India - Companies Amendment Act, 2020.

Updated: Jan 29










The Companies Amendment Act 2020 has introduced several measures to improve the ease of doing business and de-criminalize certain offences. The Companies Amend. Act,2020 was published in the official Gazette on Sept. 28th 2020 which came into effect on 21st December 2020.

The said Act does away with imprisonment because of violation of certain provisions of Companies Act, 2013. It reduces and modifies the fines and penalties offences under the Companies Act. The write up attempts briefly discuss the provisions and the amendment therein.



Amend. Act / Companies Act,2013

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Old Provision

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New Provision

Sec. 3 / Sec.8


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Director and every officer of the company who is in default shall be punishable with:

Imprisonment:

Maximum- 3 years

OR

Fine:

Minimum- Rs. 25 thousand;

Maximum- Rs. 25 lakh.

OR

Both

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Director and every officer of the company who is in default shall be punishable with:

Fine:

Minimum- Rs. 25 thousand;

Maximum- Rs. 25 lakh.


Sec. 6 / Section 26:Matters to be stated in prospectus


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Every person who is knowingly a party to the issue of such prospectus shall be punishable with:

Imprisonment:

Maximum- 3 years

OR

Fine:

Minimum- Rs. 50 thousand;

Maximum- Rs. 3 lakh.

OR

Both


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Every person who is knowingly a party to the issue of such prospectus shall be punishable with:

Fine:

Minimum- Rs. 50 thousand;

Maximum- Rs. 3 lakh.

Sec. 7 / Section 40:Securities to be dealt with in stock exchanges


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Every officer of the company who is in default shall be punishable with:

Imprisonment:

Maximum- 1 year

OR

Fine:

Minimum- Rs. 50 thousand;

Maximum- Rs. 3 lakh.

OR

Both


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Every officer of the company who is in default shall be punishable with:

Fine:

Minimum- Rs. 50 thousand;

Maximum- Rs. 3 lakh.

Sec. 8 / Section 48- Variation of shareholders’ rights


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In case of Default in complying with the provisions relating to variation of shareholders’ rights Company shall be punishable with and officers in default with imprisonment.

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Omitted

Sec. 9 Section 56: Transfer and transmission of securities


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Where default is made in complying with this section


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Company shall be punishable with:

Fine:

Minimum- Rs. 25 thousand;

Maximum- Rs. 5 lakh.

Every officer of the company who is in default shall be punishable with:

Fine:

Minimum- Rs. 10 thousand;

Maximum- Rs. 1 lakh.


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Company and every officer of the company who is in default shall be liable to a penalty of Rs. 50 thousand.

Sec. 10 / Section 59: Rectification of register of members.


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If any default is made in complying with the order of the Tribunal under this section, the company

shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for

a term which may extend to one year or with fine which shall not be less than one lakh rupees but which

may extend to three lakh rupees, or with bot


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Omitted

Sec. 12 / Section 64- Notice to be given to Registrar for alteration of share capital


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Offence: In case a company fails to file notice of alteration or increase or redemption of share capital along with an altered memorandum with the Registrar within 30 days.

Changes:

The amount of penalty on company and every officer who is in default has been reduced from Rs. 1,000 to Rs. 500 for each day during which default continues.

Further, the maximum amount of penalty has been reduced from Rs. 5 lakh to Rs. 1 lakh.

Sec. 13 / Section 66- Reduction of share capital


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The penalty imposed If a company fails to publish the confirmation order of the reduction of share capital by the Tribunal.

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Omitted

Sec. 14 / Section 68: Power of company to purchase its own securities


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If a company makes any default in complying with the provisions of this section or any regulation made by SEBI.

Every officer of the company who is in default shall be punishable with:

Imprisonment:

Maximum- 3 years

OR

Fine:

Minimum- Rs. 1 lakh;

Maximum- Rs. 3 lakh.

OR

Both


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Every officer of the company who is in default shall be punishable with:

Fine:

Minimum- Rs. 1 lakh;

Maximum- Rs. 3 lakh.

Sec. 15 / Section 71- Debentures


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Penalty imposed In case of default in complying with the order of Tribunal relating to redemption of debentures.

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omitted

Sec. 16 / Section 86- Punishment for contravention


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If any company contravenes any provision of Chapter VI relating to Registration of Charges.

Company shall be punishable with:

Fine:

Minimum- Rs. 1 lakh;

Maximum- Rs. 10 lakh.

Every officer of the company who is in default shall be punishable with:

Imprisonment:

Maximum- 6 months

OR

Fine:

Minimum- Rs. 25 thousand;

Maximum- Rs. 1 lakh.

OR

Both

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Company shall be liable to a penalty of Rs. 5 lakh and every officer of the company who is in default shall be liable to a penalty of Rs. 50 thousand.

Sec. 17 / Section 88- Register of members, etc.

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If a company does not maintain a register of members or debenture-holders or other security holders or fails to maintain them in accordance with the provisions of this section.

Company shall be punishable with:

Fine:

Minimum: Rs. 50 thousand;

Maximum: Rs. 3 lakh and where the failure is a continuing one, with a further fine which may extend to Rs. 1,000 for every day, after the first during which the failure continues.

