Companies (Amendment) Bill 2020 passed by the Lok Sabha
September 21, 2020
The Companies Amendment Bill 2020 was passed by the Lok Sabha on 19 September 2020. The Bill further amends the Companies Act 2013 based on the report of the Company Law Committee which was tasked to review, amongst others, the de-criminalisation of some more provisions of the Act based on their gravity. A comparative table of amendments vis a vis the principal Act is attached for reference. The key changes, however, are as under:
Decriminalisation of certain offences 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;
Exclusion of certain class of companies from ‘listed company’ for the purposes of listing of debt securities. This will be facilitated by empowering the Central Government, in consultation with SEBI, to make such exclusion;
Allows direct listing of securities by Indian companies in permissible foreign jurisdictions as per rules to be prescribed.
Clarification on the jurisdiction of trial court on the basis of place of commission of 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;
Incorporation of a new Chapter XXIA relating to Producer Companies, which was part of the Companies Act 1956;
Setting up of Benches of the National Company Law Appellate Tribunal;
Provides for allowing payment of adequate remuneration to nonexecutive directors in case of inadequacy of profits, in line with remuneration provided to executive directors, in such cases;
Relaxation of provisions charging 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;
Extension of 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;
Exemption of any class of persons from complying with the requirements of section 89 relating to declaration of 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;
Reducing the timelines for applying for rights issues under section 62 in order to speed up the process;
Extension of exemptions to certain classes of non-banking financial companies and housing finance companies from filing certain resolutions under section 117;
Exemption of companies which have Corporate Social Responsibility spending obligation up to fifty lakh rupees from constituting the Corporate Social Responsibility Committee and allowing 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;
Provision of a window within which penalties shall not be levied for delay in filing annual returns and financial statements in certain cases;
Provides for specified classes of unlisted companies to prepare and file their periodical financial results;
To refer to the Companies (Amendment) Bill 2020 as introduced, click here. The copy of the Bill as passed has not yet been released.
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