Companies Amendment Act 2019 summary

COMPANIES AMENDMENT ACT 2019
CS Uttam Kumar Mohallik
FCS, ACMA, LLB, M.COM, M.A.(ECO), MBA.
UGC-NET in First attempt.
Author in Corporate Laws
15+ years teaching experience including
5 years in KiiT , Regular Faculty at ICAI(CMA)
5+ years cs practice.
Feel free to write at: cs.uttam.mohallik@gmail.com
Presented by:
Amendments are in Italic font and in green color.
CS Uttam Kumar Mohallik
FCS, ACMA, LLB, M.COM, M.A.(ECO), MBA.
UGC-NET in First attempt.
Author in Corporate Laws
15+ years teaching experience including
5 years in KiiT , Regular Faculty at ICAI(CMA)
5+ years cs practice.
Feel free to write at: cs.uttam.mohallik@gmail.com9/12/2019

Section 2 (41): financial year
 "financial year", in relation to any company or body corporate,
means
 the period ending on the 31st day of March every year, and
 where it has been incorporated on or after the 1st day of January
of a year,
 the period ending on the 31st day of March of the following
year, in respect whereof financial statement of the company or
body corporate is made up:
Presented by: CS Uttam Kumar Mohallik
 "financial year", in relation to any company or body corporate,
means
 the period ending on the 31st day of March every year, and
 where it has been incorporated on or after the 1st day of January
of a year,
 the period ending on the 31st day of March of the following
year, in respect whereof financial statement of the company or
body corporate is made up:
9/12/2019

Different F.Y. if Holding or Subsidiary or
Associate Company is in Outside India
 where a company or body corporate, which is a holding company or a subsidiary
or associate company of a company incorporated outside India and
 is required to follow a different financial year for consolidation of its accounts
outside India,
 the Central Government may, on an application made by that company or body
corporate in such form and manner as may be prescribed, allow any period as its
financial year, whether or not that period is a year:
 any application pending before the Tribunal as on the date of commencement of
the Companies (Amendment) Act, 2019, shall be disposed of by the Tribunal in
accordance with the provisions applicable to it before such commencement.
 An existing Company or body corporate shall within a period of 2 years from
commencement of this act align its financial year as per the provisions of this
clause.
 where a company or body corporate, which is a holding company or a subsidiary
or associate company of a company incorporated outside India and
 is required to follow a different financial year for consolidation of its accounts
outside India,
 the Central Government may, on an application made by that company or body
corporate in such form and manner as may be prescribed, allow any period as its
financial year, whether or not that period is a year:
 any application pending before the Tribunal as on the date of commencement of
the Companies (Amendment) Act, 2019, shall be disposed of by the Tribunal in
accordance with the provisions applicable to it before such commencement.
 An existing Company or body corporate shall within a period of 2 years from
commencement of this act align its financial year as per the provisions of this
clause.
9/12/2019

Section 10A:
Commencement of business etc
 (1) A company having a share capital shall not commence any business
or exercise any borrowing powers unless—
 (a) a declaration is filed by a director within a period of 180 days of
the date of incorporation, with the Registrar that every subscriber to
the memorandum has paid the value of the shares agreed to be
taken by him on the date of making of such declaration; and
 (b) The company has filed with the Registrar a verification of its
registered office as provided in sub-section (2) of section 12.
 (1) A company having a share capital shall not commence any business
or exercise any borrowing powers unless—
 (a) a declaration is filed by a director within a period of 180 days of
the date of incorporation, with the Registrar that every subscriber to
the memorandum has paid the value of the shares agreed to be
taken by him on the date of making of such declaration; and
 (b) The company has filed with the Registrar a verification of its
registered office as provided in sub-section (2) of section 12.
9/12/2019

 (2) In case of default, company shall be liable to a penalty of 50
thousand rupees and every officer who is in default shall be liable to
a penalty of 1000 rupees for each day during which such default
continues but not exceeding an amount of 1 lakh rupees.
 (3) Where no declaration has been filed with the Registrar within a
period of 180 days of the date of incorporation and
 the Registrar has reasonable cause to believe that the company is
not carrying on any business or operations, he may, initiate action
for the removal of the name of the company from the register of
companies under Chapter XVIII.
 (2) In case of default, company shall be liable to a penalty of 50
thousand rupees and every officer who is in default shall be liable to
a penalty of 1000 rupees for each day during which such default
continues but not exceeding an amount of 1 lakh rupees.
 (3) Where no declaration has been filed with the Registrar within a
period of 180 days of the date of incorporation and
 the Registrar has reasonable cause to believe that the company is
not carrying on any business or operations, he may, initiate action
for the removal of the name of the company from the register of
companies under Chapter XVIII.
9/12/2019

Section 12 (9): physical verification
of the registered office by ROC
 As per section 12 (9), If the Registrar has reasonable cause to
believe that the company is not carrying on any business or
operations, he may cause a physical verification of the registered
office of the company and if any default is found to be made in
complying with the requirements of section 12 (1), he may initiate
action for the removal of the name of the company from the
register of companies under Chapter XVIII.
 As per section 12 (9), If the Registrar has reasonable cause to
believe that the company is not carrying on any business or
operations, he may cause a physical verification of the registered
office of the company and if any default is found to be made in
complying with the requirements of section 12 (1), he may initiate
action for the removal of the name of the company from the
register of companies under Chapter XVIII.
9/12/2019

CONVERSION OF A PUBLIC COMPANY
INTO A PRIVATE COMPANY
 Second proviso to section 14(1) stipulates that any alteration having the
effect of conversion of a public company into a private company shall
not be valid unless it is approved by an order of the Central Government
(delegated to RD) on an application made in such form and manner as
may be prescribed:
 Provided also that any application pending before the Tribunal, shall be
disposed of by the Tribunal.
 As per Section 14 (2), Every alteration of the articles under this section
and a copy of the order of the Central Govt. approving the alteration u/s
14(1) shall be filed with the Registrar in Form INC 27 together with
altered articles and MGT-14 for special resolution with fee within 15
days, who shall register the same.
 Second proviso to section 14(1) stipulates that any alteration having the
effect of conversion of a public company into a private company shall
not be valid unless it is approved by an order of the Central Government
(delegated to RD) on an application made in such form and manner as
may be prescribed:
 Provided also that any application pending before the Tribunal, shall be
disposed of by the Tribunal.
 As per Section 14 (2), Every alteration of the articles under this section
and a copy of the order of the Central Govt. approving the alteration u/s
14(1) shall be filed with the Registrar in Form INC 27 together with
altered articles and MGT-14 for special resolution with fee within 15
days, who shall register the same.
9/12/2019

Section 26: Matters to be stated in
Prospectus
 in sub-sections (4), (5) and (6), for the word “registration”, the word “filing”
shall be substituted; and
 sub-section (7) shall be omitted.
 Section 26(4): Filing a copy of prospectus with the registrar etc.
 Section 26(5): Expert must be independent and has given his written consent
and has not withdrawn such consent before the delivery of a copy of the
prospectus to the Registrar for filing and a statement to that effect shall be
included in the prospectus.
 Section 26(6):Every prospectus shall, on the face of it,—
 (a) state that a copy has been delivered for filing to the Registrar
 Section 26(7):The Registrar shall not register a prospectus unless the
requirements are complied with(not dated, not comply sec26(1)) and
prospectus is accompanied by the consent in writing of all the persons named
in the prospectus.
 in sub-sections (4), (5) and (6), for the word “registration”, the word “filing”
shall be substituted; and
 sub-section (7) shall be omitted.
 Section 26(4): Filing a copy of prospectus with the registrar etc.
 Section 26(5): Expert must be independent and has given his written consent
and has not withdrawn such consent before the delivery of a copy of the
prospectus to the Registrar for filing and a statement to that effect shall be
included in the prospectus.
 Section 26(6):Every prospectus shall, on the face of it,—
 (a) state that a copy has been delivered for filing to the Registrar
 Section 26(7):The Registrar shall not register a prospectus unless the
requirements are complied with(not dated, not comply sec26(1)) and
prospectus is accompanied by the consent in writing of all the persons named
in the prospectus.
9/12/2019

Section 29: Public offer of securities
to be in dematerialized form.
 (1) (a) every company making public offer; and
 (b) such other class or classes of public companies as may be
prescribed,
 shall issue the securities only in dematerialised form by
complying with the Depositories Act, 1996 and the regulations
made there under.
 (1A) In case of such class or classes of unlisted companies as may
be prescribed, the securities shall be held or transferred only in
dematerialised form in the manner laid down in the Depositories
Act, 1996 and the regulations made thereunder.
 (1) (a) every company making public offer; and
 (b) such other class or classes of public companies as may be
prescribed,
 shall issue the securities only in dematerialised form by
complying with the Depositories Act, 1996 and the regulations
made there under.
 (1A) In case of such class or classes of unlisted companies as may
be prescribed, the securities shall be held or transferred only in
dematerialised form in the manner laid down in the Depositories
Act, 1996 and the regulations made thereunder.
9/12/2019

