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Companies (Amendment) Act, 2020

By INSOL India - Editorial Team Posted On : October 29, 2020

The Companies (Amendment) Act 2020 was notified on September 28, 2020. Some of the key changes under the amendment include:
 
  • The amendment makes a host of changes to penal provisions. Importantly, it omits imprisonment for certain offences, such as the contravention of matters required to be stated in the prospectus, or of the provisions governing the buy-back of shares, or those governing the dealing of securities in stock exchanges. Further, the amendment makes a shift from fines to penalties for certain offences, and makes amendments to quantum of penalty for various offences. It also omits some penal provisions altogether, such as those for contravention of provisions governing reduction of share capital and for default in adhering to the orders of the NCLT pertaining to issuance of debentures by the company, amongst others. 
     
  • With a view to reduce regulatory pressure and to promote ease of doing business, the amendment seeks to exclude classes of companies (to be prescribed) from the definition of a ‘listed company’ under the Companies Act.
     
  • Section 117 of the Companies Act requires a copy of specified resolutions and agreements to be filed with the registrar of companies. However, banking companies are exempted from complying with this section. The amendment extends this exemption to NBFCs and housing finance companies. 
     
  • The amendment introduces Chapter XXIA to the Companies Act, which lays down specific provisions for governing ‘producer companies’. 
     
  • The amendment allows classes of public companies to issue such classes of securities to be listed on stock exchanges in foreign jurisdictions, as may be prescribed. 
     
  • The amendment proposes a shift from the comply or pay fine principle to the comply or pay penalty principle in relation to the corporate social responsibility provisions under the Companies Act. 
     
  • The amendment proposes a minimum remuneration to be paid to non-executive directors, including independent directors, in cases of inadequacy of profits of the company.