Key Points of Companies (Amendment) Ordinance 2018

In order to strengthen the regulatory framework, The Government published Companies amendment Ordinance 2018 for amendment to the Companies Act, 2013. The key points have been discussed hereunder:

Central Govt  power to change the financial Year

Currently if Companies are required to change the Financial Year, they have to file an application with the NCLT. Now, the Central Govt. has the power to entertain the applications from a company, being a holding/ subsidiary/ associate company of a company incorporated outside India, to follow a different financial year for the purpose
of consolidation of its accounts outside India.

 Receipt of Share Money and Verification of Address must to obtain certificate of commencement

Companies with share capital, which are incorporated after date on which this ordinance comes into force, can’t start the business unless a declaration is filed by them with the Registrar of Companies that every subscriber has paid the value of the shares and its registered office has been verified. Any failure in filing such declaration would be one of
the grounds to strike off the name of the companies

Physical verification of registered office

A Registrar may physically verify the registered office of the company and if any default is found in complying with the requirement of maintenance of registered office, he may initiate action for the removal of name of the company from the register of companies.

Time for registration and modification of charges

The Ordinance reduces the maximum time period for registration and modification of charge with the ROC from existing 300 days to 60 days from date of creation/modification.

Increase in penalty for not appointing Key Managerial Personnel

It is mandatory for specified companies to appoint Key Managerial Personnel (i.e., CEO, CFO and CS) under Section 203. Currently, any failure in appointing the KMP would result in levy of penalty of Rs. 1 Lakh to Rs. 5 Lakhs on the company and up to Rs. 50,000 on every officer-in-default.

The Ordinance now levies an absolute penalty of Rs. 5 lakhs on the company and penalty of Rs. 50,000 on every Officer-in-default. In case of continuous default there would be an additional penalty of Rs. 1,000 per day for each day subject to maximum of Rs. 5 lakh.

Removal of imprisonment provision for certain defaults

As per existing provisions, every officer-in-default shall be prosecuted with an imprisonment for term of 6 months and penalty if company fails to file the annual return before the specified period. The Ordinance removes the provisions of imprisonment of an officer-in-default in case of non-compliance of Section 92.
Similarly, the Ordinance removes the imprisonment provision against all directors of the company in default for non-filing of copy of financials to ROC.

Penalty for failure to issue statement along with notice about voting by proxy

Section 105(2) requires every company (with share capital), or where Article of Association provides for voting by proxy, to provide a statement along with notice for calling general meeting that a member is entitled to attend and vote or to appoint a proxy.

Any failure to comply with this requirement results in levy of penalty of up to Rs. 5,000. The Ordinance levies the absolute penalty of Rs. 5,000 for such non-compliance

Penalty on non-filing of resolutions and agreements to ROC

The Ordinance introduces a penalty of Rs. 500 per day in case of continuing failure of non-filing of resolutions or agreements as specified under Section 117(3) in addition to penalty of Rs. 1 lakh to Rs. 5 lakh against company and Rs. 50, 000 against every officerin-default including liquidator of the company.

 

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