Every officer of the company who is in default shall be punishable with:

Fine:

Minimum: Rs. 50 thousand;

Maximum: Rs. 3 lakh and where the failure is a continuing one, with a further fine which may extend to Rs. 1,000 for every day, after the first during which the failure continues.


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Company shall be liable to a penalty of Rs. 3 lakh and every officer of the company who is in default shall be liable to a penalty of Rs. 50 thousand.

Sec. 18 / Section 89- Declaration in respect of beneficial interest in any share

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If any person fails, to make a declaration as required under this section.

Such person shall be punishable with:

Fine:

If a company, required to file a return under this section, fails to do so before the expiry of the time specified.

The fine by the company and the imprisonment to the officers is reduced and omitted

Such person shall be liable to a penalty of Rs. 50 thousand and in case of continuing failure, with a further penalty of Rs. 200 for each day after the first during which such failure continues, subject to a maximum of Rs. 5 lakh.

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Company and every officer of the company who is in default shall be liable to a penalty of Rs. 1,000 for each day during which such failure continues, subject to a maximum of Rs. 5 lakh in the case of a company and Rs. 2 lakh in case of an officer who is in default.

Sec. 19 / Section 90- Register of significant beneficial owners in a company



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If a company, required to maintain register or file the information or required to take necessary steps under this section, fails to do so or denies inspection as provided therein.

The penalty and punishment therein has been reduce.


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Company shall be liable to a penalty of Rs. 1 lakh and in case of continuing failure, with a further penalty of Rs. 500 for each day, after the first during which such failure continues, subject to a maximum of Rs. 5 lakh and every officer of the company who is in default shall be liable to a penalty of Rs. 25 thousand and in case of continuing failure, with a further penalty of Rs. 200 for each day, after the first during which such failure continues, subject to a maximum of Rs. 1 lakh.

Sec. 20 / Section 92- Annual return


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Offence: In case a company fails to file its annual return within specified period (i.e. 60 days from AGM).

Changes:

The amount of penalty on company and every officer who is in default has been reduced from Rs. 50 thousand to Rs. 10 thousand.

Further, the maximum amount of penalty has been reduced from Rs. 5 lakh to Rs. 2 lakh in case of a company and Rs. 50 thousand in case of an officer who is in default.

Sec. 21 / Section 105- Proxies


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If for the purpose of any meeting of a company, invitations to appoint as proxy a person or one of a number of persons specified in the invitations are issued at the company’s expense to any member entitled to have a notice of the meeting sent to him and to vote thereat by proxy. The punishment and penalty is reduced.

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Every officer of the company who issues the invitation as aforesaid or authorises or permits their issue shall be liable to a penalty of Rs. 50 thousand.

Sec. 22 / Section 117- Resolutions and agreements to be filed


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The Central Government is empowered to exempt any class of NBFCs and any class of HFCs from filing of resolutions passed to grant loans or give guarantees or to provide security in respect of loans in the ordinary course of their business.

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Earlier, only Banking Companies were exempted.

Sec. 24 / Section 128- Books of account, etc., to be kept by company


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If MD, WTD in charge of finance, CFO or any other person of a company charged by the Board with the duty of complying with the provisions of this section, contravenes the provisions of the section The penalty is reduced.

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Such MD, WTD in charge of finance, CFO or such other person of the company shall be punishable with:

Fine:

Minimum- Rs. 50 thousand;

Maximum- Rs. 5 lakh.

Sec. 26 / Section 134- Financial statement, Board’s report, etc.


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If a company fails to comply with the provisions regarding signing of financial statement and contents & signing of Board’s Report the penalty is reduced.

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Company shall be liable to a penalty of Rs. 3 lakh and every officer of the company who is in default shall be liable to a penalty of Rs. 50 thousand.

Sec. 28 / Section 137- Copy of financial statement to be filed with Registrar


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Offence: In case a company fails to file the copy of the financial statements with the Registrar within the time specified therein (i.e. within 30 days from the date of AGM).

Changes:

The amount of penalty on company has been reduced from Rs. 1,000 to Rs. 100 for each day during which the failure continues and maximum amount of penalty has been reduced from Rs. 10 lakh to Rs. 2 lakh.

The amount of penalty on MD/ CFO/ directors has been reduced from Rs. 1 lakh to Rs. 10 thousand and maximum amount of penalty has been reduced from Rs. 5 lakh to Rs. 50 thousand.

Sec. 29 / Section 140- Copy of financial statement to be filed with Registrar

Offence:

Changes:

The maximum amount of penalty on auditor has been reduced from Rs. 5 lakh to Rs. 2 lakh.

Sec. 29 / Section 140: Copy of financial statement to be filed with Registrar


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Offence: In case the auditor fails to file his resignation with the Registrar within the time specified therein (i.e. 30 days from the date of resignation).

Changes:

The maximum amount of penalty on auditor has been reduced from Rs. 5 lakh to Rs. 2 lakh.

Sec. 30 / Section 143- Powers and duties of auditors and auditing standards


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