The Ministry of Corporate Affairs (MCA) notified that the provisions of the Companies (Amendment) Act, 2020 will be enforced from 21 December 2020.
The 17 provisions includes Section 1; Section 3; Sections 6 to 10 (both inclusive); Sections 12 to 17 (both inclusive); Clauses (a) and (b) of section 18; Sections 19 to 21 (both inclusive); Clause (i) of section 22; Section 24; Section 26; Sections 28 to 31 (both inclusive); Sections 33 to 39 (both inclusive); Sections 41 to 44 (both inclusive); Sections 46 to 51 (both inclusive); Section 54; Section 57; Section 61; and Section 63.
Brief details about the 17 provisions are as follows:-
1. Section 1 deals with the name of the amendment called the Companies (Amendment) Act, 2020.
2. Section 3 deals with the penalty provisions wherein the words “with imprisonment for a term which may extend to three years or” shall be omitted; and for the words “twenty-five lakh rupees, or with both”, the words “twenty-five lakh rupees” shall be substituted.
3. Sections 6 to 10 deals with the decriminalisation of the Companies Act, 2013 is the main feature of the Amendment Act. It removes the imprisonment for various offenses, substitutes fine by penalty in and reduces the amount of payable as penalty across the board. In certain minor omissions, etc. penal consequence has been omitted.
4. Sections 12 to 17 deals with notice to be given to the Registrar for the alteration of share capital; omission of Section 66 which pertained to Reduction of share capital; the power of the company to purchase its own securities; omission of section 71; Punishment for contravention and Register of members, etc. respectively.
5. Clauses (a) and (b) of section 18 pertains to the exemption of 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.
6. Sections 19 to 21 deals with the amendment in the investigation of beneficial ownership of shares in certain cases; Annual return and Proxiesrespectively.
7. Clause (i) of section 22 says that If any company fails to file the resolution or the agreement before the expiry of the period such company shall be liable to a penalty of Rs. 10,000 and in case of continuing failure, with a further penalty of Rs.100 for each day after the first during which such failure continues, subject to a maximum of two lakh rupees and every officer of the company who is in default including liquidator of the company, if any, shall be liable to a penalty of ten 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 fifty thousand rupees.
8. Section 24 deals with the amendment in the provision relating to Books of account, etc., to be kept by the company.
9. Section 26 deals with the amendment in the provision relating to the Financial statement, Board‘s report, etc.
10. Sections 28 to 31 deals with the amendment in the provision relating to Copy of financial statement to be filed with Registrar; Removal, resignation of auditor and giving of special notice; Powers and duties of auditors and auditing standards and Punishment for contravention respectively.
11. Sections 33 to 39 deals with the amendment in the provision relating to Number of directorships; Vacation of office of director; Punishment; Nomination and Remuneration Committee and Stakeholders Relationship Committee; Disclosure of interest by director; Investments of company to be held in its own name and Related party transactions; respectively.
12. Sections 41 to 44 deals with the amendment in the provision relating to Secretarial audit for bigger companies; Merger and amalgamation of companies; Powers of Tribunal; and Consequence of termination or modification of certain agreements respectively.
13. Sections 46 to 51 deals with the amendment in the provision relating to Promoters, directors, etc., to cooperate with Company Liquidator; Dissolution of company by Tribunal; Section 342 was omitted; Disposal of books and papers of the company; Information as to pending liquidations; and Power of Tribunal to declare dissolution of company void respectively.
14. Section 54 deals with Amendment of section 392 relating to the Punishment for the contravention by companies incorporated outside India.
15. Section 57 deals with the amendment in section 405 relating to Power of the Central Government to direct companies to furnish information or statistics.
16. Section 61 deals with the amendment in section 441 relating to Compounding of certain offences.
17.Section 63 deals with the amendment in section 450 relating to punishment where no specific penalty or punishment is provided.