The Lok Sabha on 19 September 2020 passed the Companies Amendment Bill, 2020 which seeks to amend approximately 48 sections of the Companies Act, 2013. The Bill was introduced in the Lok Sabha in May 2020 after receipt of the approval of the Union Cabinet.
Highlights of the Key Changes brought through the Bill is as under:
- It decriminalizes certain offenses under the Act in case of defaults which can be determined objectively and which otherwise lack any element of fraud or do not involve larger public interest;
- It empowers the Central Government to exclude, in consultation with the Securities and Exchange Board, a certain class of companies from the definition of “listed company“, mainly for the listing of debt securities;
- It clarifies the jurisdiction of the trial court on the basis of place of commission of an offence under section 452 of the Act for wrongful withholding of property of a company by its officers or employees, as the case may be;
- It incorporates a new Chapter XXIA in the Act relating to Producer Companies, which was earlier part of the Companies Act, 1956;
- It seeks to set up Benches of the National Company Law Appellate Tribunal;
- It has introduced provisions for allowing payment of adequate remuneration to non-executive directors in case of inadequacy of profits, by aligning the same with the provisions for remuneration to executive directors in such cases;
- Provisions relaxed to enable charging of higher additional fees for default on two or more occasions in submitting, filing, registering, or recording any document, fact, or information as provided in section 403;
- It extends the applicability of section 446B, relating to lesser penalties for small companies and one-person companies, to all provisions of the Act which attract monetary penalties and also extend the same benefit to Producer Companies and start-ups.
- It empowers the Central Government to exempt any class of persons from complying with the requirements of section 89 relating to declaration of a beneficial interest in shares and exempt any class of foreign companies or companies incorporated outside India from the provisions of Chapter XXII relating to companies incorporated outside India;
- It has reduced timelines for applying for rights issues so as to speed up such issues under section 62;
- It has extended exemptions to certain classes of non-banking financial companies and housing finance companies from filing certain resolutions under section 117;
- It provides that the companies which have Corporate Social Responsibility spending obligation up to Rs 50 Lakhs shall not be required to constitute the Corporate Social Responsibility Committee and to allow eligible companies under section 135 to set off any amount spent in excess of their Corporate Social Responsibility spending obligation in a particular financial year towards such obligation in subsequent financial years;
- It provides for a window within which penalties shall not be levied for delay in filing annual returns and financial statements in certain cases;
- It empowers the Central Government to prescribe specified classes of unlisted companies to prepare and file their periodical financial results;
- It allows direct listing of securities by Indian companies in permissible foreign jurisdictions as per rules to be prescribed.
