17 Provisions Of The Companies (Amendment) Act 2020 Amended By MCA

Recently, the Ministry of Corporate Affairs (MCA), by way of the notification issued on 21.12.2020, had notified that 17 amended provisions of the Companies (Amendment) Act 2020 are in force from 21.12.2020 itself.

Further, The 17 provisions comprises of Section 1, Section 3, Sections 6 to 10 (both inclusive), Sections 12 to 17 (both inclusive), Clause (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.

In this blog, we will discuss in brief the provisions of the Companies (Amendment) Act 2020 amended by MCA.

Amended Provisions of Companies (Amendment) Act 2020

The provisions amended in the Companies (Amendment) Act 2020 by the Ministry of Corporate Affairs are as follows:

Section 1

Section 1 of the Act deals with the name of the amendment known as the Companies (Amendment) Act, 2020.

Section 3

Section 3 of the Act deals with the penalty provisions in which the words ‘with the imprisonment for a term which may extend up 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.

Section 6 to 10

Sections 6 to 10 of the Act deals with the decriminalization of the Companies Act 2013. It is the main feature of the Amendment Act, and it removes the imprisonment for several offences, and substitutes fine by a penalty, and decreases the amount of payable as penalty through the board. Also, in certain minor omissions, etc., penal consequences have been omitted as well.

Section 12 to 17

Sections 12 to 17 of the Act deals with the provisions as follows:

1. Notice to be given to the Registrar for the Alteration of Share Capital;
2. The omission of Section 66 which related to the Reduction of Share Capital;
3. Power of the Company to Purchase or Buyback its own Securities;
4. The omission of section 71;
5. Punishment for Contravention; and
6. Register of Members, etc.;

Section 18

Clauses (a) and (b) of section 18 relates to the exemption of any class of persons from adhering to the requirements of section 89 pertaining to the declaration of the beneficial interest in the shares offered. Also, the same exempt any class of foreign companies or the companies that are incorporated outside India from the conditions of Chapter XXII concerning the companies incorporated outside India.

Section 19 o 21

Sections 19 to 21 of the Act deals with the amendment concerning the investigation of beneficial ownership of shares in some cases, together with Annual Returns and Proxies, respectively.

Section 22

Clause (i) of section 22 of the Companies (Amendment) Act 2020 states that if in case any company fails to file or furnish the resolution or the agreement prior to the expiry of the period, then such a company shall be liable to pay a penalty of Rs 10,000. Further, in the case of continuing failure, the company will be liable to pay a further penalty of Rs 100 for each day after the first time during which such failure continues. However, the same will be subject to a maximum penalty of Rs 2 lakh.

Moreover, every defaulting officer of the company, including the liquidator, shall be liable to pay a penalty of Rs 10000. Further, if in case of continuing failure, the same will need to pay a further penalty of Rs 1000 for each day after the first time during which such failure continues. However, the same will be subject to a maximum of Rs 50000.

Section 24

Section 24 of the Companies (Amendment) Act 2020 deals with the amendment in the provisions pertaining to the Books of account, etc., to be maintained and kept by the company.

Section 26

Section 26 of the Act deals with the amendment in the provisions concerning the Financial Statement, Board Report, etc.

Section 28 to 31

Sections 28 to 31 of the Companies (Amendment) Act 2020 deals with the amendment in the provisions pertaining to the following:

1. Copy of Financial Statements to be filed with the Registrar.
2. Removal and Resignation of the Auditor by giving of Special Notice.
3. Powers and Duties of the Auditors appointed as per the Auditing Standards.
4. Punishment for contravention respectively.

Section 33 to 39

Sections 33 to 39 of the Act deals with the amendment in the provisions as follows:

1. Number of Directorships;
2. Vacation of the Office of Director;
3. Punishment for contravention of provisions;
4. Nomination and Remuneration Committee;
5. Stakeholders Relationship Committee;
6. Disclosure of the Interest by Director;
7. Investments of Company to be kept in its own Name, and;
8. Related Party Transactions;

Section 41 to 44

Sections 41 to 44 of the Companies (Amendment) Act 2020 deals with the amendment in the provisions pertaining to as follows:

1. Secretarial Audit for Bigger Companies;
2. Merger and Amalgamation of Companies;
3. Powers of Tribunal; and
4. Consequences of Termination or Modification of specific agreements respectively;

Section 46 to 51

Sections 46 to 51 of the Act deals with the amendment in the provisions concerning the following:

1. Promoters and Directors to cooperate with the Company’s Liquidator;
2. Dissolution of the Company by Tribunal;
3. Omission of Section 342;
4. Disposal of the Books and Papers of the company;
5. Information regarding the Pending Liquidations; and
6. Power of the Tribunal to declare Dissolution of a Company as Void;

Section 54

Section 54 of the Companies^[1] (Amendment) Act 2020 deals with the amendment of section 392 pertaining to the punishment for contravention or violation by the companies incorporated outside India.

Section 57

Section 57 of the Act deals with the amendment in section 405 concerning the Power of the Central Government to direct companies to file or furnish information or statistics.

Section 61

This particular section of the Act deals with the amendment in section 441 pertaining to the Compounding of certain offences.

Section 63

Section 63 of the Companies (Amendment) Act 2020 deals with the amendment in the provisions of section 450 pertaining to the punishment where no specific punishment or penalty is provided.

Conclusion

In a nutshell, the Ministry of Corporate Affairs (MCA), by way of its commencement Notification dated 21.12.2020, has amended 45 sections of Provisions of The Companies (Amendment) Act 2020, which has recently received the assent of the President on 28.09.2020.

Further, the sections notified by the MCA mainly relate to the re-categorization of criminal offences into civil wrongs, which is in line with the policy introduced by the Government of India to decriminalize non-compliances that are more technical and procedural in nature. Therefore, the main aim is to promote the ease of doing business.

Lastly, in case of any other doubt or dilemma, reach out to Swarit Advisors, our professionals are always there to cater to your needs.

Also, Read: IGST Department Cannot Block Import Export Code: Bombay HC

Official MCA Notification

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