Section 35: Civil liability for
misstatements in prospectus.
 (2) No person shall be liable, if he proves—
 (a) that, having consented to become a director, he withdrew his consent before the
issue of the prospectus, and that it was issued without his authority or consent; or
 b) that the prospectus was issued without his knowledge or consent, and that on
becoming aware of its issue, he forthwith gave a reasonable public notice that it was
issued without his knowledge or consent.
 (c) that, as regards every misleading statement purported to be made by an expert or
contained in what purports to be a copy of or an extract from a report or valuation of
an expert, it was a correct and fair representation of the statement, or a correct copy
of, or a correct and fair extract from, the report or valuation; and he had reasonable
ground to believe and did up to the time of the issue of the prospectus believe, that
the person making the statement was competent to make it and that the said person
had given the consent required by sub-section (5) of section 26 to the issue of the
prospectus and had not withdrawn that consent before “delivery of a copy of the
prospectus for registration filing of a copy of the prospectus with
the Registrar or, to the defendant's knowledge, before allotment there under.
 (2) No person shall be liable, if he proves—
 (a) that, having consented to become a director, he withdrew his consent before the
issue of the prospectus, and that it was issued without his authority or consent; or
 b) that the prospectus was issued without his knowledge or consent, and that on
becoming aware of its issue, he forthwith gave a reasonable public notice that it was
issued without his knowledge or consent.
 (c) that, as regards every misleading statement purported to be made by an expert or
contained in what purports to be a copy of or an extract from a report or valuation of
an expert, it was a correct and fair representation of the statement, or a correct copy
of, or a correct and fair extract from, the report or valuation; and he had reasonable
ground to believe and did up to the time of the issue of the prospectus believe, that
the person making the statement was competent to make it and that the said person
had given the consent required by sub-section (5) of section 26 to the issue of the
prospectus and had not withdrawn that consent before “delivery of a copy of the
prospectus for registration filing of a copy of the prospectus with
the Registrar or, to the defendant's knowledge, before allotment there under.
9/12/2019

Section 53. Prohibition on issue of
shares at discount.
 1. Company shall not issue shares at a discount.
 Exception: section 54 – Issue of Sweat Equity share
 2. Any share issued by a company at a discount price shall be void.
 2A. However a company may issue shares at a discount to its creditors when its
debt is converted into shares in pursuance of any statutory resolution plan or
debt restructuring scheme of RBI.
 3 where any company fails to comply this section,
 such company and every officer who is in default shall be liable to a penalty
which may extend to an amount equal to the amount raised through the issue
of shares at a discount or five lakh rupees, whichever is less, and
 the company shall also be liable to refund all monies received with interest at
the rate of 12% p.a from the date of issue.
 1. Company shall not issue shares at a discount.
 Exception: section 54 – Issue of Sweat Equity share
 2. Any share issued by a company at a discount price shall be void.
 2A. However a company may issue shares at a discount to its creditors when its
debt is converted into shares in pursuance of any statutory resolution plan or
debt restructuring scheme of RBI.
 3 where any company fails to comply this section,
 such company and every officer who is in default shall be liable to a penalty
which may extend to an amount equal to the amount raised through the issue
of shares at a discount or five lakh rupees, whichever is less, and
 the company shall also be liable to refund all monies received with interest at
the rate of 12% p.a from the date of issue.
9/12/2019

Section 64: Notice to be given to Registrar
for alteration of share capital.
 1. Where—
 a. a company alters its share capital in any manner specified in section 61(1);
 b. an order is passed by the Government increasing the authorised capital of
the company under section 62(4) & (6).
 c. a company redeems any redeemable preference shares,
 The notice of such alteration, increase or redemption shall be filed by the
company with the Registrar in Form No. SH.7 along with the fee within 30
days.
 2. If Contravention:
 such company and every officer who is in default shall be liable to a penalty
of 1 thousand rupees for each day during which such default continues, or 5
lakh rupees whichever is less.
 1. Where—
 a. a company alters its share capital in any manner specified in section 61(1);
 b. an order is passed by the Government increasing the authorised capital of
the company under section 62(4) & (6).
 c. a company redeems any redeemable preference shares,
 The notice of such alteration, increase or redemption shall be filed by the
company with the Registrar in Form No. SH.7 along with the fee within 30
days.
 2. If Contravention:
 such company and every officer who is in default shall be liable to a penalty
of 1 thousand rupees for each day during which such default continues, or 5
lakh rupees whichever is less.
9/12/2019

Section 77:
Duty to register charges, etc.
 1. It shall be the duty of every company creating a charge
 within or outside India,
 on its property or assets or any of its undertakings,
 whether tangible or otherwise, and
 situated in or outside India,
 to register the particulars of the charge signed by the company and
the charge-holder together with the instruments in Form no CHG-1
or CHG-9(for debenture), on payment of such fees with the
Registrar within 30 days of its creation:
 1. It shall be the duty of every company creating a charge
 within or outside India,
 on its property or assets or any of its undertakings,
 whether tangible or otherwise, and
 situated in or outside India,
 to register the particulars of the charge signed by the company and
the charge-holder together with the instruments in Form no CHG-1
or CHG-9(for debenture), on payment of such fees with the
Registrar within 30 days of its creation:
9/12/2019

If not registered within 30 days, the ROC may
allow to register within 300days or 60 days
 Proviso to section 77(1) states that the Registrar may, on an
application by the company, allow such registration to be made:
 (a) in case of charges created before the commencement of the
Companies Amendment Act, 2019 within a period of 300 days of
such creation on payment of such additional fees.
 (b) in case of charges created on or after the commencement of
the Companies Amendment Act, 2019, within a period of 60 days
of such creation, on payment of such additional fees.
 Proviso to section 77(1) states that the Registrar may, on an
application by the company, allow such registration to be made:
 (a) in case of charges created before the commencement of the
Companies Amendment Act, 2019 within a period of 300 days of
such creation on payment of such additional fees.
 (b) in case of charges created on or after the commencement of
the Companies Amendment Act, 2019, within a period of 60 days
of such creation, on payment of such additional fees.
9/12/2019

 Provided further that if the registration is not made within the
period specified:
 (a) in clause (a) to the first proviso, the registration of the charge
shall be made within six months from the date of commencement
Companies Amendment Act, 2019, on payment of such additional
fees; (different fees may be prescribed for different classes of
companies)
 (b) in clause (b) to the first proviso, the Registrar may, on an
application, allow such registration to be made within a further
period of 60 days after payment of such ad valorem fees
 (Ad Valorem – It’s a Method for charging a duty, fee, or tax
according to the value of goods and services, instead of by a fixed
rate, or by weight or quantity.)Presented by: CS Uttam Kumar Mohallik
 Provided further that if the registration is not made within the
period specified:
 (a) in clause (a) to the first proviso, the registration of the charge
shall be made within six months from the date of commencement
Companies Amendment Act, 2019, on payment of such additional
fees; (different fees may be prescribed for different classes of
companies)
 (b) in clause (b) to the first proviso, the Registrar may, on an
application, allow such registration to be made within a further
period of 60 days after payment of such ad valorem fees
 (Ad Valorem – It’s a Method for charging a duty, fee, or tax
according to the value of goods and services, instead of by a fixed
rate, or by weight or quantity.) 9/12/2019

Section 86: Punishment for contravention
of any provisions of this Chapter VI.
 (1) company shall be punishable with fine:
 1 lakh to 10 lakh rupees and
 every officer of the company who is in default shall be
punishable with:
 Imprisonment for may extend to 6 months or
 Fine 25 thousand to 1 lakh rupees, or with both.
 (2) If any person wilfully furnishes any false or incorrect
information or knowingly suppresses any material information,
required to be registered in accordance with the provisions of
section 77, he shall be liable for action under section 447.
 (1) company shall be punishable with fine:
 1 lakh to 10 lakh rupees and
 every officer of the company who is in default shall be
punishable with:
 Imprisonment for may extend to 6 months or
 Fine 25 thousand to 1 lakh rupees, or with both.
 (2) If any person wilfully furnishes any false or incorrect
information or knowingly suppresses any material information,
required to be registered in accordance with the provisions of
section 77, he shall be liable for action under section 447.
9/12/2019

Section 87: Rectification by Central
Government in Register of Charges
 The Central Government on being satisfied that —
 (a) the omission to give intimation to the Registrar of the payment or
satisfaction of a charge, within the time required under this Chapter; or
 (b) the omission or misstatement of any particulars, in any filing previously
made to the Registrar with respect to any such charge or modification thereof or
with respect to any memorandum of satisfaction or other entry made in
pursuance of section 82 or section 83,
 was accidental or due to inadvertence or some other sufficient cause or it is not
of a nature to prejudice the position of creditors or shareholders of the
company,
 it may, on the application of the company or any person interested and on such
terms and conditions as it deems just and expedient, direct that the time for the
giving of intimation of payment or satisfaction shall be extended or, as the case
may require, that the omission or misstatement shall be rectified.
 The Central Government on being satisfied that —
 (a) the omission to give intimation to the Registrar of the payment or
satisfaction of a charge, within the time required under this Chapter; or
 (b) the omission or misstatement of any particulars, in any filing previously
made to the Registrar with respect to any such charge or modification thereof or
with respect to any memorandum of satisfaction or other entry made in
pursuance of section 82 or section 83,
 was accidental or due to inadvertence or some other sufficient cause or it is not
of a nature to prejudice the position of creditors or shareholders of the
company,
 it may, on the application of the company or any person interested and on such
terms and conditions as it deems just and expedient, direct that the time for the
giving of intimation of payment or satisfaction shall be extended or, as the case
may require, that the omission or misstatement shall be rectified.
9/12/2019

