Legal & Industry Updates - November 2018
Amendment to Companies Act, 2013
The Ministry of Corporate Affairs on 2nd November, 2018 has notified the Companies Amendment (Ordinance), 2018 with twin objectives of promotion of ease doing of business along with better corporate compliance. The main reforms undertaken through the Ordinance include the following:
In section 53(3) (Prohibition of issue of shares at a discount), Section 64(2) (Notice to be given to Registrar for alteration of share capital), Section 92(5) (Annual Return), offences which are in the category of compoundable offences have been re-categorized to an in-house adjudication framework which is expected to reduce the case load of Special Courts by over 60%, thereby enabling them to concentrate on serious corporate offences.
A new section, Section 454A (Penalty for repeated default) has been inserted wherein a company/officer who has already been subjected to penalty for default under this Act, again commits such default within a period of three years from the date of order imposing such penalty shall be liable for the second default for twice the amount of penalty provided for such default under this Act.
In Section 441(1)(b) (Compounding of certain offences), power of Regional Director to compound offence punishable has been increased upto Rs. 25 lakhs as opposed to Rs. 5 lakhs prior to the amendment.
In Section 164(1) (Disqualifications from appointment of directors), A new clause (i) has been inserted, whereby a person shall be subject to disqualification if he accepts directorships exceeding the maximum number of directorships provided in section 165 (Number of Directorships).
Disclaimer: The updates provided in this document is not a legal opinion and does not claim to capture all legal developments related to the subject matter stated herein. It is advisable to seek legal advice for accurate applicability, prior to relying on the updates for any legal matter.