Entrepreneur Friendly Amendments of Companies Act

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Entrepreneur Friendly Amendments of Companies Act

Following are the entrepreneur friendly amendments of companies act 2013

  • Omission of requirement of minimum share capital and consequential changes
    – Company can be incorporated with any capital (similar to LLP)
    – Reduction in cost of registration (stamp duty)
  • Common Seal made optional for authorisation for execution of documents and consequential changes
    – Reduction in time and cost of registration
  • Prohibition on public inspection of Board resolutions filed in the form MGT-14
    – Maintaining confidentiality of the internal matters of the company/board decision.
  • Replacing ‘special resolution’ with ‘ordinary resolution’ for approval of related party transactions by non-related shareholders
    – Ease of doing business
  • Exempt related party transactions between holding companies and wholly owned subsidiaries from the requirement of approval of non-related shareholders
    – Ease of doing business – corporate demand.
  • Empowering Audit Committee to give omnibus approvals for related party transactions on annual basis. (Align with SEBI policy and increase ease of doing business)

OTHER AMENDMENTS

  • Prescribing specific punishment for deposits accepted under the new Act. This was left out in the Act inadvertently
  • Rectifying the requirement of transferring equity shares for which unclaimed/unpaid dividend has been transferred to the IEPF even though subsequent dividend(s) has been claimed. (To meet corporate demand)
  • Enabling provisions to prescribe thresholds beyond which fraud shall be reported to the Central Government (below the threshold, it will be reported to the Audit Committee). Disclosures for the latter category also to be made in the Board’s Report. (Demand of auditors)
  • Exemption u/s 185 (Loans to Directors) provided for loans to wholly owned subsidiaries and guarantees/securities on loans taken from banks by subsidiaries. (This was provided under the Rules but being included in the Act as a matter of abundant caution).
  • Winding Up cases to be heard by 2-member Bench instead of a 3-member Bench. (Removal of an inadvertent error)
  • Bail restrictions to apply only for offence relating to fraud u/s 447. (Though earlier provision is mitigated, concession is made to Law Ministry & ED)
  • Winding Up cases to be heard by 2-member Bench instead of a 3-member Bench. (Removal of an inadvertent error)
  • Special Courts to try only offences carrying imprisonment of two years or more. (To let magistrate try minor violations). (Source- PIB)

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