Section 90: Register of significant
beneficial owners in a company
(1) Every individual, who acting alone or together, or through one or more persons
or trust, including a trust and persons resident outside India, holds beneficial
interests, of not less than 25%. or such other percentage as may be
prescribed, in shares of a company or the right to exercise, or the actual
exercising of significant influence or control over the company (herein referred
to as "significant beneficial owner"), shall make a declaration to the company,
specifying the nature of his interest and other particulars, in such manner and
within such period of acquisition of the beneficial interest or rights and any
change thereof, as may be prescribed:
 Provided that the Central Government may prescribe a class or classes of
persons who shall not be required to make declaration under this sub-section
 "Significant beneficial owner" means an individual u/s 90(1) (holding ultimate
beneficial interest of not less than 10% ) read with section89(10), but whose
name is not entered in the register of members of a company as the holder of
such shares
(1) Every individual, who acting alone or together, or through one or more persons
or trust, including a trust and persons resident outside India, holds beneficial
interests, of not less than 25%. or such other percentage as may be
prescribed, in shares of a company or the right to exercise, or the actual
exercising of significant influence or control over the company (herein referred
to as "significant beneficial owner"), shall make a declaration to the company,
specifying the nature of his interest and other particulars, in such manner and
within such period of acquisition of the beneficial interest or rights and any
change thereof, as may be prescribed:
 Provided that the Central Government may prescribe a class or classes of
persons who shall not be required to make declaration under this sub-section
 "Significant beneficial owner" means an individual u/s 90(1) (holding ultimate
beneficial interest of not less than 10% ) read with section89(10), but whose
name is not entered in the register of members of a company as the holder of
such shares
9/12/2019

Register of significant beneficial
owners
(2) Every company shall maintain a register of significant beneficial
owners in Form No. BEN-3. of the interest declared by individuals
u/s-s(1) and changes therein which shall include the name of
individual, his date of birth, address, details of ownership in the
company and such other details.
(3) The register shall be open to inspection during business hours of
not less than 2 hours by any member of the company on payment
of fees Rs, 50.
(4) Every company shall file a return in Form No. BEN-2 of significant
beneficial owners of the company and changes therein with the
Registrar containing names, addresses and other details within 30
days.
(2) Every company shall maintain a register of significant beneficial
owners in Form No. BEN-3. of the interest declared by individuals
u/s-s(1) and changes therein which shall include the name of
individual, his date of birth, address, details of ownership in the
company and such other details.
(3) The register shall be open to inspection during business hours of
not less than 2 hours by any member of the company on payment
of fees Rs, 50.
(4) Every company shall file a return in Form No. BEN-2 of significant
beneficial owners of the company and changes therein with the
Registrar containing names, addresses and other details within 30
days.
9/12/2019

Section 90(4A): Identify an individual who is a significant
beneficial owner and require him to comply
 (4A) Every company shall take necessary steps to identify an
individual who is a significant beneficial owner in relation to the
company and require him to comply with the provisions of this
section.
Presented by: CS Uttam Kumar Mohallik 9/12/2019

company shall give notice to
significant beneficial owner
(5) A company shall give notice to any person (whether or not a member of
the company) whom the company knows or has reasonable cause to
believe—
 (a) to be a significant beneficial owner of the company;
 (b) to be having knowledge of the identity of a significant beneficial
owner or another person likely to have such knowledge; or
 (c) to have been a significant beneficial owner of the company at any
time during the 3 years immediately preceding the date on which the
notice is issued, and who is not registered as a significant beneficial
owner with the company as required under this section.
(6) The information required by the notice shall be given by the concerned
person within not exceeding 30 days of the date of the notice.
(5) A company shall give notice to any person (whether or not a member of
the company) whom the company knows or has reasonable cause to
believe—
 (a) to be a significant beneficial owner of the company;
 (b) to be having knowledge of the identity of a significant beneficial
owner or another person likely to have such knowledge; or
 (c) to have been a significant beneficial owner of the company at any
time during the 3 years immediately preceding the date on which the
notice is issued, and who is not registered as a significant beneficial
owner with the company as required under this section.
(6) The information required by the notice shall be given by the concerned
person within not exceeding 30 days of the date of the notice.
9/12/2019

Application to the Tribunal
(7) The company shall,—
 (a) where that person fails to give the company the information
required by the notice within the time; or
 (b) where the information given is not satisfactory,
 apply to the Tribunal within of 15 days of the expiry of the period
specified in the notice, for an order directing that the shares in question
be subject to restrictions with regard to:
 (a) restrictions on the transfer of interest attached to the shares in question;
 (b) suspension of the right to receive dividend in relation to the shares in
question;
 (c) suspension of voting rights in relation to the shares in question;
 (d) any other restriction on all or any of the rights attached with the shares in
question
(8) On any application , the Tribunal may, after giving an opportunity of
being heard to the parties concerned, make such order restricting the
rights attached with the shares within of 60 days of receipt of
application. Presented by: CS Uttam Kumar Mohallik
(7) The company shall,—
 (a) where that person fails to give the company the information
required by the notice within the time; or
 (b) where the information given is not satisfactory,
 apply to the Tribunal within of 15 days of the expiry of the period
specified in the notice, for an order directing that the shares in question
be subject to restrictions with regard to:
 (a) restrictions on the transfer of interest attached to the shares in question;
 (b) suspension of the right to receive dividend in relation to the shares in
question;
 (c) suspension of voting rights in relation to the shares in question;
 (d) any other restriction on all or any of the rights attached with the shares in
question
(8) On any application , the Tribunal may, after giving an opportunity of
being heard to the parties concerned, make such order restricting the
rights attached with the shares within of 60 days of receipt of
application. 9/12/2019

Application to the Tribunal for
relaxation or lifting of the restrictions
 (9) The company or the person aggrieved by the order of the Tribunal may
make an application to the Tribunal for relaxation or lifting of the restrictions
placed under sub-section (8), within a period of one year from the date of such
order:
 Provided that if no such application has been filed within a period of one year
from the date of the order, such shares shall be transferred, without any
restrictions, to the authority constituted under sub-section (5) of section 125.
 (9A) The Central Government may make rules for the purposes of this section.
 (9) The company or the person aggrieved by the order of the Tribunal may
make an application to the Tribunal for relaxation or lifting of the restrictions
placed under sub-section (8), within a period of one year from the date of such
order:
 Provided that if no such application has been filed within a period of one year
from the date of the order, such shares shall be transferred, without any
restrictions, to the authority constituted under sub-section (5) of section 125.
 (9A) The Central Government may make rules for the purposes of this section.
9/12/2019

Penalty for contravention
 (10) If any person fails to make a declaration as required u/s- (1), he shall be
punishable with imprisonment which may extend to 1 year or with fine which
shall not be less than 1 lakh rupees but which may extend to 10 lakh rupees or
with both and
 where the failure is a continuing one, with a further fine which may extend to
1000 rupees for every day after the first during which the failure continues.
 (11) If a company, required to maintain register u/s-s (2) and file the
information under sub-section(4) or required to take necessary steps under sub-
section (4A), fails to do so or denies inspection as provided therein, the
company and every officer who is in default shall be punishable with fine which
shall not be less than 10 lakh rupees but which may extend to 50 lakh rupees
and where the failure is a continuing one, with a further fine which may extend
to 1000 rupees for every day after the first during which the failure continues.
 (12) If any person wilfully furnishes any false or incorrect information or
suppresses any material information of which he is aware in the declaration
made under this section, he shall be liable to action under section 447Presented by: CS Uttam Kumar Mohallik
 (10) If any person fails to make a declaration as required u/s- (1), he shall be
punishable with imprisonment which may extend to 1 year or with fine which
shall not be less than 1 lakh rupees but which may extend to 10 lakh rupees or
with both and
 where the failure is a continuing one, with a further fine which may extend to
1000 rupees for every day after the first during which the failure continues.
 (11) If a company, required to maintain register u/s-s (2) and file the
information under sub-section(4) or required to take necessary steps under sub-
section (4A), fails to do so or denies inspection as provided therein, the
company and every officer who is in default shall be punishable with fine which
shall not be less than 10 lakh rupees but which may extend to 50 lakh rupees
and where the failure is a continuing one, with a further fine which may extend
to 1000 rupees for every day after the first during which the failure continues.
 (12) If any person wilfully furnishes any false or incorrect information or
suppresses any material information of which he is aware in the declaration
made under this section, he shall be liable to action under section 4479/12/2019

Section 92(5): Punishment for failure
to file Annual Return
 If any company fails to file its annual return under sub-
section (4), before the expiry of the period, such company and its
every officer who is in default shall be liable to a penalty of 50
thousand rupees and
 in case of continuing failure, with further penalty of 100 rupees for
each day during which such failure continues, subject to a
maximum of 5 lakh rupees.
 If any company fails to file its annual return under sub-
section (4), before the expiry of the period, such company and its
thousand rupees and
each day during which such failure continues, subject to a
maximum of 5 lakh rupees.
9/12/2019

Section 120(5): Penalty for non
compliance of this Section.
 “(5) Without prejudice to the provisions of sub-section (4),
 if any default is made in complying with the provisions of this
section,
 every promoter, director, manager or other KMP who is in default
shall be liable to a penalty of
 50 thousand rupees or 5 times the amount of benefit accruing to the
promoter, director, manager or other key managerial personnel or any of his
relatives,
 whichever is higher.”
 “(5) Without prejudice to the provisions of sub-section (4),
 if any default is made in complying with the provisions of this
section,
 every promoter, director, manager or other KMP who is in default
shall be liable to a penalty of
 50 thousand rupees or 5 times the amount of benefit accruing to the
promoter, director, manager or other key managerial personnel or any of his
relatives,
 whichever is higher.”
9/12/2019

