Companies (Amendment) Bill, 2014
The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi,
today 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:
1. Omitting requirement for minimum paid up share capital, and
consequential changes. (For ease of doing business)
2. Making common seal optional, and consequential changes for authorization
for execution of documents. (For ease of doing business)
3. Prescribing specific punishment for deposits accepted under the new
Act. This was left out in the Act inadvertently. (To remove an omission)
4. Prohibiting public inspection of Board resolutions filed in the
Registry. (To meet corporate demand)
5. 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.
6. 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. (To meet corporate demand)
7.
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. (Demand of auditors)
8.
Exemption u/s 185 (Loans to
Directors) provided for bans to wholly owned subsidiaries and guarantees/securities
on bans taken from banks by subsidiaries. (This was provided under the Rules
but being included
in the Act as a matter of abundant caution).
9.
Empowering Audit Committee
to give omnibus approvals for related party transactions on annual basis. (Align with SEBI policy
and increase ease of doing business)
10.
Replacing 'special
resolution' with 'ordinary resolution' for approval of related party
transactions by non-related shareholders. (Meet problems
iaced by large stakeholders who are related parties)
11.
Exempt related party
transactions between holding companies and wholly owned subsidiaries from the requirement of approval
of non- related shareholders, (corporate demand)
12.
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)
13.
Winding Up cases to be
heard by 2-member Bench instead of a 3-member Bench. (Removal of an inadvertent error)
14.
Special Courts to try only
offences carrying imprisonment of two years or more. (To let magistrate try minor violations).
