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The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi has approved the introduction of the Companies (Amendment) Bill, 2014 in Parliament to make certain amendments in the Companies Act, 2013.
The Companies Act, 2013 (Act) was notified on 29.8.2013. Out of 470 sections in the Act, 283 sections and 22 sets of Rules corresponding to such sections have so far been brought into force. In order to address some issues raised by stakeholders such as Chartered Accountants and professionals, following amendments in the Act have been proposed:
For ease of doing business
1. Omitting requirement for minimum paid up share capital, and consequential changes.
2. Making common seal optional, and consequential changes for authorization for execution of documents.
3. Empowering Audit Committee to give omnibus approvals for related party transactions on annual basis.
4. Exemption u/s 185 (Loans to Directors) provided for loans to wholly owned subsidiaries and guarantees/securities on loans taken from banks by subsidiaries. (This was provided under the Rules but being included in the Act as a matter of abundant caution).
To remove an omission
1. Prescribing specific punishment for deposits accepted under the new Act, which was left out in the Act inadvertently.
2. Winding up cases to be heard by 2-member Bench instead of a 3-member Bench.
3. Including provision for writing off past losses/depreciation before declaring dividend for the year. This was missed in the Act but included in the Rules.
On corporate demand
1. Prohibiting public inspection of Board resolutions filed in the Registry.
2. Rectifying the requirement of transferring equity shares for which unclaimed/unpaid dividend has been transferred to the IEPF even though subsequent dividend(s) has been claimed.
3. Replacing 'special resolution' with 'ordinary resolution' for approval of related party transactions by non-related shareholders. (Meet problems faced by large stakeholders who are related parties)
4. Exempt related party transactions between holding companies and wholly owned subsidiaries from the requirement of approval of non-related shareholders.
Demand of auditors
Enabling provisions to prescribe thresholds beyond which fraud shall be reported to the Central Government (below the threshold, it will be reported to the Audit Committee). Disclosures for the latter category also to be made in the Board's Report.
Enabling provisions to prescribe thresholds beyond which fraud shall be reported to the Central Government (below the threshold, it will be reported to the Audit Committee). Disclosures for the latter category also to be made in the Board's Report.
Other changes
Bail restrictions to apply only for offence relating to fraud u/s 447. (Though earlier provision is mitigated, concession is made to Law Ministry & ED)
- C.S. Suresh ThakurDesai