Section 105: Proxies
 (3) If default is made in complying with sub-section (2), every
officer who is in default shall be liable to penalty of 5
thousand rupees.
Presented by: CS Uttam Kumar Mohallik 9/12/2019

Section 117: Resolutions and
Agreements to be filed.
 “(2) If any company fails to file the resolution or the agreement under
sub-section (1) before the expiry of the period specified therein,
 such company shall be liable to a penalty of 1 lakh rupees and
 in case of continuing failure, with a further penalty of 500 rupees for
each day after the first during which such failure continues,
 subject to a maximum of 25 lakh rupees and
 every officer of the company who is in default including liquidator of the
company, if any, shall be liable to a penalty of 50 thousand rupees and
each day after the first during which such failure continues, subject to a
maximum of 5 lakh rupees.”.
 “(2) If any company fails to file the resolution or the agreement under
sub-section (1) before the expiry of the period specified therein,
 such company shall be liable to a penalty of 1 lakh rupees and
each day after the first during which such failure continues,
 subject to a maximum of 25 lakh rupees and
 every officer of the company who is in default including liquidator of the
company, if any, shall be liable to a penalty of 50 thousand rupees and
each day after the first during which such failure continues, subject to a
maximum of 5 lakh rupees.”.
9/12/2019

Section 121: Report on Annual
General Meeting
3. Penalty in case of default
 If the company fails to file the report under sub section (2) before
the expiry of 30 days, such company shall be liable to a penalty of
1 lakh rupees and
each day, after the first during which such failures continues,
subject to a maximum of 5 lakh rupees and
 every officer who is in default shall be liable to a penalty which
shall not be less than 25 thousand rupees and
 in case of continuing failure, with further penalty of 5 hundred
rupees for each day after the first during which such failures
continues, subject to a maximum of 1 lakh rupees.Presented by: CS Uttam Kumar Mohallik
3. Penalty in case of default
 If the company fails to file the report under sub section (2) before
the expiry of 30 days, such company shall be liable to a penalty of
1 lakh rupees and
each day, after the first during which such failures continues,
subject to a maximum of 5 lakh rupees and
 every officer who is in default shall be liable to a penalty which
shall not be less than 25 thousand rupees and
 in case of continuing failure, with further penalty of 5 hundred
rupees for each day after the first during which such failures
continues, subject to a maximum of 1 lakh rupees.9/12/2019

Section 132 :Constitution of National
Financial Reporting Authority
 (1) The Central Government may, constitute a National Financial Reporting
Authority to provide for matters relating to accounting and auditing standards
under this Act.
Functions of NFRA
 (1A) The National Financial Reporting Authority shall perform its functions
through such divisions as may be prescribed.
 (2) The NFRA shall—
 (a) make recommendations to the Central Government on the formulation and
laying down of accounting and auditing policies and standards for adoption by
companies or auditors,
 (b) monitor and enforce the compliance with accounting standards and auditing
standards;
 (c) oversee the quality of service of the professions associated with ensuring
compliance with such standards, and suggest measures required for
improvement in quality of service; and
 (d) perform such other functions relating to clauses (a), (b) and (c) as may be
prescribed.
 (1) The Central Government may, constitute a National Financial Reporting
Authority to provide for matters relating to accounting and auditing standards
under this Act.
Functions of NFRA
 (1A) The National Financial Reporting Authority shall perform its functions
through such divisions as may be prescribed.
 (2) The NFRA shall—
 (a) make recommendations to the Central Government on the formulation and
laying down of accounting and auditing policies and standards for adoption by
companies or auditors,
 (b) monitor and enforce the compliance with accounting standards and auditing
standards;
 (c) oversee the quality of service of the professions associated with ensuring
compliance with such standards, and suggest measures required for
improvement in quality of service; and
 (d) perform such other functions relating to clauses (a), (b) and (c) as may be
prescribed.
9/12/2019

Constitution of NFRA
 (3) The NFRA shall consist of a chairperson, who shall be a person of eminence and
having expertise in accountancy, auditing, finance or law to be appointed by the Central
Government and
 such other members not exceeding 15 consisting of part-time and full-time members :
 (3A) Each division of the National Financial Reporting Authority shall be presided over
by the Chairperson or a full-time Member authorised by the Chairperson.
 (3B) There shall be an executive body of the National Financial Reporting Authority
consisting of the Chairperson and full-time Members of such Authority for efficient
discharge of its functions under sub-section (2) [other than clause (a)] and sub-section
(4).
 (3) The NFRA shall consist of a chairperson, who shall be a person of eminence and
having expertise in accountancy, auditing, finance or law to be appointed by the Central
Government and
 such other members not exceeding 15 consisting of part-time and full-time members :
 (3A) Each division of the National Financial Reporting Authority shall be presided over
by the Chairperson or a full-time Member authorised by the Chairperson.
 (3B) There shall be an executive body of the National Financial Reporting Authority
consisting of the Chairperson and full-time Members of such Authority for efficient
discharge of its functions under sub-section (2) [other than clause (a)] and sub-section
(4).
9/12/2019

 Provided that the terms and conditions and the manner of appointment of
the chairperson and members shall be such as may be prescribed:
 Provided further that the chairperson and members shall make a declaration
to the Central Government in the prescribed form regarding no conflict of
interest or lack of independence in respect of his or their appointment:
 Provided also that the chairperson and members, who are in full-time
employment with National Financial Reporting Authority shall not be
associated with any audit firm (including related consultancy firms) during
the course of their appointment and 2 years after ceasing to hold such
appointment.
 Provided that the terms and conditions and the manner of appointment of
the chairperson and members shall be such as may be prescribed:
 Provided further that the chairperson and members shall make a declaration
to the Central Government in the prescribed form regarding no conflict of
interest or lack of independence in respect of his or their appointment:
 Provided also that the chairperson and members, who are in full-time
employment with National Financial Reporting Authority shall not be
associated with any audit firm (including related consultancy firms) during
the course of their appointment and 2 years after ceasing to hold such
appointment.
9/12/2019

Power to investigate by NFRA
 (4) The National Financial Reporting Authority shall—
 (a) have the power to investigate,
 either suo moto or
 on a reference made to it by the Central Government,
 for such class of bodies corporate or persons into the matters of
professional or other misconduct committed by any member or firm of
chartered accountants, registered under the Chartered Accountants Act,
1949:
 Provided that no other institute or body shall initiate or continue
any proceedings in such matters of misconduct where the NFRA
has initiated an investigation under this section;
 (4) The National Financial Reporting Authority shall—
 (a) have the power to investigate,
 either suo moto or
 on a reference made to it by the Central Government,
 for such class of bodies corporate or persons into the matters of
professional or other misconduct committed by any member or firm of
chartered accountants, registered under the Chartered Accountants Act,
1949:
 Provided that no other institute or body shall initiate or continue
any proceedings in such matters of misconduct where the NFRA
has initiated an investigation under this section;
9/12/2019

Powers of NFRA as are vested in a
civil court under CPC 1908
 (b) have the same powers as are vested in a civil court under the Code of Civil
Procedure, 1908, while trying a suit, in respect of the following matters,
namely:—
 (i) discovery and production of books of account and other documents, at
such place and at such time as may be specified by the NFRA;
 (ii) summoning and enforcing the attendance of persons and examining
them on oath;
 (iii) inspection of any books, registers and other documents of any person
referred to in clause (b) at any place;
 (iv) issuing commissions for examination of witnesses or documents;
 (b) have the same powers as are vested in a civil court under the Code of Civil
Procedure, 1908, while trying a suit, in respect of the following matters,
namely:—
 (i) discovery and production of books of account and other documents, at
such place and at such time as may be specified by the NFRA;
 (ii) summoning and enforcing the attendance of persons and examining
them on oath;
 (iii) inspection of any books, registers and other documents of any person
referred to in clause (b) at any place;
 (iv) issuing commissions for examination of witnesses or documents;
9/12/2019

Power of NFRA to make order
 (c) where professional or other misconduct is proved, have the power to make
order for—
 (A) imposing penalty of—
 (I) not less than 1 lakh rupees, but which may extend to 5 times of the fees received, in case
of individuals; and
 (II) not less than 5 lakh rupees, but which may extend to 10 times of the fees received, in case
of firms;
 (B) debarring the member or the firm from—
 I. being appointed as an auditor or internal auditor or undertaking any audit in
respect of financial statements or internal audit of the functions and activities of
any company or body corporate; or
 II. performing any valuation as provided under section 247,
 for a minimum period of six months or such higher period not exceeding
ten years as may be determined by the National Financial Reporting Authority.
 Explanation.—For the purposes of his sub-section, the expression "professional
or other misconduct" shall have the same meaning assigned to it under section
22 of the Chartered Accountants Act, 1949.
 (c) where professional or other misconduct is proved, have the power to make
order for—
 (A) imposing penalty of—
 (I) not less than 1 lakh rupees, but which may extend to 5 times of the fees received, in case
of individuals; and
 (II) not less than 5 lakh rupees, but which may extend to 10 times of the fees received, in case
of firms;
 (B) debarring the member or the firm from—
 I. being appointed as an auditor or internal auditor or undertaking any audit in
respect of financial statements or internal audit of the functions and activities of
any company or body corporate; or
 II. performing any valuation as provided under section 247,
 for a minimum period of six months or such higher period not exceeding
ten years as may be determined by the National Financial Reporting Authority.
 Explanation.—For the purposes of his sub-section, the expression "professional
or other misconduct" shall have the same meaning assigned to it under section
22 of the Chartered Accountants Act, 1949.
9/12/2019

