ICAI has shared Summary of Provisions of The Companies (Second Amendment) Ordinance 2019, which has the effect of amending 29 sections. Further, 2 new sections were inserted through the earlier ordinances, which were promulgated on 2nd November, 2018 (Ordinance 9 of 2018) and on 12th January, 2019 (Ordinance 3 of 2019).
The Companies (Second Amendment) Ordinance 2019 was issued by the Government on 19th February, 2019. It is based on the recommendations of the Committee to review offences under the Companies Act, 2013, so as to fill critical gaps in the corporate governance & compliance framework as enshrined in the Companies Act 2013. This will incentivise compliance of law while simultaneously meting out exemplary punishment for serious violations. The Companies (Amendment) Bill, 2018 later renamed as the Companies (Amendment) Bill, 2019 was introduced in the Lok Sabha on December 20, 2018. The Bill was transmitted to the Rajya Sabha but it could not be passed in the Upper House in the Winter Session. There was an urgent need for bringing out and implementation of the various provisions of the Companies Act 2013, accordingly, the Companies (Second Amendment) Ordinance 2019 was promulgated by the Cabinet. The provisions that are part of the Ordinance shall be applicable w.e.f 2nd November, 2018. Amongst others, the following are the important amendments:
i) Recateogorization of 16 minor offences as purely civil defaults which will declog special courts.
ii) Stringent provisions with reduced timelines for creation and modification of charges.
iii) Transfer of approval for certain routine functions such as change of financial year and conversion of public to private companies from The National Company Law Tribunal to the Central Government.
iv) Breach of ceiling on directorship being made a ground for disqualification to be appointed as a director in a company. v) Making non-maintenance of registered office and non reporting of commencement of business grounds results in removal of names of companies from the Register Of Companies.