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I.      Provisions of the Companies (Amendment) Act, 2015 which are notified with effect from 29th May, 2015
Amendments to Section 2(68) and Section 2(71) of the Companies Act, 2013 relating to Requirement of minimum paid up capital

“76A. Where a company accepts or invites or allows or causes any other person to accept or invite on its behalf any deposit in contravention of the manner or the conditions prescribed under section 73 or section 76 or rules made thereunder or if a company fails to repay the deposit or part thereof or any interest due thereon within the time specified under section 73 or section 76 or rules made thereunder or such further time as may be allowed by the Tribunal under section 73,—

(a) the company shall, in addition to the payment of the amount of deposit or part thereof and the interest due, be punishable with fine which shall not be less than one crore rupees but which may extend to ten crore rupees; and

(b) every officer of the company who is in default shall be punishable with imprisonment which may extend to seven years or with fine which shall not be less than twenty-five lakh rupees but which may extend to two crore rupees, or with both:

Provided that if it is proved that the officer of the company who is in default, has contravened such provisions knowingly or wilfully with the intention to deceive the company or its shareholders or depositors or creditors or tax authorities, he shall be liable for action under section 447.”.

“Provided that no person shall be entitled under section 399 to inspect or obtain copies of such resolutions; and”.

“Provided also that no company shall declare dividend unless carried over previous losses and depreciation not provided in previous year or years are set off against profit of the company for the current year”.

“(c) any loan made by a holding company to its wholly owned subsidiary company or any guarantee given or security provided by a holding company in respect of any loan made to its wholly owned subsidiary company; or

(d) any guarantee given or security provided by a holding company in respect of loan made by any bank or financial institution to its subsidiary company:

Provided that the loans made under clauses (c) and (d) are utilised by the subsidiary company for its principal business activities.”.

(1)   Replace ‘special resolution’ with ‘ordinary resolution’ for approval of related party transactions by non-related shareholders and

(2) Exempt related party transactions between holding companies and wholly owned subsidiaries from the requirement of approval of non-related shareholders. No resolution required to be passed at general meeting.

Accordingly, in section 188 of the principal Act, in sub-section (1) for the words “special resolution”, at both the places where they occur, the word “resolution” shall be substituted; and after the third proviso, the following proviso shall be inserted, namely:—

“Provided also that the requirement of passing the resolution under first proviso shall not be applicable for transactions entered into between a holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval.”;

Further, in sub-section (3) of section 188 of the Act, for the words “special resolution”, the word “resolution” shall be substituted.

Accordingly,  in section 212 of the principal Act, in sub-section (6), for the words, brackets and figures “the offences covered under sub-sections (5) and (6) of section 7, section 34, section 36, sub-section (1) of section 38, sub-section (5) of section 46, sub-section (7) of section 56, sub-section (10) of section 66, sub-section (5) of section 140, sub-section (4) of section 206, section 213, section 229, sub-section (1) of section 251, sub-section (3) of section 339 and section 448 which attract the punishment for fraud provided in section 447”, the words and figures “offence covered under section 447” shall be substituted.

Substitution of sub-section (2) of section 462 of the Companies Act, 2013 with new sub-sections (2), (3), and (4) to rationalize the procedure for lying draft notifications granting exemptions to various classes of companies

‘‘(2) A copy of every notification proposed to be issued under sub-section (1), shall be laid in draft before each House of Parliament, while it is in session, for a total period of thirty days, and if, both Houses agree in disapproving the issue of notification or both Houses agree in making any modification in the notification, the notification shall not be issued or, as the case may be, shall be issued only in such modified form as may be agreed upon by both the Houses.

(3) In reckoning any such period of thirty days as is referred to in sub-section (2), no account shall be taken of any period during which the House referred to in subsection (2) is prorogued or adjourned for more than four consecutive days.

(4) The copies of every notification issued under this section shall, as soon as may be after it has been issued, be laid before each House of Parliament.”.

