1. Companies (Amendment) Act 2015
The Ministry of Law and Justice (Legislative Department) has on 26th May 2015 issued the Companies (Amendment) Act 2015. Further vide notification dated 29th May 2015 provisions of the Companies (Amendment) Act 2015 other than those stated in paragraph (d) and (e) below which are yet to be notified shall come into force from 29th May 2015. Some of the important amendments include:
a) Insertion of Clause 76A – Punishment for contravention of Section 73 or Section 76 relating to acceptance of Deposits:—
“76A. Where a company accepts or invites or allows or causes any other person to accept or invite on its behalf any deposit in contravention of the manner or the conditions prescribed under section 73 or section 76 or rules made thereunder or if a company fails to repay the deposit or part thereof or any interest due thereon within the time specified under section 73 or section 76 or rules made thereunder or such further time as may be allowed by the Tribunal under section 73,— (a) the company shall, in addition to the payment of the amount of deposit or part thereof and the interest due, be punishable with fine which shall not be less than one crore rupees but which may extend to ten crore rupees; and (b) every officer of the company who is in default shall be punishable with imprisonment which may extend to seven years or with fine which shall not be less than twenty-five lakh rupees but which may extend to two crore rupees, or with both: Provided that if it is proved that the officer of the company who is in default, has contravened such provisions knowingly or willfully with the intention to deceive the company or its shareholders or depositors or creditors or tax authorities, he shall be liable for action under section 447.”.
b) Insertion of 4th Proviso to Section 123(1) pertaining to declaration of Dividends:-
“Provided also that no company shall declare dividend unless carried over previous losses and depreciation not provided in previous year or years are set off against profit of the company for the current year.”
c) Insertion of Clause (ca) to Clause 134(3) (c ) for reporting of frauds:
“(ca) details in respect of frauds reported by auditors under sub-section (12) of Section 143 other than those which are reportable to the Central Government;”
d) Section 143 (12) is to be substituted with:
“(12) Notwithstanding anything contained in this section, if an auditor of a company in the course of the performance of his duties as auditor, has reason to believe that an offence of fraud involving such amount or amounts as may be prescribed, is being or has been committed in the company by its officers or employees, the auditor shall report the matter to the Central Government within such time and in such manner as may be prescribed:
Provided that in case of a fraud involving lesser than the specified amount, the auditor shall report the matter to the audit committee constituted under section 177 or to the Board in other cases within such time and in such manner as may be prescribed:
Provided further that the companies, whose auditors have reported frauds under this sub-section to the audit committee or the Board but not reported to the Central Government, shall disclose the details about such frauds in the Board’s report in such manner as may be prescribed.”
e) Proviso to Section 177 (4) (iv) is to be inserted:
“Provided that the Audit Committee may make omnibus approval for related party transactions proposed to be entered into by the company subject to such conditions as may be prescribed;”.
The Amendment Act can be accessed at http://www. mca.gov.in/Ministry/pdf/AmendmentAct_2015.pdf and the notification can be accessed at http://www. mca.gov.in/Ministry/pdf/Notification_31052015.pdf
2. Copies of resolution passed u/s 117 (3) (g) are not open for inspection
The Ministry of Corporate Affairs has vide Notification dated 29th May 2015, inserted the following proviso to the Companies ( Registration Offices and Fees ) Rules 2014, to Rule 15:
“Provided that no person shall be entitled under section 399 to inspect or obtain copies of resolutions referred to in clause (g) of sub-section (3) of section 117 of the Act.”
Notification can be accessed at http://www.mca.gov. in/Ministry/pdf/Rules_31052015_5.pdf
3. Companies ( Incorporation ) Second Amendment Rules 2015
The Ministry of Corporate Affairs has notified further amendments to the Companies (Incorporation) Rules 2014 on 29th May 2015 as follows:
a) In Rule 12, the following proviso is inserted:
“Provided that in case pursuing of any of the objects of a Company requires registration or approval from sectorial regulators like Reserve Bank of India, Securities and Exchange Board, registration or approval, as the case may be, from such regulator shall be obtained by the Company before pursuing such objects and a declaration in this behalf shall be submitted at the stage off incorporation of the Company. “
b) Rule 24 pertaining to the Declaration at the time of commencement of business or exercising its borrowing powers to be filed by a director in Form No.INC.21 along with the fee is omitted
c) Form INC-13 pertaining to the Memorandum of Association and Form INC-16 for License under Section 8(1) of the Companies Act, 2013 have been modified
Full notification can be accessed at http://www.mca. gov.in/Ministry/pdf/Rules_31052015_3.pdf
4. Companies (Declaration and Payment of Dividend) Second Amendment Rules, 2015.
As per the Amendment dated 29th May 2015, the Rule 3, sub Rule – 5 to the Companies (Declaration and Payment of Dividend) Rules 2015 which pertains to “No company shall declare dividend unless carried over previous losses and depreciation not provided in previous year are set off against profit of the company of the current year the loss or depreciation, whichever is less, in previous years is set off against the profit of the company for the year for which dividend is declared or paid.” – is omitted.
Full notification can be accessed at http://www.mca.gov.in/Ministry/pdf/Rules_31052015_2.pdf
5. Clarification on repayment of deposits accepted by the companies before the commencement of the Companies Act, 2013 under section 74 of the said Act
Vide General Circular No 09/2015, the Ministry of Corporate Affairs has clarified regarding processing of the deposits related complaints received from investors under section 74 of the Companies Act, 2013 (the said Act) in respect of defaults made by companies in repayment of deposits accepted by them before the commencement of the said Act i.e. before 1st April, 2014 and filing of prosecutions against defaulting companies by the Registrars of Companies/Regional Directors. As per the notification, a depositor is free to file an application under section 73(4) of the said Act, with the Company Law Board if the company fails to make repayment of deposits accepted by it. Further the company may also file application under section 74(2) of the said Act with the Company Law Board seeking extension of time in making the repayment of deposits accepted by it before the commencement of the provisions of the said Act.
Further, attention is also drawn to Explanation appearing below Rule 19 of the Companies (Acceptance of Deposits) Rules, 2014 which clarifies the conditions subject to which a company would be deemed to have complied with the requirements laid down in Section 74(1)(b) of the Companies Act, 2013 Companies can repay deposits accepted prior to 1st April, 2014 in accordance with terms and conditions for which the deposits had been accepted.
It is also clarified that there is no bar on the Registrar of Companies for filing of prosecution against a com- pany if such company fails to make repayment of de- posits accepted by it under the provisions of the Com- panies Act, 1956 or Companies Act, 2013, subject to the contents of para 3 above.
Full circular can be accessed at http://www.mca.gov. in/Ministry/pdf/General_Circular_9-2015.pdf
6. Exemptions for Section 8 Companies with Charitable Objects etc
Notification dated 5th June 2015, directs that certain provisions of the Companies Act, 2013, shall not apply or shall apply with exceptions/modifications:
Exemption from Application of certain Provisions to Section 8 Companies