Section 135: Corporate Social
Responsibility
 (5) Board shall ensure that the company spends, in every financial year,
at least 2%. of the average net profits of the company made during the
3 immediately preceding financial years or
 where the company has not completed the period of three financial years
since its incorporation, during such immediately preceding financial years,
in pursuance of its Corporate Social Responsibility Policy:
 Provided that the Company shall give preference to local area and where
the co. is operating.
 Provided further that If co. fails to spend such amount, BOD shall give
reasons for not spending the amount in their board report and, unless
the unspent amount relates to any ongoing project referred to in sub-
section (6), transfer such unspent amount to a Fund specified in
Schedule VII, within a period of six months of the expiry of the financial
year
 Net profit calculated as per Section 198.
 (5) Board shall ensure that the company spends, in every financial year,
at least 2%. of the average net profits of the company made during the
3 immediately preceding financial years or
 where the company has not completed the period of three financial years
since its incorporation, during such immediately preceding financial years,
in pursuance of its Corporate Social Responsibility Policy:
 Provided that the Company shall give preference to local area and where
the co. is operating.
 Provided further that If co. fails to spend such amount, BOD shall give
reasons for not spending the amount in their board report and, unless
the unspent amount relates to any ongoing project referred to in sub-
section (6), transfer such unspent amount to a Fund specified in
Schedule VII, within a period of six months of the expiry of the financial
year
 Net profit calculated as per Section 198.
9/12/2019

Section 135(6): Remaining unspent amount transferred to
“Unspent Corporate Social Responsibility Account”
 ( 6) Any amount remaining unspent under sub-section (5), pursuant to any
ongoing project, fulfilling such conditions as may be prescribed, undertaken by a
company in persuance of its Corporate Social Responsibility Policy,
 shall be transferred by the company within a period of thirty days from the
end of the financial year to a special account to be opened by the company in
that behalf for that financial year in any scheduled bank to be called the
Unspent Corporate Social Responsibility Account, and
 such amount shall be spent by the company in pursuance of its obligation
towards the Corporate Social Responsibility Policy within a period of three
financial years from the date of such transfer,
 failing which, the company shall transfer the same to a Fund specified in
Schedule VII, within a period of thirty days from the date of completion of the
third financial year.
 ( 6) Any amount remaining unspent under sub-section (5), pursuant to any
ongoing project, fulfilling such conditions as may be prescribed, undertaken by a
company in persuance of its Corporate Social Responsibility Policy,
 shall be transferred by the company within a period of thirty days from the
end of the financial year to a special account to be opened by the company in
that behalf for that financial year in any scheduled bank to be called the
Unspent Corporate Social Responsibility Account, and
 such amount shall be spent by the company in pursuance of its obligation
towards the Corporate Social Responsibility Policy within a period of three
financial years from the date of such transfer,
 failing which, the company shall transfer the same to a Fund specified in
Schedule VII, within a period of thirty days from the date of completion of the
third financial year.
9/12/2019

Section 135(7): Fine in case of contravention
of provisions of sub-section (5) or (6)
 (7) If a company contravenes the provisions of sub-section (5) or sub-section (6),
the company shall be punishable with fine which shall not be less than 50
thousand rupees but which may extend to 25 lakh rupees and every officer of
such company who is in default shall be punishable with imprisonment for a
term which may extend to 3 years or with fine which shall not be less than 50
thousand rupees but which may extend to 5 lakh rupees, or with both.
 (8) The Central Government may give such general or special directions to a
company or class of companies as it considers necessary to ensure compliance of
provisions of this section and such company or class of companies shall comply
with such directions.
 (7) If a company contravenes the provisions of sub-section (5) or sub-section (6),
the company shall be punishable with fine which shall not be less than 50
thousand rupees but which may extend to 25 lakh rupees and every officer of
such company who is in default shall be punishable with imprisonment for a
term which may extend to 3 years or with fine which shall not be less than 50
thousand rupees but which may extend to 5 lakh rupees, or with both.
 (8) The Central Government may give such general or special directions to a
company or class of companies as it considers necessary to ensure compliance of
provisions of this section and such company or class of companies shall comply
with such directions.
9/12/2019

Section 137: Copy of Financial
Statement to be filed with Registrar
(3) DEFAULT:-PENALTY:-
Company:
 shall be liable to a penalty Rs. 1000 for every day during default
continues.
 Subject to maximum Rs. 10 lakh. and
The Person Responsible:-
 Shall be liable to a penalty of 1 lakh rupees and in case of
continuing failure, with further penalty of 100 rupees for each day
 subject to a maximum of 5 lakh rupees.
(3) DEFAULT:-PENALTY:-
Company:
 shall be liable to a penalty Rs. 1000 for every day during default
continues.
 Subject to maximum Rs. 10 lakh. and
The Person Responsible:-
 Shall be liable to a penalty of 1 lakh rupees and in case of
continuing failure, with further penalty of 100 rupees for each day
 subject to a maximum of 5 lakh rupees.
9/12/2019

SECTION 140(2)(3) RULE 8
RESIGNATION OF AUDITOR:-
 Auditor who has resigned:-
 Shall File Form ADT-3 within 30 days from the date of resignation with relevant
reason.
 Other than government company:-In ROC & in company.
 Government company or govt. controlled company:-in ROC, in company and
in CAG.
 Contravention of Sub section 2:-
 Auditor shall be liable to a penalty of 50 thousand rupees or an amount equal to
the remuneration of the auditor, w.e.i. less, and
 in case of continuing failure, with further penalty of 500 rupees for each day
after the first during which such failure continues, subject to a maximum of 5
lakh rupees.
 Auditor who has resigned:-
 Shall File Form ADT-3 within 30 days from the date of resignation with relevant
reason.
 Other than government company:-In ROC & in company.
 Government company or govt. controlled company:-in ROC, in company and
in CAG.
 Contravention of Sub section 2:-
 Auditor shall be liable to a penalty of 50 thousand rupees or an amount equal to
the remuneration of the auditor, w.e.i. less, and
 in case of continuing failure, with further penalty of 500 rupees for each day
after the first during which such failure continues, subject to a maximum of 5
lakh rupees.
9/12/2019

Section -157: Company to inform to
registrar
 (1) Every company shall within 15 days of the receipt of DIN from
director, furnish DIN to ROC.
 (2) if any co. fails to furnish DIN to ROC, the company and its
thousand rupees and in case of continuing failure, with further
penalty of 100 rupees for each day after the first during which
such failure continues, subject to a maximum of 1 lakh rupees.
 (1) Every company shall within 15 days of the receipt of DIN from
director, furnish DIN to ROC.
 (2) if any co. fails to furnish DIN to ROC, the company and its
thousand rupees and in case of continuing failure, with further
penalty of 100 rupees for each day after the first during which
such failure continues, subject to a maximum of 1 lakh rupees.
9/12/2019

Section-159: Punishment for
contravention
 If any individual or director makes any default in complying section
152, 155 and156, shall be liable to a penalty which may extend to
50 thousand rupees and
 where the default is a continuing one, with a further penalty
which may extend to 500 rupees for each day after the first during
which such default continues.
 If any individual or director makes any default in complying section
152, 155 and156, shall be liable to a penalty which may extend to
50 thousand rupees and
 where the default is a continuing one, with a further penalty
which may extend to 500 rupees for each day after the first during
which such default continues.
9/12/2019

(1) A person shall not be eligible for appointment as director of a company, if he –
a) Is of unsound mind.
b) Is undischarged insolvent.
c) has applied to be adjudicated as insolvent.
d) Has been Convicted by a court of any offence, whether involving moral turpitude or
otherwise and sentenced to imprisonment for not less than 6 months and a period of 5
years has not elapsed from the date of expire of the sentence.
Provided that if imprisonment for 7 years or more, he shall not be eligible to be
appointed as a director in any co.
e) is disqualified by an order of court or Tribunal.
f) has not paid share call money in respect of shares held by him whether alone or jointly
and six months have elapsed from the date of call.
g) Has been convicted of the offence dealing with related party transaction u/s 188 at any
time during the last preceding 5 years. or
h) has not got the DIN.(section 152(3))
i) has not complied section 165(1).
Section-164 - Disqualifications of
appointment of director
(1) A person shall not be eligible for appointment as director of a company, if he –
a) Is of unsound mind.
b) Is undischarged insolvent.
c) has applied to be adjudicated as insolvent.
d) Has been Convicted by a court of any offence, whether involving moral turpitude or
otherwise and sentenced to imprisonment for not less than 6 months and a period of 5
years has not elapsed from the date of expire of the sentence.
Provided that if imprisonment for 7 years or more, he shall not be eligible to be
appointed as a director in any co.
e) is disqualified by an order of court or Tribunal.
f) has not paid share call money in respect of shares held by him whether alone or jointly
and six months have elapsed from the date of call.
g) Has been convicted of the offence dealing with related party transaction u/s 188 at any
time during the last preceding 5 years. or
h) has not got the DIN.(section 152(3))
i) has not complied section 165(1).
9/12/2019

