- Reduction of fines: Fines for certain offences under the Companies Act, 2013 (Act) such as contravention of notice requirements for alteration of share capital, contravention of provisions relating to registration of charges, failure to file annual returns etc. have been reduced;
- Decriminalisation of offences: Certain offences under the Act lacking the element of fraud or larger public interest such as failure to maintain books of account, related party transactions etc. have now been decriminalised and hence will no longer entail imprisonment. A noteworthy point here is that whilst the punishment of imprisonment for related party transactions of listed companies has been done away with, the fine for this contravention has been increased from an earlier cap of INR 5 lakhs to INR 25 Lakhs;
- CSR Committee requirement: Companies which have an annual obligation of less than INR 50 lakhs towards Corporate Social Responsibility expenditure are no longer required to constitute the Corporate Social Responsibility Committee. The requisite functions pertaining to the now redundant committee will need to be discharged by the board of directors of the covered entities;
- Exclusion from listed companies: Provision of exclusion of specific class of companies from the ambit of ‘listed companies’ for the purpose of listing of debt securities;
- Further issue of capital: The minimum notice period of 15 days for accepting offer of further issue of capital by existing equity shareholders has been revised to ‘such timelines as may be prescribed’. This has been done with the view of reducing timelines for applying for rights issues so as to speed up such issues under section 62 of the Act;
- Benches: The Amendment introduces provisions relating to setting up Benches of the National Company Law Appellate Tribunal (NCLAT). These benches will be located at Delhi and other such places as may be notified by the Central Government post consultation with the NCLAT Chairperson; &
- Company name allotment: Notably, the Amendment now dispenses away civil liability in case of failure in rectification of name of company due to it being similar to a registered trademark. Notably, a new name in such cases will be assigned by the Central Government itself if the company fails to make the rectification within three months.
We are one of the largest law firms in Gurgaon, Delhi and Mumbai. The author of this article is Pushkar Thakur, Managing Partner, Corrida Legal. Pushkar is an ex AVP, Legal, Nomura and has led the legal teams at corporates namely Emaar India and Drake & Scull India. He represent clients before all major courts of India and has worked with Kochhar & Co., law firm. Pushkar is an expert in corporate law, contracts, litigation, employment law and data protection. Reach out to him on LinkedIn at: https://www.linkedin.com/in/pushkarthakurcorridalegal/ or pushkar.thakur@corridalegal.com. In case of urgent issues, you may call him at +91-8826680614.