be as minimum fine mentioned in the section. Thanks.   Thanks & Regards CS AASHISH KUMAR JAIN +9198 4133 1247 +9178 1100 4400 AASHISH KUMAR JAIN & ASSOCIATES COMPANY SECRETARY IN PRACTICE No. 164, LINGHI CHETTY STREET, SINGAPORE PLAZA, 2ND FLOOR, PARRYS, CHENNAI 600 001