Companies (Amendment) Act, 2015
The Government of India has amended various provisions of Companies Act, 2013 to deal with many issues of concern, through bringing about the Companies (Amendment) Act, 2015. This amendment Act received approval of the President of India on May 25, 2015, and then was put into effect from May 26, 2015, along with publishing in the Official Gazette of India on 26th May 2015.
The main and ultimate objectives of this Companies Amendment Act of 2015 are to ease doing business in India, improve further the corporate governance, align various Indian corporate laws with international practices, to boost economic growth, and make India quite investor-friendly.
Highlights of the Companies Amendment Act, 2015With a view to help our myriads of Indian and international visitors and clients, here we are providing information about some major changes made by this Indian Companies (Amendment) Act of 2015. The following are key highlights of this Act: Today, India is one among the best and top five destinations in the whole world, owing to the following strong and striking points:
- Paid-up Capital: No minimum paid-up capital required to start a Private Limited Company in India. The Amendment Act has removed the words "of one lakh rupees or such higher paid-up share capital" from the Companies Act 2013. Earlier, to start a Private Limited Company in India a minimum of Rs.100,000 was required as paid-up capital. Similarly, for starting a Public Limited Company in India, one doesn't need any minimum paid-up capital.
- No Requirement of Commencement of Business Certificate: The need to obtain the Commencement of Business Certificate post registration has been withdrawn from the Companies Act. The Companies Act of 2013 had introduced a new concept of obtaining Commencement of Business Certificate after the incorporation of a Private Limited Company. It had to be obtained by filing a declaration with the Registrar of Companies (ROC).
- Common Seal: Common seal has become optional now and signatures of the Directors are acceptable. In Companies Act, a common seal was needed for a Company in order to provide various authorizations and attestations on Company's behalf.
- Penalties: Now there is stringent penalty for Companies that invite or accept deposits from public without any approval from the Regulatory Authorities. The earlier Act was silent about any such penalty.
- Loans or Guarantees: The new Companies (Amendment) Act, 2015, says that the holding Company can provide loans or guarantees to the subsidiary Company. However, the Companies Act of 2013 did not impose any restrictions on the holding company providing guarantees or loans to the subsidiary company. This amendment Act has just clarified everything.
- Dividends: A Company having losses or negative reserves cannot declare dividends. To further clarify this, the Companies Amendment Act, 2015 has added these words: "Provided also that no company shall declare dividend unless carried over previous losses and depreciation not provided in previous year or years are set off against profit of the company for the current year."
- Confidentiality: Board Resolutions will be confidential from now. Earlier the board resolutions executed were required to be filed with the Ministry of Corporate Affairs, Government of India, by the Company. These were public documents that could be easily downloaded from the site by paying the prescribed amount of fee. To protect Company's confidentiality a new provision has been inserted which says that board resolutions are not accessible to the public from now onwards. Here are the words that have been inserted regarding this: "provided that no person shall be entitled under section 399 to inspect or obtain copies of such resolutions."
- Special Courts: The Companies Act, 2013, had empowered the central government to form special courts for speedy disposal of corporate cases. The amendment Act has amended certain clauses of the Companies Act of 2013 to limit the constitution of such special courts for the trial of offences where punishment of imprisonment is two years or more.