The Central Government through a Notification dated May 29, 2015 appointed May 29, 2015 as the date on which the provisions of sections 1 to 12 and 15 to 23 of the Companies (Amendment) Act, 2015 would be deemed to have come into effect. Earlier, the Company (Amendment) Bill was passed by Rajya Sabha on May 13, 2015 and Lok Sabha on December 17, 2014. The Bill got the presidential assent on May 25, 2015 and was subsequently published in the official Gazette of India on May 26, 2015. Some of the key amendments brought through this Companies (Amendment) Act, 2015 are-
- Omitting requirement for minimum paid up share capital, and consequential changes [section 2(68)/2(71) of the Companies Act, 2013 (Act)].
- Making common seal optional and consequential changes for authorization for execution of documents [sections 9, 12, 22, 46 and 223 of the Act].
- Doing away with the requirement for filing a declaration by a company before commencement of business or exercising its borrowing powers [Omission of section 11 of the Act and consequential change in section 248].
- Prescribing specific punishment for deposits accepted under the new Act in order to deal with defaults in repayment and afford protection to depositors’ interests [New Section 76A of the Act].
- Prohibiting public inspection of Board resolutions filed in the Registry to ensure confidentiality of commercial interests discussed in resolutions [section 117(3) of the Act].
- Including provision for setting off past losses/depreciation before declaring dividend for the year as a standard prudential clause [section 123(1) of the Act].
- Rectifying the requirement of transferring equity shares for which unclaimed/ unpaid dividend has been transferred to the Investor Education and Protection Fund (IEPF) even though subsequent dividend(s) has been claimed [section 124(6) of the Act].
- Enabling provisions to prescribe thresholds beyond which fraud shall be reported to the Central Government. Fraud below this threshold can be reported to the Audit Committee/ Board. Disclosures for the latter category are also to be made in the Board’s Report [section 143(12) and 134(3) of the Act].
- Empowering Audit Committee to give omnibus approvals for related party transactions on annual basis. This is in order to align it with SEBI policy and increase ease of doing business [section 177(4) of the Act].
- Exemption under Section 185 (Loans to Directors) provided for loans to wholly owned subsidiaries and guarantees/securities on loans taken from banks by subsidiaries. This was provided under the Rules but has now been included in the Act [section 185(1) of the Act].
- Replacing ‘special resolution’ with ‘resolution’ for approval of related party transactions by non-related shareholders in order to balance the process for majority supported genuine commercial decisions [section 188(1) of the Act].
- Related party transactions between holding companies and wholly owned subsidiaries exempted from the requirement of approval of non-related shareholders [section 188(1) of the Act].
- Bail restrictions to apply only for offences relating to fraud under Section 447 [section 212(6) of the Act].
- Winding up cases to be heard by 2-member Bench instead of a 3-member Bench [section 419 of the Act].
- Special Courts to try only those offences carrying imprisonment of two years or more. This is in order to rationalize the jurisdiction and let magistrates try minor violations, with the objective of speeding up disposal [section 435 and 436 of the Act].
- Rationalizing the procedure for laying draft notifications granting exemptions to various classes of companies or modifying provisions of the Act in Parliament, in order to ensure speedier issue of final notifications [section 462 of the Act].