In the wake of constantly changing business atmosphere and scenarios in India and countries worldwide, to make businesses in India easier, fully convenient, and safely transparent, the Indian Government opted for making certain changes in the provisions of the newly promulgated Companies Act of 2013. These changes have been brought about through the Companies (Amendment) Act of 2015, which had got President's assent on 25th May 2015 and was then published in the Official Gazette of India on 26th May 2015 with effect since. Many provisions and regulations have been added to, made refined, omitted from, and included in the existing Companies Act of 2013 through this companies amendment act of 2015. The section below provides separate information regarding the Highlights of Companies Amendment Act 2015, to help our myriads of India and international website visitors.
The changes introduced by this Companies Amendment Act of 2015, are related with many aspects of corporate establishment and corporate governance, including the minimum amount of paid-up share capital required; common seal of the company; requirement of obtaining the certificate of commencement of business; public inspection of Board Resolutions; related party transactions; responsibilities of the Audit Committee; fraud reporting by auditors; provisions of special courts for hearing the winding up cases and offences; etc.
Highlights of Companies Amendment Act 2015
Some of the major and most significant changes made under the Companies (Amendment) Act of 2015, are the following:- No Minimum Paid-Up Share Capital: --- After this Indian Companies (Amendment) Act of 2015, a private limited company and a public limited company can be registered without the minimum paid-up share capital requirement of Rupees One Lac and Rupees Five Lacs, respectively. Consequently, the definitions of these types of companies given in the Sections 2(68) and 2(71) of the Indian Companies Act of 2013 now stand amended.
- No Requirement for getting the Commencement of Business Certificate: --- Now, there is no mandatory requirement for obtaining the Certificate for Commencement of Business (prescribed in the Section 11 of the CA-2013), after incorporation of a company (private or public limited), through filing e-form INC-21 with the concerned RoC.
- Common Seal Made Optional: --- In the CA-2013, for providing various authorizations, attestations, and affixations on certain documents (such as bills of exchange, share certificates, etc.) on behalf of the company, a common seal was made mandatory. But now, use of this common seal has been made optional, and such documents may now instead be signed by the two directors or one director and a company secretary of the company. Consequently, several Sections of the CA-2013 dealing with this common seal, such as Sections 9, 12, 223, etc., have been amended.
- Rigorous Penalty for Company Inviting or Accepting Deposit: ---- Though the CA-2013 had introduced provisions in the Section 73 and Section 76 in connection with acceptance/renewal/repayment of deposits from public, it (CA-2013) was curtly silent with respect to the specific penalties for those companies which invited/accepted/renewed/repaid deposits from public, without getting proper approval from the concerned regulatory authorities. Hence, this Companies (Amendment) Act of 2015 prescribed certain strict penalties and fines against non-compliance with the provisions given in CA-2013. Consequently, a new Section 76A has been inserted in the CA-2013.
- Board Resolutions are made Confidential: --- So far, Board Resolutions of a company filed with the Ministry of Corporate Affairs (MCA) through form MGT-14 for the purposes given in the Section 179(3), were open for public inspection (entitled under Section 399) paying the prescribed fee. But now, this Amendment Act of 2015 has prohibited people from inspecting or obtaining copies of such resolutions, through making amendments in the Section 117(3) of the CA-2013, for the main objective of protecting confidentiality. Hence now, board resolutions of companies will not be accessible on MCA portal.
- Dividends Not to be Declared by Companies Having Losses: --- Regarding distribution of dividends, the following provisions has been inserted in the Section 123 of the CA-2013 --- "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." Hence, companies undergoing losses or having negative reserves, now cannot declare dividends.
- Clarifications on Loans from the Holding Company to Subsidiary Company: --- Amendments made through adding clauses (c) and (d) in the Section 185 of the CA-2013, clarify that a holding company can provide loans/guarantees to its wholly-owned subsidiary, "Provided that the loans made under clauses (c) and (d) are utilized by the subsidiary company for its principal business activities".
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