Section-165: Number of directorship
(1) Maximum directorship including any alternate directorship 20.
 Maximum directorship in public co is 10,
 Directorship in private co. that are either holding or subsidiary of a public co
shall be included in public co.
 Directorship in a dormant company shall not be included.
 This provisions are not applicable to Section 8 co. (ie directorship in section 8
co. shall not be counted in 20 limit)
 co. may by special resolution restrict directorship of its director
 a director holding directorship in more than 20 or 10 co. has to resign from
directorship of other co. within one year 1 year from commencement of this act.
(6) Contravention of sub-section (1), he shall be liable to a penalty of 5 thousand
rupees for each day during which such contravention continues.
(1) Maximum directorship including any alternate directorship 20.
 Maximum directorship in public co is 10,
 Directorship in private co. that are either holding or subsidiary of a public co
shall be included in public co.
 Directorship in a dormant company shall not be included.
 This provisions are not applicable to Section 8 co. (ie directorship in section 8
co. shall not be counted in 20 limit)
 co. may by special resolution restrict directorship of its director
 a director holding directorship in more than 20 or 10 co. has to resign from
directorship of other co. within one year 1 year from commencement of this act.
(6) Contravention of sub-section (1), he shall be liable to a penalty of 5 thousand
rupees for each day during which such contravention continues.
9/12/2019

Regulation 17A of LODR Regulation 2018:
Maximum number of directorships.
 The directors of listed entities shall comply with the following conditions with
respect to the maximum number of directorships, including any alternate
directorships that can be held by them at any point of time-
 (1) A person shall not be a director in more than 8 listed entities with effect
from April 1, 2019 and in not more than 7 listed entities with effect from April 1,
2020:
 Provided that a person shall not serve as an independent director in more than
7 listed entities.
 (2) Notwithstanding the above, any person who is serving as a whole time
director / managing director in any listed entity shall serve as an independent
director in not more than 3 listed entities.
 For the purpose of this sub-
 regulation, the count for the number of listed entities on which a person is a
director / independent director shall be only those whose equity shares are
 listed on a stock exchange.
 The directors of listed entities shall comply with the following conditions with
respect to the maximum number of directorships, including any alternate
directorships that can be held by them at any point of time-
 (1) A person shall not be a director in more than 8 listed entities with effect
from April 1, 2019 and in not more than 7 listed entities with effect from April 1,
2020:
 Provided that a person shall not serve as an independent director in more than
7 listed entities.
 (2) Notwithstanding the above, any person who is serving as a whole time
director / managing director in any listed entity shall serve as an independent
director in not more than 3 listed entities.
 For the purpose of this sub-
 regulation, the count for the number of listed entities on which a person is a
director / independent director shall be only those whose equity shares are
 listed on a stock exchange.
9/12/2019

Section 191: Payment to director for loss of office in
connection with transfer of undertaking, share, property
 (1)No director shall receive any payment for loss of office in connection
with :-
 (a) transfer of the whole or any part of any under taking or property or
 (b) the transfer to any person of all or any of the shares in a company,
being a transfer resulting from-
 An offer made to shareholders
 An offer by a body corporate with a view to make a subsidiary co.
 An offer by an individual with a view to obtain not less than 1/3 of the total
voting power at G.M. of co. or
 Any other conditional offer.
 unless approved by G.M. by way of O.R. and disclose to members all
particulars relating to such director and payment etc.
 (1)No director shall receive any payment for loss of office in connection
with :-
 (a) transfer of the whole or any part of any under taking or property or
 (b) the transfer to any person of all or any of the shares in a company,
being a transfer resulting from-
 An offer made to shareholders
 An offer by a body corporate with a view to make a subsidiary co.
 An offer by an individual with a view to obtain not less than 1/3 of the total
voting power at G.M. of co. or
 Any other conditional offer.
 unless approved by G.M. by way of O.R. and disclose to members all
particulars relating to such director and payment etc.
9/12/2019

Section 191(2) read with Rule17(2): Payment to MD,
WTD Manager for loss of office:
 Any payment made by Co. to MD , WTD or manager in
connection with loss of office or retirement subject to the limit
prescribed in section 202 as under:
 any payment shall not exceed average remuneration (of 3 years
or lessor period as the case may be) on:
 His Unexpired period or
 3 years
 w.e.i shorter
 Any payment made by Co. to MD , WTD or manager in
connection with loss of office or retirement subject to the limit
prescribed in section 202 as under:
 any payment shall not exceed average remuneration (of 3 years
or lessor period as the case may be) on:
 His Unexpired period or
 3 years
 w.e.i shorter
9/12/2019

Rule17(3): No payment to MD, WTD,
Manager(except notice pay & statutory pay) if:
 The company is in Default in:-
 Repayment of public deposit or interest
 Redemption of debenture and interest
 Repayment of liabilities of any banker of f.I or other
 Govt dues , Outstanding statutory dues of employee
 Redemption of preference share and their dividend.
 The company is in Default in:-
 Repayment of public deposit or interest
 Redemption of debenture and interest
 Repayment of liabilities of any banker of f.I or other
 Govt dues , Outstanding statutory dues of employee
 Redemption of preference share and their dividend.
9/12/2019

CONTRAVENTION AND PENALTY
 3. If the payment under sub-section (1) or (2) is not approved,
proposal shall not be deemed to have been approved.
 4. director receives payment in contravention of sub-section (1)
or before it is approved, he shall keep it as trust for the company.
 5. If a director makes any default in complying with the
provisions of this section, shall be liable to a penalty of 1 lakh
rupees.
 6. disclosure to be made with respect to any payment received
under this section or such other like payments made to a director.
 3. If the payment under sub-section (1) or (2) is not approved,
proposal shall not be deemed to have been approved.
 4. director receives payment in contravention of sub-section (1)
or before it is approved, he shall keep it as trust for the company.
 5. If a director makes any default in complying with the
provisions of this section, shall be liable to a penalty of 1 lakh
rupees.
 6. disclosure to be made with respect to any payment received
under this section or such other like payments made to a director.
9/12/2019

197(7): An independent director not
entitled to stock options - omitted
 (7) Notwithstanding anything contained in any other provision of this Act
but subject to the provisions of this section, an independent director
shall not be entitled to any stock option and may receive remuneration
by way of fees provided under sub-section (5), reimbursement of
expenses for participation in the Board and other meetings and profit
related commission as may be approved by the members.
 Thus an independent director is entitled to stock
options after 2, 11, 2018.
 Status of listed companies:
 As per regulation 17(6)(d) of SEBI (LODR) Regulation 2015, an independent
director is not entitled to stock options.
 Hence the relaxation made under companies act 2013 will not apply to
independent directors of listed company.
 (7) Notwithstanding anything contained in any other provision of this Act
but subject to the provisions of this section, an independent director
shall not be entitled to any stock option and may receive remuneration
by way of fees provided under sub-section (5), reimbursement of
expenses for participation in the Board and other meetings and profit
related commission as may be approved by the members.
 Thus an independent director is entitled to stock
options after 2, 11, 2018.
 Status of listed companies:
 As per regulation 17(6)(d) of SEBI (LODR) Regulation 2015, an independent
director is not entitled to stock options.
 Hence the relaxation made under companies act 2013 will not apply to
independent directors of listed company.
9/12/2019

Section-197: Over all managerial
remuneration
 Sec 197(15):penalty for contravention
 If any person makes any default in complying with this section, he
shall be liable to a penalty of 1 lakh rupees and
 where any default has been made by a company, the company
shall be liable to a penalty of 5 lakh rupees.
 Sec 197(15):penalty for contravention
 If any person makes any default in complying with this section, he
shall be liable to a penalty of 1 lakh rupees and
 where any default has been made by a company, the company
shall be liable to a penalty of 5 lakh rupees.
9/12/2019

Section 203: Appointment of K.M.P
 (5) Default in complying with this section:
 company shall be liable to a penalty of 5 lakh rupees
 Every directors and KMP who is in default shall be liable to a
penalty of 50 thousand rupees and
 where the default is a continuing one, with a further penalty of
1000 rupees for each day during default continues but not
exceeding 5 lakh rupees.
 (5) Default in complying with this section:
 company shall be liable to a penalty of 5 lakh rupees
 Every directors and KMP who is in default shall be liable to a
penalty of 50 thousand rupees and
 where the default is a continuing one, with a further penalty of
1000 rupees for each day during default continues but not
exceeding 5 lakh rupees.
9/12/2019

Section 212(8): Arrest of suspected
persons
 If any officer not below the rank of Assistant Director of SFIO
authorised in this behalf by the Central Government by general or
special order, has on the basis of material in his possession
reason to believe (the reason for such belief to be recorded in
writing) that any person has been guilty of any offence
punishable under sections referred to in sub-section (6),
 he may arrest such person and shall inform him of the grounds
for such arrest.
 If any officer not below the rank of Assistant Director of SFIO
authorised in this behalf by the Central Government by general or
special order, has on the basis of material in his possession
reason to believe (the reason for such belief to be recorded in
writing) that any person has been guilty of any offence
punishable under sections referred to in sub-section (6),
 he may arrest such person and shall inform him of the grounds
for such arrest.
9/12/2019

