Companies (Amendment) Act, 2015

The Companies (Amendment) Act, 2015 received the assent of the President on 25.05.2015. The Act amends the Companies Act, 2013 (referred hereto as the principal Act) by introducing following amendment in the said Act:

  • Puts an end on the limit of ‘minimum paid-up share capital of one lakh rupees or such higher paid-up share capital’ for a company to be a ‘private company’, and ‘minimum paid-up share capital of five lakh rupees or such higher paid-up share capital’ for a company to be a ‘public company’.
  • Omits the words “and a common seal” from Section 9.
  • Omits Section 11, which puts limitations on a company having share capital to commence any business or exercise any borrowing powers.
  • Substitutes Section 12 (3)(b) of the principal Act, with “(b) have its name engraved in legible characters on its seal, if any”.
  • Substitutes the words “under its common seal” in Section 22(2), with the words “under the common seal, if any”, and inserts a proviso thereto which states that “Provided that in case a company does not have a common seal, the authorization under this sub-section shall be made by two directors or by a director and the Company Secretary, wherever the company has appointed a Company Secretary”. The Act also omits the words “and have the effect as if it were made under its common seal” in Section 22(3).
  • Substitutes the words “issued under the common seal of the company” with the words “issued under the common seal, if any, of the company or signed by two directors or by a director and the Company Secretary, wherever the company has appointed a Company Secretary” in Section 46(1).
  • Inserts a new Section 76A after Section 76 of the principal Act, which provides provision for penalty and punishment on the company and its officers who accepts or invites or allows or causes any other person to accept or invite on its behalf any public deposit in contravention of Section 73 and 76.
  • Omits the word “and” at the end of Section 117(3)(g), and inserts a proviso thereto which states that “Provided that no person shall be entitled under section 399 to inspect or obtain copies of such resolutions; and”.
  • Inserts a proviso after third proviso in Section 123(1), which states that “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”.
  • Amendment in Section 124 to provide that all shares in respect of which dividend has not been paid or claimed for seven consecutive years or more shall be transferred by the company in the name of Investor Education and Protection Fund, along with an explanation that in case any dividend is paid or claimed for any year during the said period of seven consecutive years, the share shall not be transferred to Investor Education and Protection Fund.
  • Amendment in Section 143 to provide that where the auditor has a reasonable belief that a fraud had been committed in a company by its officer involving a sum lesser than the specified amount, the auditor shall report the matter to the audit committee or to the Board, instead of reporting it directly to the Central Government.
  • Amendment in Section 185 to provide that after Section 185(1)(b) following clause and proviso to be inserted:

Ø  “(c) any loan made by a holding company to its wholly owned subsidiary company or any guarantee given or security provided by a holding company in respect of any loan made to its wholly owned subsidiary company; or

Ø  (d) any guarantee given or security provided by a holding company in respect of loan made by any bank or financial institution to its subsidiary company:

Provided that the loans made under clauses (c) and (d) are utilised by the subsidiary company for its principal business activities.”

  • Substitution of words “special resolution” by the word “resolution” in Section 188 wherever they occur, along with insertion of a new proviso after third proviso in Section 188(1), which provides that the requirement of passing the resolution under first proviso shall not be applicable for transactions entered into between a holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval.
  • Substitutes the words, brackets and figures “the offences covered under sub-sections (5) and (6) of section 7, section 34, section 36, sub-section (1); of section 38, sub-section (5) of section 46, sub-section (7) of section 56, sub-section (10) of section 66, sub-section (5) of section 140, sub-section (4) of section 206, section 213, section 229, sub-section (1); of section 251, sub-section (3) of section 339 and section 448 which attract the punishment for fraud provided in section 447”, with the words and figures “offence covered under section 447” in Section 212.
  • Substitutes the words “by the seal” with the words “by the seal, if any” in Section 223(4)(a).
  • Omits Section 248(1)(b), and inserts the word “or” after the word “incorporation” in Section 248(1)(a).
  • Omits the words “or winding up” in Section 419(4).
  • Amends Section 435 to provide establishment of special courts by the Central Government for speedy trial of offences “punishable under this Act with imprisonment of two years or more” instead of “every offence punishable under this Act”. The Act also inserts a proviso, which states that all other offences shall be tried by a Metropolitan Magistrate or a Judicial Magistrate of the First Class having jurisdiction to try any offence under this Act or under any previous company law.
  • Amends Section 462, which provides power to exempt class or classes of companies from provisions of Companies Act, 2013.

 

-Ministry of Law &Justice

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