Amendments in companies Act 2013 | Amendment in Section-12

Company formation / Compliances
||
September 5, 2020

As per ordinance passed by the President of India, there were some amendments made to the Companies Act 2013. This ordinance was a result of the recommendations that were proposed by Ministry of Corporate Affairs.

We have mentioned some important Amendments made in Companies Act 2013 as specified below:

Insertion of provision under Section-10A
As per the amendments a company which is incorporated after commencement of the Companies amendments (2018) ordinance shall not commence business or exercise any borrowing powers unless it satisfies the following two conditions:

A declaration is filed by a director within a period of 180 days from the date of incorporation of the company with the Registrar in the prescribed form, stating that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of making such declaration; and
A declaration is filed by the Company with the Registrar furnishing verification of its registered office within a period of 30 days from its incorporation.

If declaration not filed within 180 days registrar has reasonable cause to believe that company is not conducting any business therefor Registrar can order for removal of company name from registrar of companies.

Section-14 conversion of public company into private company (Rule-41)
Application for conversion shall be filled within 60 days of passing Special resolution (SR) with regional director in form RD-1 along with fee and shall be accompanied by following documents:

Draft copy of MOA and AOA with proposed changes;
Copy of minutes of the general meeting at which special resolution was passed;
Declaration by Key managerial person that company limits the number of members to 200; and
Declaration by Key managerial person that company have not accepted any deposits in violation to the companies’ act 2013 and its rules.

Amendment in Section-12(9)
The registrar may initiate action for removal of name from registrar of companies if:

If declaration not filed within 180 days from the date of incorporation with registrar.
If the company have not intimidated the registered address of company within 30 days of incorporation.

Amendment in Section-77 deals with the registration of charges
As per amendment if charges created by the company before November 2, 2018 then:

Company shall file form for registration of charge within 30 days of creation; or
In case where company fails to file the same within 30 days Registrar may, through application by the company, allow such registration to be made within a period of three hundred days

Provided further that if the registration have not been made within the period specified i.e. 300 days from such creation then the registration of the charge shall be made within six months from the date of commencement of the Companies (Amendment) Ordinance, 2018, i.e. 01^st May, 2019 on payment of such additional fees as may be prescribed

As per amendment if charges created by the company after November 2, 2018 then:

The Company shall file for registration of charge within 30 days of creation; or
In case company fails to file the same within 30 days, Act allows additional 30 days with normal fee and additional fee. In case company fails to file the same within 60 days, Act allows additional 60 days with normal fee + additional fee + advalorem fees.

Amendment under Section-164(2)
As per amendment a person if holds directorship more than the total number allowed by the act, then he will be disqualified for being appointed as director for all companies. Also, penalty of five thousand rupees for each day after the first day during which such contravention continues.

Re-categorization of Certain Offences

Relevant Provision	Old Penalty	Amended Penalty
Issue of shares at a discount by a company in contravention of the Act	For Company: 5lakhs>=Fine>=1lakh. For Every officer in Default: 5lakhs>=Fine>=1lakh. Imprisonments<=6months. Or Both.	The company and every officer in default will be liable to a penalty up to an amount raised through the issue of shares at a discount or INR 5 lakhs, whichever is less. The company will be liable to refund all monies received with interest at the rate of 12% p.a. from the date of issue of such shares to the persons to whom such shares have been issued.
Non-filing of annual return by a company within the due date	For Company: 5lakhs>=Fine>=50Thousand. For Every officer in Default: 5lakhs>=Fine>=50Thousand. Imprisonments<=6months. Or Both.	The company and every officer in default will be liable to a penalty of INR 50,000 and in case of continuing failure, with further penalty of INR 100 for each day during which such failure continues, subject to a maximum of INR 5 lakhs.
Failure/delay by a company in filing financial statement	Punishable with fine of INR 1,000 for every day during which the failure continues but the total penalty not exceeding INR 10 lakhs. The managing director and the CFO of the company, if any, and, in the absence of the managing director and the CFO, any director responsible for complying with the relevant provisions, and, in the absence of any such director, all the directors of the company, were punishable with imprisonment for a term extending up to six months or with fine of between INR 1-5 lakhs, or with both.	Punishable with fine of INR 1,000 for every day during which the failure continues but the total penalty not exceeding INR 10 lakhs. The managing director and the CFO of the company, if any, and, in the absence of the managing director and the CFO, any director responsible for complying with the relevant provisions, and, in the absence of any such director, all the directors of the company will be liable to a penalty of INR 1 lakh and in case of continuing failure, with further penalty of INR 1 hundred for each day after the first day during which such failure continues, subject to a maximum of INR 5 lakhs.
Failure/delay in filing statement by the auditor after resignation	Penalty of INR 50,000 or the remuneration of the auditor, whichever is less but extending up to INR 5 lakhs	Penalty of INR 50,000 or an amount equal to the remuneration of the auditor, whichever is less and in case of continuing failure, a further penalty of INR 500 for each day after the first day, during which such failure continues, subject to a maximum of INR 5 lakhs.

Here at AJSH, we assist our clients in complying with applicable provisions of the Companies Act, 2013 including company registration, MCA filings, statutory audits etc. If you have any query or wish to know more in this regard, kindly contact us.