Section 212(9) Copy of order to SFIO
 The officer authorised under sub-section (8) shall, immediately
after arrest of such person under such sub-section, forward a copy
of the order, along with the material in his possession, referred to
in that sub-section, to the SFIO in a sealed envelope and
 the SFIO shall keep such order and material for such period as
may be prescribed.
 The officer authorised under sub-section (8) shall, immediately
after arrest of such person under such sub-section, forward a copy
of the order, along with the material in his possession, referred to
in that sub-section, to the SFIO in a sealed envelope and
 the SFIO shall keep such order and material for such period as
may be prescribed.
9/12/2019

Section 212(10): Arrested person to be produced
before a Special Court or judicial magistrate
 Every person arrested shall within 24 hours, be taken to a Special
Court or Judicial Magistrate having jurisdiction:
 Provided that the period of 24 hours shall exclude the time
necessary for the journey from the place of arrest to the Special
Court or Magistrate’s court.
 Every person arrested shall within 24 hours, be taken to a Special
Court or Judicial Magistrate having jurisdiction:
 Provided that the period of 24 hours shall exclude the time
necessary for the journey from the place of arrest to the Special
Court or Magistrate’s court.
9/12/2019

Section 212(14A): fraud has taken place, Central Government may
file an application before the Tribunal for appropriate orders
 (14A) Where the report states that fraud has taken place in a
company and due to such fraud any director, KMP, other officer of
the company or any other person or entity, has taken undue
advantage or benefit, whether in the form of any asset, property or
cash or in any other manner,
 the Central Government may file an application before the
Tribunal for appropriate orders with regard to disgorgement of
such asset, property or cash and also for holding such director, key
managerial personnel, other officer or any other person liable
personally without any limitation of liability.
 (14A) Where the report states that fraud has taken place in a
company and due to such fraud any director, KMP, other officer of
the company or any other person or entity, has taken undue
advantage or benefit, whether in the form of any asset, property or
cash or in any other manner,
 the Central Government may file an application before the
Tribunal for appropriate orders with regard to disgorgement of
such asset, property or cash and also for holding such director, key
managerial personnel, other officer or any other person liable
personally without any limitation of liability.
9/12/2019

Section 238: Registration of offer of
schemes involving transfer of shares.
 1. In relation to every offer of a scheme involving the transfer of shares or any
class of shares in the transferor company to the transferee company under
section 235,—
 a. every circular containing such offer and recommendation to the members of
the transferor company by its directors to accept such offer shall be
accompanied by such information and in such manner as prescribed in Rule 28;
 b. every such offer shall contain a statement by or on behalf of the transferee
company, disclosing the steps it has taken to ensure that necessary cash will be
available; and
 c. every such circular shall be presented to the Registrar for registration and no
such circular shall be issued until it is so registered:
 Registrar may refuse to register which does not contain the information as per
clause(a) or contain information which is likely to give a false impression, and
communicate such refusal to the parties within 30 days.
 2. Appeal against the order of the Registrar:
 An appeal shall lie to the Tribunal against an order of the Registrar refusing to
register any circular under sub-section (1).
 3. Circular which has not been presented for registration:
 The director shall be liable to a penalty of 1 lakh rupees.
 1. In relation to every offer of a scheme involving the transfer of shares or any
class of shares in the transferor company to the transferee company under
section 235,—
 a. every circular containing such offer and recommendation to the members of
the transferor company by its directors to accept such offer shall be
accompanied by such information and in such manner as prescribed in Rule 28;
 b. every such offer shall contain a statement by or on behalf of the transferee
company, disclosing the steps it has taken to ensure that necessary cash will be
available; and
 c. every such circular shall be presented to the Registrar for registration and no
such circular shall be issued until it is so registered:
 Registrar may refuse to register which does not contain the information as per
clause(a) or contain information which is likely to give a false impression, and
communicate such refusal to the parties within 30 days.
 2. Appeal against the order of the Registrar:
 An appeal shall lie to the Tribunal against an order of the Registrar refusing to
register any circular under sub-section (1).
 3. Circular which has not been presented for registration:
 The director shall be liable to a penalty of 1 lakh rupees.
9/12/2019

Application to Tribunal for relief in cases
of oppression, etc (Section 241).
 (1) Any member of a company who complains that:
 (a) the affairs of the company have been or are being conducted in a manner
prejudicial to:
 public interest or
 oppressive to him or any other member(s) or
 interests of the company, or
 (b) the material change has taken place in the management or control of the
company, and
 that by reason of such change, it is likely that the affairs of the company will
be conducted in a manner prejudicial to its interests or its members or any
class of members,
 may apply to the Tribunal, provided such member has a right to apply u/S 244.
 Note: 1. change means whether change in the Board or manager, or in the
ownership, or , in its membership, or in any other manner
 2.change brought about by, or in the interests of, any creditors, debenture holders
or any class of shareholders is valid
 (1) Any member of a company who complains that:
 (a) the affairs of the company have been or are being conducted in a manner
prejudicial to:
 public interest or
 oppressive to him or any other member(s) or
 interests of the company, or
 (b) the material change has taken place in the management or control of the
company, and
 that by reason of such change, it is likely that the affairs of the company will
be conducted in a manner prejudicial to its interests or its members or any
class of members,
 may apply to the Tribunal, provided such member has a right to apply u/S 244.
 Note: 1. change means whether change in the Board or manager, or in the
ownership, or , in its membership, or in any other manner
 2.change brought about by, or in the interests of, any creditors, debenture holders
or any class of shareholders is valid
9/12/2019

 (2) Central Government, if it is of the opinion that the affairs of
the company are being conducted in a manner prejudicial to
public interest,
 it may itself apply to the Tribunal for an order under this
Chapter.
 Provided that the Applications, in respect of such company, as may
be prescribed, shall be made before the Principal Bench of the
Tribunal which shall be dealt with by such Bench.
 (2) Central Government, if it is of the opinion that the affairs of
the company are being conducted in a manner prejudicial to
public interest,
 it may itself apply to the Tribunal for an order under this
Chapter.
 Provided that the Applications, in respect of such company, as may
be prescribed, shall be made before the Principal Bench of the
Tribunal which shall be dealt with by such Bench.
9/12/2019

 (3) Where in the opinion of the Central Government there exist circumstances suggesting
that––
 (a) any person concerned in the conduct and management of the affairs of a company is
or has been in connection therewith guilty of fraud, misfeasance, persistent negligence or
default in carrying out his obligations and functions under the law or of breach of trust;
 (b) the business of a company is not or has not been conducted and managed by such
person in accordance with sound business principles or prudent commercial practices;
 (c) a company is or has been conducted and managed by such person in a manner which
is likely to cause, or has caused, serious injury or damage to the interest of the trade,
industry or business to which such company pertains; or
 (d) the business of a company is or has been conducted and managed by such person with
intent to defraud its creditors, members or any other person or otherwise for a fraudulent
or unlawful purpose or in a manner prejudicial to public interest,
 the Central Govt may initiate a case against such person and refer the same to the
Tribunal with a request that the Tribunal may inquire into the case and record a decision
as to whether or not such person is a fit and proper person to hold the office of director or
any other office connected with the conduct and management of any co.
 (3) Where in the opinion of the Central Government there exist circumstances suggesting
that––
 (a) any person concerned in the conduct and management of the affairs of a company is
or has been in connection therewith guilty of fraud, misfeasance, persistent negligence or
default in carrying out his obligations and functions under the law or of breach of trust;
 (b) the business of a company is not or has not been conducted and managed by such
person in accordance with sound business principles or prudent commercial practices;
 (c) a company is or has been conducted and managed by such person in a manner which
is likely to cause, or has caused, serious injury or damage to the interest of the trade,
industry or business to which such company pertains; or
 (d) the business of a company is or has been conducted and managed by such person with
intent to defraud its creditors, members or any other person or otherwise for a fraudulent
or unlawful purpose or in a manner prejudicial to public interest,
 the Central Govt may initiate a case against such person and refer the same to the
Tribunal with a request that the Tribunal may inquire into the case and record a decision
as to whether or not such person is a fit and proper person to hold the office of director or
any other office connected with the conduct and management of any co.
9/12/2019

 (4) The person against whom a case is referred to the Tribunal
under sub-section (3), shall be joined as a respondent to the
application.
 (5) Every application under sub-section (3)––
 (a) shall contain a concise statement of such circumstances and
materials as the Central Government may consider necessary for
the purposes of the inquiry; and
 (b) shall be signed and verified in the manner laid down in the Code
of Civil Procedure, 1908, for the signature and verification of a
plaint in a suit by the Central Government.
 (4) The person against whom a case is referred to the Tribunal
under sub-section (3), shall be joined as a respondent to the
application.
 (5) Every application under sub-section (3)––
 (a) shall contain a concise statement of such circumstances and
materials as the Central Government may consider necessary for
the purposes of the inquiry; and
 (b) shall be signed and verified in the manner laid down in the Code
of Civil Procedure, 1908, for the signature and verification of a
plaint in a suit by the Central Government.
9/12/2019

Powers of Tribunal (Section 242)
 (4A) At the conclusion of the hearing of the case in respect of sub-
section (3) of section 241, the Tribunal shall record its decision
stating therein specifically as to whether or not the respondent is a
fit and proper person to hold the office of director or any other
office connected with the conduct and management of any
company.
 (4A) At the conclusion of the hearing of the case in respect of sub-
section (3) of section 241, the Tribunal shall record its decision
stating therein specifically as to whether or not the respondent is a
fit and proper person to hold the office of director or any other
office connected with the conduct and management of any
company.
9/12/2019

