The Companies (Amendment) Act, 2015 came into force from May 14, 2015. The amendments made by the said Act deal with: related party t...
The Companies (Amendment) Act, 2015 came into force from May 14, 2015. The amendments made by the said Act deal with:
- related party transactions,
- fraud reporting by auditors,
- public inspection of Board resolutions,
- responsibilities of audit committee,
- restrictions on bail,
- making common seal optional,
- requirement for minimum paid-up share capital,
- strength of benches for hearing winding up cases,
- jurisdiction of special courts to try offences.
Amendments have also been made in the Act to incorporate some of the provisions
- that were earlier left out inadvertently, or
- that are related to setting off of past losses/depreciation before declaring dividend and
- those that are related to exemptions for giving of loans/guarantee/security by holding companies to its subsidiaries.
Accordingly, the Companies (Amendment) Act, 2015, inter alia, contains the amendments to the Companies Act, 2013 as under :—
1. to amend clauses (68), (71) of section 2 of the said Act to omit the requirement for minimum paid-up share capital, doing away with the requirement of applying for commencement of business by omitting section 11;
2. to amend sections 9, 12, 22, 46 and 223 of the said Act for making common seal optional. Now, for execution of documents on behalf of the Company, the common seal is not required. Either, two directors can sign on behalf of the Company or the document needs to be signed by a director and/or the Company Secretary, where the Company has appointed a Company Secretary;
3. to insert a new section 76A to provide for punishment for deposits accepted in violation of the provisions of the said Act;
4. to amend clause (g) of sub-section (3) of section 117 to prohibit public inspection of Board resolutions filed in the Registry; CORPORATE LAWS UPDATE MAY 2015 Sanjay Vasudeva Partner S.C. Vasudeva & Co. Chartered Accountants
5. to amend sub-section (1) of section 123 of the said Act to include provisions for writing off past losses/depreciation before declaring dividend for the year;
6. to amend sub-section (6) of section 124 of the said Act. Shares on which dividend is unclaimed/unpaid for a period of consecutive seven years or more, are to be transferred to the Investors Education and Protection Fund. However, a clarification has been given that for equity shares in case of which any dividend is claimed or paid in this period of seven years, the shares shall not be transferred to the Investors Education and Protection Fund ;
7. to amend sub-section (3) of section 134 and sub-section (12) of section 143 of the said Act to incorporate enabling provisions to prescribe thresholds beyond which fraud shall be reported to the Central Government (below the threshold, it will be reported to the Audit Committee). Disclosures for the latter category also to be made in the Board's Report;
8. to amend clause (iv) of sub-section (4) of section 177 of the said Act to provide provision empowering Audit Committee to give omnibus approvals for related party transactions on annual basis;
9. to amend section 185 of the said Act to provide for exemption u/s 185 provided for loans to wholly owned subsidiaries and guarantees/securities on loans taken from banks by such subsidiaries;
10. to amend sub-section (1) of section 188 of the said Act for replacing 'special resolution' with 'resolution' for approval of related party transactions;
11. to amend sub-section (1) of section 188 of the said Act such that the provisions of the section does not cover transactions between holding companies and its wholly owned subsidiaries whose accounts are consolidated with such holding company and placed before the shareholders in the general meeting for approval;
12. to amend sub-section (6) of section 212 of the said Act to provide for bail restrictions to apply only for offence relating to fraud u/s 447;
13. to amend sub-section (4) of section 419 of the said Act to provide for winding up cases to be heard by 2-member Bench instead of a 3- member Bench; and
14. to amend sections 435 and 436 of the said Act to provide for that Special Courts to try only offences carrying imprisonment of two years or more.
Sanjay Vasudeva Partner S.C. Vasudeva & Co. Chartered Accountants