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A Study on Recent Amendments in Companies Act, 2013

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A Study on Recent Amendments in Companies Act, 2013 A Study on Recent Amendments in Companies Act, 2013 4/19/2019 Prepared by Divya Rajput, Sanjulata Jaiswal, Kanchan Kaku, Pranita Dalvi and Nagarjuna Kurelli Genesis of Companies Act, 2013 The 1956 Act has been in need of a substantial revamp for quite some time now, to make it more contemporary and relevant to corporates, regulators and other stakeholders in India. While several unsuccessful attempts have been made in the past to revise the existing 1956 Act, there have been quite a few changes in the administrative portion of the 1956 Act. The most recent attempt to revise the 1956 Act was the Companies Bill, 2009 which was introduced in the Lok Sabha, one of the two Houses of Parliament of India, on 3 August 2009. This Companies Bill, 2009 was referred to the Parliamentary Standing Committee on Finance, which submitted its report on 31 August 2010 and was withdrawn after the introduction of the Companies Bill, 2011. The Companies Bill, 2011 was also considered by the Parliamentary Standing Committee on Finance which submitted its report on 26 June 2012. Subsequently, the Bill was considered and approved by the Lok Sabha on 18 December 2012 as the Companies Bill, 2012 (the Bill). The Bill was then considered and approved by the Rajya Sabha too on 8 August 2013. It received the President’s assent on 29 August 2013 and has now become the Companies Act, 2013. The changes in the 2013 Act have far- reaching implications that are set to significantly change the manner in which corporates operate in India. In this study report, we have encapsulated the major amendments of the companies act, 2013 and the potential implications of these changes. Page 2 of 47 Table of Contents 1. COMMENCEMENT OF BUSINESS ......................................................................................... 5 Extract of Section 10A. Commencement of business etc. ........................................................... 5 SECTION 10 A- Commencement Of Business ........................................................................... 5 Fee for filing e-Form 20A: ........................................................................................................... 6 2. REGISTRATION OF CHARGES ............................................................................................... 8 3. Siginificant Benefecial Ownership rules ..................................................................................... 1 Background of SBO Rules ......................................................................................................... 12 Objectives of SBO rules ............................................................................................................ 13 Recent Amendments on SBO Rules .......................................................................................... 13 Meaning of SBO ........................................................................................................................ 13 SBO Rules ................................................................................................................................. 14 How to determine direct holding ............................................................................................... 14 How to determine indirect shareholding .................................................................................... 14 Meaning of few Key Terms ....................................................................................................... 16 Declaration by SBO ................................................................................................................... 16 Exemptions ................................................................................................................................ 17 Application to the tribunal ......................................................................................................... 17 Order of Tribunal ....................................................................................................................... 17 Penal Provisions ......................................................................................................................... 18 3. Companies (Acceptance of Deposits) Amendments Rules, 2019.............................................. 19 FAQs on Companies (Acceptance of Deposits) Amendments Rules, 2019:- ............................ 26 4. The COMPANIES (AMENDMENT) ORDINANCE, 2019 ..................................................... 28 Introduction ................................................................................................................................ 28 What was the intention? ............................................................................................................. 28 The Amendments and Impact Thereof ...................................................................................... 29 Re-introduction of Commencement of Business Declaration .................................................... 29 Significant Beneficial Ownership Disclosure ............................................................................ 29 Disqualification for Appointment of a Director ......................................................................... 29 Power of Regional Director to Compound Offences ................................................................. 30 Re-Categorisation of Certain Offences ...................................................................................... 30 Section 12 Registered Office of company ................................................................................. 32 Physical Verification of the Registered Office .......................................................................... 32 Registration of Charges ............................................................................................................. 35 5. INC- 22A: Active Company Tagging Identities and Verification (ACTIVE) ........................... 37 Last date of Filing INC-22A: ..................................................................................................... 38 Page 3 of 47 INC-22A Form Filing Fees charged by MCA: .......................................................................... 38 Consequences of Non- filing INC-22A: .................................................................................... 39 Pre-requisites of the form INC-22A: ......................................................................................... 39 Procedure for filing the Form INC-22A: ................................................................................... 40 Certification of Form INC-22A: ................................................................................................ 40 Points to Remember before filing of Form INC-22A: ............................................................... 41 The Companies (Prospectus and Allotment of Securities) Rules, 2014Rule 9A – Issue of Securities in dematerialized form by unlisted public Companies .............................................. 42 TReDS for MSME and Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019 .................................................................... 45 Penalty for Non-Filing of Form MSME-1: ................................................................................ 47 Page 4 of 47 1. COMMENCEMENT OF BUSINESS Declaration for Commencement of business is re-introduced by way of inserting a new Section 10A after section 10 of the Companies Act, 2013. The DETAIL of Section 10A is as follow; Extract of Section 10A. Commencement of business etc. (1) A company incorporated after the commencement of the Companies (Amendment) Ordinance, 2018 and 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 one hundred and eighty days of the date of incorporation of the company in such form and verified in such manner as may be prescribed, 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. (2) If any default is made in complying with the requirements of this section, the company shall be liable to a penalty of fifty thousand rupees and every officer who is in default shall be liable to a penalty of one thousand rupees for each day during which such default continues but not exceeding an amount of one lakh rupees. (3) Where no declaration has been filed with the Registrar under clause (a) of sub-section (1) within a period of one hundred and eighty days of the date of incorporation of the company and the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he may, without prejudice to the provisions of sub-section (2), initiate action for the removal of the name of the company from the register of companies under Chapter XVIII.]] SECTION 10 A- Commencement of Business MANDATORY TO OBTAIN CERTIFICATE OF COMMENCEMENT OF BUSINESS FOR REGISTERED COMPANIES: Companies registered on or after November 02, 2018 are required to file the declaration for commencement of business with the Registrar of companies *Time limit:* The declaration for commencement of business shall be filled within 180 days from the date of getting
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