MCA has enforced the following amendments made by the Companies (Amendment) Act, 2019 & the Companies (Amendment) Act, 2020 w.e.f. 22nd January, 2021:
(1) Amendment in the Provisions of CSR [Section 135 (5) to (8)]:
By the Companies (Amendment) Act, 2019:
- The section now provides, inter alia for:
- Further 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.
(a) carrying forward the unspent CSR amounts, to a special account to be spent within three financial years and transfer thereafter to the Fund specified in Schedule VII, in case of an ongoing project; and
(b) transferring the unspent amounts to the Fund specified under Schedule VII, in other cases.
By the Companies (Amendment) Act, 2020:
- Now, the companies, which spend an amount in excess of the requirement of 2%, will be allowed to set off such excess amount out of their obligation in the succeeding financial years after complying with the prescribed rules.
- New sub-section (9) has been inserted to provide that the requirement of constitution of CSR Committee shall not be applicable, in case the amount required to be spent on CSR does not exceed Rs. 50 lakhs and the functions of CSR Committee in such a case, may be discharged by the Board of directors.
- Re-categorizing of offence relating to failing to spend CSR amount or transfer such amount to a fund specified in Schedule VII or the Unspent CSR Account, as the case may be, from compoundable offences to in-house adjudication framework.
Other amendments made by the Companies (Amendment) Act, 2020:
(2) Amendment in the definition of listed company [Section 2(52)]: The Central Government has been empowered to exclude certain companies, based on listing of certain securities on recognized stock exchanges, as may be provided by rules, in consultation with SEBI from the definition of listed companies.
(3) Lesser period for rights issue offer [Section 62(1)(a)(i)]: The Central Government is empowered to prescribe days lesser than 15, for deeming decline of offer of rights issue.
(4) Exemptions from declaration in respect of beneficial interest in any share: New sub-section (11) has been inserted in section 89 to enable the Central Government to notify a class or classes of persons who shall, unconditionally or subject to such conditions as may be specified, be exempted from complying with section 89 [except sub-section (10)].
(5) Exemptions from filing resolutions under section 117: The Central Government is empowered to exempt any class of NBFCs and any class of HFCs from filing of resolutions passed to grant loans or give guarantees or to provide security in respect of loans in the ordinary course of their business. Earlier, only Banking Companies were exempted.
(6) New periodic financial results for unlisted companies: A new section 129A has been inserted to empower the Central Government to provide by rules such class or classes of unlisted companies to prepare periodical financial results of the company, audit or limited review thereof and their filing with Registrar within 30 days from the end of that period as specified in the rules.
(7) The proviso to section 379(1) [Application of Act to foreign companies], which empowers the Central Government to exempt any class of foreign companies from any of the provisions of sections 380 to 386, 392 and 393 by Order published in Official Gazette has been omitted since a new provision has been inserted to provide the Central Government with power related to granting exemption to foreign companies.
(8) A new section 393A has been inserted in the Act to empower the Central Government to exempt any class of foreign companies or companies incorporated or to be incorporated outside India, from any of the provisions of Chapter XXII of the Act by notification to be laid before both Houses of Parliament.
(9) The restriction on the appointment of the number of judicial and technical members in the Appellate Tribunal by the Central Government has been removed (Section 410).
(10) A new section 418A has been inserted to provide for constitution of additional Benches of NCLAT and related provisions.
(11) The amendment in sub-section (1) of section 435 excluding the offence under section 452 from the purview of special courts has been notified.
(12) Section 446B has been substituted to provide for payment of lessor monetary penalty by a start-up company, Producer Company, One Person Company or small company on failure to comply with provisions of the Act which attract monetary penalties.
(13) Now, the offence under section 452 i.e. punishment for wrongful withholding of property, will be excluded from the applicability of section 435 i.e. the Special Court and a provision in section 452 has been inserted to provide that the imprisonment of officer or employee of the company for wrongful withholding of property shall not be ordered by the Court if the court is satisfied that such officer or employee has not received certain statutory dues from the company.
(14) A new provision in section 454 has been inserted to provide that no monetary penalty shall be imposed by the adjudicating officer, when the default relates to non-compliance of section 92(4) [Annual Return] or section 137(1) or (2) [Filing of Financial Statements] has been rectified either prior to, or within 30 days of, the issue of the notice by the adjudicating officer.