On 2nd December 2014, the Union Cabinet chaired by Prime Minister Shri Narendra Modi approved the introduction of the Companies (Amendment) Bill, 2014 in Parliament to make certain amendments in the Companies Act, 2013. The objective of the proposed amendment is to meet the corporate demand, for ease of doing business, and to address problems faced by stakeholders such as Chartered Accountants and professionals.
The proposed amendments are as follows:
- To omit the requirement for minimum paid up share capital for ease of doing business.
- To make common seal optional, and consequential changes for authorization for execution of documents.
- To prescribe specific punishment for deposits accepted under the new Act, which was left out in the earlier Act inadvertently.
- To prohibit public inspection of Board resolutions filed in the Registry.
- To include a provision for writing off past losses/depreciation before declaring dividend for the year.
- To rectify the requirement of transferring equity shares for which unclaimed/unpaid dividend has been transferred to the IEPF even though subsequent dividend(s) has been claimed.
- To prescribe thresholds beyond which fraud shall be reported to the Central Government. If it is below the threshold, it will be reported to the Audit Committee and also the disclosure for the same shall be made in the Board’s Report.
- To exempt u/s 185 (Loans to Directors) provided for loans to wholly owned subsidiaries and guarantees/securities on loans taken from banks by subsidiaries.
- To empower the Audit Committee to give omnibus approvals for related party transactions on annual basis.
- To replace ‘special resolution’ with ‘ordinary resolution’ for approval of related party transactions by non-related shareholders.
- To exempt related party transactions between holding companies and wholly owned subsidiaries from the requirement of approval of non-related shareholders.
- To enable Bail restrictions to be applicable only in cases which are related to fraud u/s 447.
- To Wind Up cases to be heard by 2-member Bench instead of a 3-member Bench.
- To give power to Special Courts to try offences carrying imprisonment of two years or more, and the magistrate to try minor violations.
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