Section243:Consequence of termination or
modification of certain agreements
 1. Where an order made under section 242 terminates, sets aside or modifies
an agreement such as is referred to in sub-section (2) of that section,—
 a. such order shall not give rise to any claims against the company by any
person for damages or for compensation for loss of office;
 b. MD or director or manager whose agreement is so terminated shall not
appointed for a period of five years , without the leave of the Tribunal.
 (1A) The person who is not a fit and proper person pursuant to sub-section (4A)
of section 242 shall not hold the office of a director or any other office connected
with the conduct and management of the affairs of any company for a period of
five years from the date of the said decision:
 Provided that the Central Government may, with the leave of the Tribunal, permit
such person to hold any such office before the expiry of the said period of five
years.
 1. Where an order made under section 242 terminates, sets aside or modifies
an agreement such as is referred to in sub-section (2) of that section,—
 a. such order shall not give rise to any claims against the company by any
person for damages or for compensation for loss of office;
 b. MD or director or manager whose agreement is so terminated shall not
appointed for a period of five years , without the leave of the Tribunal.
 (1A) The person who is not a fit and proper person pursuant to sub-section (4A)
of section 242 shall not hold the office of a director or any other office connected
with the conduct and management of the affairs of any company for a period of
five years from the date of the said decision:
 Provided that the Central Government may, with the leave of the Tribunal, permit
such person to hold any such office before the expiry of the said period of five
years.
9/12/2019

 (1B) Notwithstanding anything contained in any other provision of this Act, or
any other law for the time being in force, or any contract, memorandum or
articles, on the removal of a person from the office of a director or any other
office connected with the conduct and management of the affairs of the
company, that person shall not be entitled to, or be paid, any compensation for
the loss or termination of office.
 Provided that the Tribunal shall not grant leave under this clause unless notice
of the intention to apply for leave has been served on the Central Government
and that Government has been given a reasonable opportunity of being heard in
the matter.
 2. contravention of clause (b) of sub-section (1) or (1A), be punishable with
imprisonment extend to six months or with fine which may extend to five lakh
rupees, or with both
 (1B) Notwithstanding anything contained in any other provision of this Act, or
any other law for the time being in force, or any contract, memorandum or
articles, on the removal of a person from the office of a director or any other
office connected with the conduct and management of the affairs of the
company, that person shall not be entitled to, or be paid, any compensation for
the loss or termination of office.
 Provided that the Tribunal shall not grant leave under this clause unless notice
of the intention to apply for leave has been served on the Central Government
and that Government has been given a reasonable opportunity of being heard in
the matter.
 2. contravention of clause (b) of sub-section (1) or (1A), be punishable with
imprisonment extend to six months or with fine which may extend to five lakh
rupees, or with both
9/12/2019

Section 248: Power of Registrar to remove name of
company from register of companies.
1. Where the Registrar has reasonable cause to believe that—
 a. a company has failed to commence its business within 1 year of its
incorporation; or
 c. a company is not carrying on any business or operation for a period of 2
immediately p.f.y, and has not made application within such period for
obtaining the status of a dormant company u/s 455, or
 d the subscribers to the memorandum have not paid the subscription which
they had undertaken to pay at the time of incorporation of a company and a
declaration to this effect has not been filed within 180 days of its
incorporation under subsection (1) of section 10A; or
 e the company is not carrying on any business or operations, as revealed
after the physical verification carried out under sub-section (9) of section 12.
 he shall send a notice to company and all directors, of his intention to remove
the name of the company from the register of companies and
 requesting them to send their representations within 30 days from the date of
the notice.
1. Where the Registrar has reasonable cause to believe that—
 a. a company has failed to commence its business within 1 year of its
incorporation; or
 c. a company is not carrying on any business or operation for a period of 2
immediately p.f.y, and has not made application within such period for
obtaining the status of a dormant company u/s 455, or
 d the subscribers to the memorandum have not paid the subscription which
they had undertaken to pay at the time of incorporation of a company and a
declaration to this effect has not been filed within 180 days of its
incorporation under subsection (1) of section 10A; or
 e the company is not carrying on any business or operations, as revealed
after the physical verification carried out under sub-section (9) of section 12.
 he shall send a notice to company and all directors, of his intention to remove
the name of the company from the register of companies and
 requesting them to send their representations within 30 days from the date of
the notice.
9/12/2019

Section 271:Circumstances in Which Company May
be Wound Up by Tribunal
 A company may, on a petition under section 272, be wound up by the Tribunal,—
(a) if the company has, by special resolution, resolved that the company be wound up by
the Tribunal;
(b) if the company has acted against the interests of the sovereignty and integrity of
India, the security of the State, friendly relations with foreign States, public order,
decency or morality;
(c) if on an application made by the Registrar or any other person authorised by the
Central Government by notification under this Act, the Tribunal is of the opinion that the
affairs of the company have been conducted in a fraudulent manner or the company was
formed for fraudulent and unlawful purpose or the persons concerned in the formation
or management of its affairs have been guilty of fraud, misfeasance or misconduct in
connection therewith and that it is proper that the company be wound up;
(d) if the company has made a default in filing with the Registrar its financial statements
or annual returns for immediately preceding five consecutive financial years; or
(e) if the Tribunal is of the opinion that it is just and equitable that the company should
be wound up.
 A company may, on a petition under section 272, be wound up by the Tribunal,—
(a) if the company has, by special resolution, resolved that the company be wound up by
the Tribunal;
(b) if the company has acted against the interests of the sovereignty and integrity of
India, the security of the State, friendly relations with foreign States, public order,
decency or morality;
(c) if on an application made by the Registrar or any other person authorised by the
Central Government by notification under this Act, the Tribunal is of the opinion that the
affairs of the company have been conducted in a fraudulent manner or the company was
formed for fraudulent and unlawful purpose or the persons concerned in the formation
or management of its affairs have been guilty of fraud, misfeasance or misconduct in
connection therewith and that it is proper that the company be wound up;
(d) if the company has made a default in filing with the Registrar its financial statements
or annual returns for immediately preceding five consecutive financial years; or
(e) if the Tribunal is of the opinion that it is just and equitable that the company should
be wound up.
9/12/2019

Section 272: Petition for Winding Up.
 (1) Subject to the provisions of this section, a petition to the Tribunal for the winding up
of a company shall be presented by—
 (a) the company;
 (b) any contributory or contributories;
 (c) all or any of the persons specified in clauses (a) and (b);
 (d) the Registrar;
 (e) any person authorised by the Central Government in that behalf; or
 (f) in a case falling under clause (b) of section 271, by the Central Government or a State
Government.
 (2) A contributory shall be entitled to present a petition for the winding up of a
company, notwithstanding that he may be the holder of fully paid-up shares, or that the
company may have no assets at all or may have no surplus assets left for distribution
among the shareholders after the satisfaction of its liabilities, and shares in respect of
which he is a contributory or some of them were either originally allotted to him or have
been held by him, and registered in his name, for at least six months during the eighteen
months immediately before the commencement of the winding up or have devolved on
him through the death of a former holder.
 (3) The Registrar shall be entitled to present a petition for winding up under section
271, except on the grounds specified in clause (a) of that sectionPresented by: CS Uttam Kumar Mohallik
 (1) Subject to the provisions of this section, a petition to the Tribunal for the winding up
of a company shall be presented by—
 (a) the company;
 (b) any contributory or contributories;
 (c) all or any of the persons specified in clauses (a) and (b);
 (d) the Registrar;
 (e) any person authorised by the Central Government in that behalf; or
 (f) in a case falling under clause (b) of section 271, by the Central Government or a State
Government.
 (2) A contributory shall be entitled to present a petition for the winding up of a
company, notwithstanding that he may be the holder of fully paid-up shares, or that the
company may have no assets at all or may have no surplus assets left for distribution
among the shareholders after the satisfaction of its liabilities, and shares in respect of
which he is a contributory or some of them were either originally allotted to him or have
been held by him, and registered in his name, for at least six months during the eighteen
months immediately before the commencement of the winding up or have devolved on
him through the death of a former holder.
 (3) The Registrar shall be entitled to present a petition for winding up under section
271, except on the grounds specified in clause (a) of that section9/12/2019

Section 398: Provisions Relating to Filing of Applications,
Documents, Inspection, etc., in Electronic Form
 (f) the Registrar shall register change of registered office,
alteration of memorandum or articles, prospectus, issue certificate
of incorporation, register such document, issue such certificate,
record the notice, receive such communication as may be required
to be registered or issued or recorded or received, as the case may
be, under this Act or the rules made thereunder or perform duties
or discharge functions or exercise powers under this Act or the
rules made thereunder or do any act which is by this Act directed
to be performed or discharged or exercised or done by the
Registrar in the electronic form in such manner as may be
prescribed.
 (f) the Registrar shall register change of registered office,
alteration of memorandum or articles, prospectus, issue certificate
of incorporation, register such document, issue such certificate,
record the notice, receive such communication as may be required
to be registered or issued or recorded or received, as the case may
be, under this Act or the rules made thereunder or perform duties
or discharge functions or exercise powers under this Act or the
rules made thereunder or do any act which is by this Act directed
to be performed or discharged or exercised or done by the
Registrar in the electronic form in such manner as may be
prescribed.
9/12/2019

Companies Amendment Act 2019 summary

Companies Amendment Act 2019 summary

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Companies Amendment Act 2019 summary

Similar to Companies Amendment Act 2019 summary (20)

Recently uploaded

Recently uploaded (13)

Companies Amendment Act 2019 summary