Informtion on India’s Companies (Amendment) Bill 2019. Important updates as follows:
1. Issuance of dematerialised shares: As of now, applicable to a listed company and public company. This may extend to all companies as may be notified. This may include all private company also.
2. Re-categorisation of certain Offences: there are 81 compoundable offences punishable with fine or fine or imprisonment, or both. The Bill re-categorizes 16 of these offences as civil defaults, where adjudicating officers (appointed by the central government) may now levy penalties instead. These offences include: (i) issuance of shares at a discount, and (ii) failure to file annual return. Further, the Bill amends the penalties for some other offences.
3. Corporate Social Responsibility (CSR): Now, any unspent annual CSR funds must be transferred to one of the funds under Schedule 7 of the Act (e.g., PM Relief Fund) within six months of the financial year.
Further, for ongoing projects, the unspent funds will have to be transferred to an Unspent CSR Account within 30 days of the end of the financial year, and spent within three years. Any funds remaining unspent after three years will have to be transferred to one of the funds under Schedule 7 of the Act. Any violation may attract a fine between Rs 50,000 and Rs 25,00,000 and every defaulting officer may be punished with imprisonment of up to three years or fine between Rs 50,000 and Rs 25,00,000, or both.
4. Debarring auditors: NFRA may debarred CA as an auditor or internal auditor of a company, or performing a company’s valuation, for a period between six months to 10 years.
5. Commencement of business: if the company do not commence the business within 180 days and file declaration to that effect, is found not to be carrying out business, its name of the company may be removed from the Register of Companies. Further the RoC may physically visit the registered office for verification, and found in default.
6. Registration of charges: Now, the time for registration of charges reduced to 60 days, Instead of 300 days earlier. May be extendable by another 60 days).
7. Change in approving authority: Now, any change in financial year in line with holding company’s accounting year or conversion of a public company in to a private company, which currently to be approved by NCLT, this power now transferred t0 the Central Government.
8. Compounding: Now, the Regional Director can compound the offence having penalty up to Rs. 25 lakh.
9. Bar on holding office by any director: It now provides that in case of compliant for oppression and mismanagement etc, the government may also make a case against an officer of the company on the ground that he is not fit to hold office in the company, for reasons such as fraud or negligence. If the NCLT passes an order against the officer, he will not be eligible to hold office in any company for five years.
10. Beneficial ownership: Now, every company to take steps to identify an individual who is a significant beneficial owner and require their compliance under the Act.
Please note that this is quick summary only for information purposes. One has to read the amended provisions and respective rules thereof.
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