The Companies (Amendment) Ordinance, 2018): The government on November 2, 2018 amended various provisions of the Companies Act through an ordinance (i.e. Companies (Amendment) Ordinance, 2018) , a move that is expected to reduce pendency of cases before special courts by 60 percent besides bringing down applicable penalties for small companies.
The ordinance amending the Companies Act, 2013, has been promulgated with twin objectives of “promotion of ease of doing business along with better corporate compliance”.
With the latest amendments, jurisdiction of 16 types of corporate offences would be shifted from the special courts to in-house adjudication.
The ministry said there would be de-clogging the National Company Law Tribunal (NCLT) by way of expanding the pecuniary jurisdiction of Regional Director.
Offences where the penalty would be up to Rs 25 lakh would be dealt by the Regional Director whereas the earlier limit was Rs 5 lakh.
Besides, the central government would have powers to approve the alteration in the financial year of a company as well as to approve cases of conversion of public companies into private ones.
As per the release, the panel’s recommendations related to corporate compliance and corporate governance include re-introduction of declaration of commencement of business provision to better tackle the menace of shell companies.
Other changes would provide for greater disclosures with respect to public deposits, more accountability regarding filing documents related to creation, modification and satisfaction of charges.
The summary of the Amendments is given as follows:
- De-clogging the NCLT by:
- Enlarging the jurisdiction of Regional Director (“RD”) by enhancing the pecuniary limits up to Rs. 25 lakh which they can compound offences under section 441 of the Act.
- vesting in the Central Government the power to approve the alteration in the financial year of a company under section 2(41);
- vesting the Central Government the power to approve cases of conversion of public companies into private companies
- Ensuring compliance of the default and prescribing stiffer penalties in case of repeated defaults
- Re-categorising of offences which are in the category of compoundable offences to an in-house adjudication framework. However, no change has been made in respect of any of the non-compoundable offences
- Re-introduction of declaration of commencement of business provision
- Greater accountability with respect to filing documents related to creation, modification and satisfaction of charges
- non-maintenance of registered office to trigger de-registration process
- holding of directorships beyond permissible limits to trigger disqualification of such directors
To Download the table-wise amendment, please click on the link below:
To download the copy of Ordinance, Click here