It was provided in Section 124 of the Act to transfer equity shares also in the name of IEPF for which unclaimed/unpaid dividend has been transferred to the IEPF. The amendment provides that such transfer of equity shares would only be in case where the dividend has not been paid or claimed for continuous period of seven years.  Accordingly, in sub-section (6) of section 124 of the Act, for the words, brackets and figure “unpaid or unclaimed dividend has been transferred under sub-section (5) shall also be”, the words “dividend has not been paid or claimed for seven consecutive years or more shall be” shall be substituted. Further, after the proviso, the following Explanation shall be inserted, namely:—

“Explanation.—For the removal of doubts, it is hereby clarified that in case any dividend is paid or claimed for any year during the said period of seven consecutive years, the share shall not be transferred to Investor Education and Protection Fund.’’.

(b) Amendment in the Section 435 of the Act:

Special Courts to try only offences carrying imprisonment of two years or more.

Hence, in section 435 of the principal Act, in sub-section (1),—
(i) for the words “trial of offences under this Act”, the words “trial of offences punishable under this Act with imprisonment of two years or more” shall be substituted;
(ii) the following proviso shall be inserted, namely:—

“Provided that all other offences shall be tried, as the case may be, by a Metropolitan Magistrate or a Judicial Magistrate of the First Class having jurisdiction to try any offence under this Act or under any previous company law.”.

Further, in section 436 of the principal Act, in sub-section (1), in clause (a), for the words “all offences under this Act”, the words, brackets and figures “all offences specified under sub-section (1) of section 435” shall be substituted.

(c) Amendment in the Section 419 of the Act:

Winding Up cases to be heard by 2-member Bench instead of a 3 or more-member Bench (i.e. special bench constituted under sub-section (4) of section 419 of the Act). Therefore, in section 419 of the principal Act, in sub-section (4), the words “or winding up” shall be omitted.

(d) Amendment in Section 248 and omission of clause (b) of sub-section (1) of section 248 of the Act:

Power of Registrar to remove name of the company from register of companies in case subscribers to the Memorandum have not paid subscription money within the period of 180 days from the date of incorporation and a declaration u/s 11(1) has not been filed within 180 days of its incorporation, has been omitted. Thus, in section 248 of the principal Act, in sub-section (1) in clause (a), after the word ‘incorporation’, the word ‘or’ shall be inserted; and clause (b) shall be omitted.

Amendments to the Companies Act, 2013

For prescribing the thresholds beyond which fraud shall be reported to the Central Government (below the threshold, it will be reported to the Audit Committee). Disclosures made to the Audit Committee also to be made in the Board’s Report (Section 134 & 143).

Accordingly, in section 134 of the principal Act, in sub-section (3), after clause (c), the following clause shall be inserted, namely:—

“(ca) details in respect of frauds reported by auditors under sub-section (12) of section 143 other than those which are reportable to the Central Government;”.

Further, in section 143 of the principal Act, for sub-section (12), the following sub-section shall be substituted, namely:—

“(12) Notwithstanding anything contained in this section, if an auditor of a company in the course of the performance of his duties as auditor, has reason to believe that an offence of fraud involving such amount or amounts as may be prescribed, is being or has been committed in the company by its officers or employees, the auditor shall report the matter to the Central Government within such time and in such manner as may be prescribed:

Provided that in case of a fraud involving lesser than the specified amount, the auditor shall report the matter to the audit committee constituted under section 177 or to the Board in other cases within such time and in such manner as may be prescribed:

Provided further that the companies, whose auditors have reported frauds under this sub-section to the audit committee or the Board but not reported to the Central Government, shall disclose the details about such frauds in the Board’s report in such manner as may be prescribed.”.

(b)   Insertion of a new proviso in section 177 of the Act:

Provisions authorising Audit Committee to give omnibus approvals for related party transactions. Thus, in section 177 of the Act, in sub-section (4), in clause (iv), the following proviso shall be inserted, namely:—

“Provided that the Audit Committee may make omnibus approval for related party transactions proposed to be entered into by the company subject to such conditions as may be prescribed;”.