The President has promulgated the Companies (Amendment) Ordinance, 2019, vide which shall be deemed to have come into effect from 02-11-2018 and will cease to operate on 21-01-2019. The ordinance further amends The Companies Act, 2013 which was previously amended by an ordinance in 2018.
Key Highlights –
- Declaration by the Director – The newly added section 10A states that any company incorporated after the commencement of this ordinance shall not commence any business unless the director within 180 days makes a declaration which will be verified by the registrar that every subscriber to the memorandum has paid the value of shares agreed to be taken by him.
- Any default in complying with the said will invite a fine of INR 50,000 to be paid by the company.
- Removal of a Company’s name from the register – If the Registrar has enough reason to believe that a company is not carryiong on bussiness then he, after a physical verification of the registered office, can remove the company’s name from the register of companies.
- Punishment for issuing shares at a discount – Penalty equal to the amount raised by issuing shares at a discount or five lakh rupees, whichever is less. The company will also be liable to refund the amount with 12% interest.
- Alteration of Articles – After this amendment, any conversion of a Public Company to a Private Company will not be valid unless approved by an order of the Central Government. Previously, the power to issue such an order was with the Tribunal.
- Duty to register charges – Registration of charges should be done within 300 days if the charges are created before the commenecement of the ordinance and within 60 days if created after the commencement of the ordinance.
- Resolutions and agreements to be filed – If the company fails to file a resolution and agreement before the specified time, the company shall be liable to pay INR 1,00,000 as penalty and in case of a continuing failure it will be extended further by INR 500 per day subject to a maximum penalty of 25 lakhs. For any officer who is liable, the penalty is of INR 50,000, and in case of a continuing failure it will be extended further by INR 500 per day subject to a maximum penalty of 5 lakhs.
- Penalties in different sections – In section 191, the penalty is increased from a minimum of INR 25,000 to a minimum of one lakh rupees. In section 441, The maximum limit is increased from 5 lakh rupees to 25 lakh rupees.
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