Companies Amendment Act 2020: Notified Sections

The government has passed the Companies (Amendment) Bill, 2020 as Bill No. 88 of 2020 to further amend the Companies Act, 2013 on March 12, 2020. Companies (Amendment) Bill, 2020 based on CLC Committee. CLC Committee submitted its report in November 2019. There are amendments in 66 Sections of the Companies Act, 2013

On September 22, 2020, it becomes the Companies Amendment Act, 2013. There are amendments in a total of 66 Sections. Out of 66 sections has been notified as follow:

Key Take Away – By 14 Sections of Companies Amendment Act, 2020 Notified w.e.f. January 22, 2021 

Section 2: Amendment in Definition of Listed Company:

Power has been given to the Central Government to exclude, in consultation with the Securities and Exchange Board, a certain class of companies from the definition of” listed company”, mainly for a listing of debt securities.

Section 62: Right issue of Shares:

The offer shall be made by notice specifying the number of shares offered and limiting a time not being less than fifteen days “or such lesser number of days as may be prescribed” and not exceeding thirty days from the date of the offer within which the offer, if not accepted, shall be deemed to have been declined;]

• Letter of Offer for the Right Issue can be kept open for less than 15 days as may be prescribed by CG- Section 62 (1) (a) (i); 

Section 89(11): Declaration in respect of beneficial interest:

The Central Govt has been empowered  to, exempt any class of persons from complying with the requirements of section 89 relating to declaration of a beneficial interest in shares and exempt any class of foreign companies or companies incorporated outside India from the provisions of Chapter XXII relating to companies incorporated outside India;

Section 117(3)(g): Resolution and agreement to be filled in form MGT-14:

Exemptions to certain classes of non-banking financial companies and housing finance companies from filing certain resolutions under section 117(3)(g) i.e. any resolution passed to grant loans, or give guarantee or provide security in respect of loans are given, etc.

Section 129A: New Section – Periodical Financial Result:

The power is given to Central Government such class or classes of unlisted companies, as may be prescribed, —

• To prepare the financial results of the company on such a periodical basis and in such form as may be prescribed.
• To obtain approval of the Board of Directors and complete audit or limited review of such periodical financial results in such manner as may be prescribed; and
• File a copy with the Registrar within a period of thirty days of completion of the relevant period with such fees as may be prescribed.”.

Purpose/ Effect: The purpose of insertion of this section is to empower Central Government to provide by rules such class or classes of unlisted companies to prepare periodical financial results of the company, audit or limited review thereof and their filing with Registrar within thirty days from the end of that period as specified in the rules.

Section 135: Corporate Social Responsibility:

In sub-section (5), after the second proviso, the following proviso shall be inserted, namely:—

“Provided also that if the company spends an amount in excess of the requirements provided under this sub-section, such company may set off such excess amount against the requirement to spend under this sub-section for a such number of succeeding financial years and in such manner, as may be prescribed.” 

Purpose/ Effect: Purpose to allow companies, which have spent an amount in excess of the requirement provided under the said sub-section, to set off such excess amount out of their obligation in the succeeding financial years in such manner as may be provided by rules.

Section 379: Application to act to foreign company:

Deletion of power of CG to exempt any class of foreign companies from any of the provisions of sections 380 to 386 and sections 392 and 393 – Section 379

Section 393A: New Section – Exemptions under the Chapter:

Power of CG to exempt any class of Foreign Companies or Companies incorporated or to be incorporated outside India whether or not it has a place of business in India from the applicability of the provisions of Chapter 22 of the Companies Act 2013

Section 410: Constitution of the appellate tribunal:

NCLAT shall hear appeals against

• Order of Tribunal; and
• Order of NFRA; and
• also any direction, decision or order referred to in Section 53A of the Competition Act, 2002

Section 418: Staff of tribunal and appellate tribunal:

Central Government may, by notification, after consultation with the Chairperson, establish such number of Benches of the Appellate Tribunal, as it may consider necessary,

• to hear appeals against any direction, decision or order referred to in section 53A of the Competition Act, 2002 and
• under section 61 of the Insolvency and Bankruptcy Code, 2016.”

Section 435: Establishment of the special court:

The Central Government may, for the purpose of providing speedy trial establish or designate as many Special Courts as may be necessary for Offences under this act except Punishment for Wrongful Withholding of Property of Company as per Section 452.

Section 446B: Lesser penalty of OPC or Small Company:

To extend the applicability of section 446B, relating to, Lesser Penalties for small companies and one-person companies, for all provisions of the Act which attract monetary penalties and also extend the same benefit to Producer Companies and start-ups and its officer in default.

Section 452: Punishment for wrongful withholding of property:

The criminal offense shall not be ordered against any officer or employee of the Company for wrongful withholding of property of the Company if the court is satisfied that the company has not paid to that officer or employee any amount relating to provident fund, pension fund, gratuity fund or any other employees welfare fund maintained by the company or any compensation or liability for compensation under the Workmen’s Compensation Act, 1923 in respect of death or disablement-

Section 454: Adjudication of penalty:

A New provision added in the Act as ease of doing business i.e. in case the default relates to non-compliance of sub-section (4) of section 92 (Annual Return -MGT-7) or sub-section (1) or sub-section (2) of section 137 (Financial Statement – AOC-4)

If such default has been rectified either prior to, or within thirty days of, the issue of the notice by the adjudicating officer, no penalty shall be imposed in this regard and all proceedings under this section in respect of such default shall be deemed to be concluded.

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