Section- Companies(Amendment) Ordinance, 2018

Corresponding section of Companies Act, 2013

Amendments

Section 2

Section 2(41)-Definition of financial year

Holding and subsidiary of a company incorporate outside India may follow a different financial year subject to approval of Central Government.

Any application pending before NCLT as on the date of commencement of the Companies (Amendment) Ordinance, 2018 shall be disposed of by NCLT.

Section 5

Section 14- Alteration of articles

Conversion of public company into a private company shall not be valid unless approved by Central Government.

Any application pending before NCLT as on the date of commencement of the Companies (Amendment) Ordinance, 2018, shall be disposed of by NCLT

Section 28

Section 441- Compounding of certain offences

Compounding of offences upto Rs 25 lakhs by Regional director earlier Rs 5 lakhs.

Section 441(6)(a), which requires the permission of the Special Court for compounding of offences, has been omitted. RD and NCLT, as the case may be, can compound offence which is punishable with imprisonment or fine or both, or with fine or imprisonment.

Section 3

Section 10A- Commencement of business, etc. (new section)

A company incorporated after the commencement of the Companies (Amendment) Ordinance, 2018 and having a share capital shall not commence any business or exercise any borrowing powers unless:

i. a declaration is filed by a director within a period of 180 days of the date of incorporation of the company, with ROC that every subscriber to MOA has paid the value of the shares agreed to be taken by him on the date of making of such declaration; and

ii. the company has filed with ROC a verification of its registered office as provided in section 12.

Penal Provision: If default is made in complying with the requirements of this section, the company shall be liable to a penalty of Rs 50,000 and every officer who is in default shall be liable to a penalty of Rs 1,000 for each day during such default continues but not exceeding and amount of Rs one lakh;

Removal of name of company: Where no declaration has been filed with ROC within 180 days of the date of incorporation of the company and ROC has reasonable cause to believe that the company is not carrying on any business or operations, he may, initiate action for the removal of the name of the company from the register of companies.

Section 4

Section 12- Registered office of company

Registrar may cause a physical verification of the registered office of the company if it has reason to believe that the Company is not carrying on any business and if default is found he may initiate action to strike off the name of the Company.

Section 8

Section 77- Duty to register charges, etc.

The period of 300 days for creation and modification of charge has been reduced to 60 days, i.e. 30 days of normal filing period and 30 days with additional fees.

ROC may, on an application, allow such registration to be made within a further period of 60 days after payment of

Such ad valorem fees as may be prescribed. Note: After 120 days, creation/ modification of charge shall not be registered. Charges created before the commencement of the Ordinance can be registered within 6 months of commencement of the Ordinance.

Section 21

Section 164- Disqualifications for appointment of director

Clause (i) after 164(1)(h) has been inserted i.e

If a person has not complied with the number of directorship u/s 165(1) i.e. maximum number of directorship.

Section 6

Section 53- Prohibition on issue of shares at discount

Old Penal Provision

New Penal Provision

Company fine Rs 1 lakh to Rs 5 lakhs; and

Officer in default: Imprisonment: Upto 6 months; or Fine: Rs 1 lakh to Rs 5 lakhs; or with both

Company and Officer in default shall be liable to a penalty which may extend to an amount equal to the amount raised through the issue of shares at a discount or Rs 5 lakhs, whichever is less and the company shall also be liable to refund all monies received with interest @ 12% per annum from the date of issue of such shares to the persons to whom such shares have been issued.

Section 7

Section 64- Notice to be given to Registrar for alteration of share capital

Company and Officer in default fine upto Rs 1,000 for each day during which such default continues, or Rs 5 lakhs, whichever is less

Company and Officer in default shall be liable to a penalty of Rs 1,000 for each day during which such default continues, or Rs 5 lakhs, whichever is less.

Section 12

Section 92- Annual return

Company with fine of Rs 50,000 to Rs 5 lakhs; and

Officer in default with Imprisonment upto 6 months or fine of Rs 50,000 to Rs 5 lakhs; or with both

Company and Officer in default with a penalty of Rs 50,000 and in case of continuing failure, with further penalty of Rs 100 for each day subject to a maximum of Rs 5 lakhs.

Section 13

Section 102- Statement to be annexed to notice

Every promoter, director, manager or other KMP who is in default fine upto Rs 50,000 or five times the amount of benefit accruing to the promoter, director, manager or other KMP or any of his relatives, whichever is more.

Every promoter, director, manager or other KMP who is in default shall be liable to a penalty of Rs 50,000 or five times the amount of benefit accruing to the promoter, director, manager or other KMP or any of his relatives, whichever is higher.

Section 14

Section 105- Proxies

Officer who is in default fine upto Rs 5,000.

Officer who is in default shall be liable to a penalty of Rs

5,000.

Section 15

Section 117- Resolutions and agreements to be filed

Company with fine Rs 1 lakh to Rs 25 lakhs; and Officer in default including liquidator Rs 50,000 to Rs 5 lakhs

Company with a penalty of Rs 1 lakh and in case of continuing failure, with further penalty of Rs 500 for each day subject to a maximum of Rs 25 lakhs; and

Officer who is in default including liquidator shall be liable to a penalty of Rs 50,000 and in case of continuing failure, with further penalty of Rs 500 for each day subject to a maximum of Rs 5 lakhs.

Section 16

Section 121- Report on annual general meeting

Company with fine of Rs 1 lakh to Rs 25 lakhs and Officer in default with fine of Rs 25,000 to Rs one lakh.

Company shall be liable to a penalty of Rs one lakh and in case of continuing failure, with further penalty of Rs 500 for each day subject to a maximum of Rs 5 lakhs; and

Officer who is in default shall be liable to a penalty which shall not be less than Rs 25,000 and in case of continuing failure, with further penalty of Rs 500 for each day subject to a maximum of Rs one lakh.

Section 17

Section 137- Copy of financial statement to be filed with Registrar

Company with fine of Rs 1,000 for every day during which the failure continues but which shall not be more than Rs 10 lakhs; and

Defaulted MD and CFO or any other director imprisonment upto 6 months or Fine of Rs 1 lakh to Rs 5 lakhs or with both

Company shall be liable to a penalty of Rs 1,000 for every day during which the failure continues but not more than Rs 10 lakhs; and

Defaulted MD and CFO or any other director shall be liable to a penalty of Rs 100 for each day after the first during which such failure continues, subject to a maximum of Rs 5 lakhs

Section 18

Section 140- Removal, resignation of auditor and giving of special notice

Auditor in default with fine not less than Rs 50,000 or the remuneration of the auditor, whichever is less but which may extend to Rs 5 lakhs.

Auditor in default shall be liable to a penalty of Rs 50,000 or an amount equal to the remuneration of the auditor, whichever is less, and in case of continuing failure, with further penalty of Rs 500 for each day subject to a maximum of Rs 5 lakhs.

Section 19

Section 157- Company to inform Director Identification Number to Registrar

Company with fine of Rs 25,000 to Rs one lakh; and Officer in default:

Fine: Rs 25,000 to Rs one lakh.

Company shall be liable to a penalty of Rs 25,000 and in case of continuing failure, with further penalty of Rs 100 for each day subject to a maximum of Rs one lakh; and Officer who is in default shall be liable to a penalty of not less than Rs 25,000 and in case of continuing failure, with further penalty of Rs 1,000 for each day , subject to a maximum of Rs one lakh.

Section 20

Section 159- Penalty for default of certain provisions

Person in default

Imprisonment upto 6 months; or

Fine upto Rs 50,000 and where the contravention is a continuing one, with a further fine which may extend to Rs 5,000 for every day.

Person in default shall be liable to a penalty which may extend to Rs 50,000 and where the default is a continuing one, with a further penalty which may extend to Rs 500 for each day.

Section 22

Section 165- Number of directorships

Person in default with fine of Rs 5,000 to Rs 25,000 for every day after the first during which the contravention continues.

Person in default shall be liable to a penalty of Rs 5,000 for each day after the first during which the contravention continues.

Section 23

Section 191- Payment to director for loss of office, etc., in connection with transfer of undertaking, property or shares

Director in default with fine of Rs 25,000 to Rs one lakh.

Director in default shall be liable to a penalty of Rs one lakh.

Section 24

Section 197- Overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy of profits

Person in default with

Fine of Rs one lakh to Rs 5 lakhs.

Person in default shall be liable to a penalty of Rs one lakh and where any default has been made by a company, the company shall be liable to a penalty of Rs 5lakhs.

Section 25

Section 203- Appointment of key managerial personnel

Company with fine of Rs 1 lakh to Rs 5 lakhs; and

Officer in default with

Fine upto Rs 50,000 and where the contravention is a continuing one, with a further fine which may extend to Rs 1,000 for every day.

Company shall be liable to a penalty Rs 5 lakhs; and

Every director and KMP who is in default shall be liable to a penalty of Rs 50,000 and where the default is a continuing one, with a further penalty of Rs 1,000 for every day after the first during which such default continues but not exceeding Rs 5 lakhs.

Section 26

Section 238- Registration of offer of schemes involving transfer of shares

Director in default with fine of Rs 25,000 to Rs five lakhs.

Director in default shall be liable to a penalty of Rs one

lakh.

Section 31

Section 454- Adjudication of

penalties

Now, apart from levying penalty in case of default, the Adjudicating officer has also been empowered to direct Rectification of the default.

Section 32

Section 454A- Penalty for repeated default (new section)

Where a penalty in relation to a default has been imposed on a person under the Act, and the person commits the same default within a period of 3 years from the date of order imposing such penalty, passing by the adjudicating officer or RD, as the case may be, it or he shall be liable for the second and every subsequent defaults for an amount equal to twice the amount provided for such default under the relevant provision of the Act.

Section 9

Section 86- Punishment for contravention

New sub-section (2) has been added:

If any person willfully furnishes any false or incorrect information or knowingly suppresses any material information, required to be registered in accordance with the provisions of section 77 (Registration of Charge), he shall be liable for action under section 447.

Section 10

Section 87- Rectification by Central Government in register of charges

Due to amendments in the provision of section 77, the power of the Central Government to condone delay in respect of registration/modification of charge has been omitted.

Section 11

Section 90- Register of significant beneficial owners in a company

If no person files an application before NCLT for lifting of the restrictions on the exercise of rights attached to the shares within a period of one year, such shares shall be transferred to IEPF without any restrictions.

The punishment for contravention of section 90(1) has been enhanced to include imprisonment for a term which may extend to one year or with fine which shall not be less than Rs one lakh but which may extend to Rs 10 Lakhs or with both.

Section 27

Section 248- Power of Registrar to remove name of company from register of companies

Due to insertion of section 10A and amendment in section 12, the following two new grounds has been added for removal of name of companies from the register of companies:

i.                    the subscribers to the memorandum have not paid the subscription which they has undertaken to pay at the time of incorporation of a company and a declaration to this effect has not been filed within 180 days of its incorporation under section 10A(1);

ii.                   the company is not carrying on any business or operations, as revealed after the physical verification carried out under section 12(9).

Section 29

Section 446B- Lesser penalties for One Person Companies or small companies

Due to amendments in the penal provisions of sections 92, 117 and 137, the word ‘fine’ has been substituted with ‘penalty’.

Section 30

Section 447- Punishment for fraud

The maximum fine has been increased from Rs 20 lakhs to Rs 50 lakhs.