Highlights of Companies Amendment Act, 2015 #CompanyIncorporation #YourPersonalMunim #Startups

The Indian Government is actively working to improve ease of doing business in India. Key initiative in this aspect is the Amendment to Companies Act, 2015 to make it more business or investor friendly. In this article, Munim.in highlighted at important aspects of the Companies Amendment Act, 2015.

1. No Minimum Paid-Up Capital: The Companies Amendment Act, 2015 removes the words “of one lakh rupees or such higher paid-up share capital” relating to Private Limited Company thereby necessitating NO minimum capital requirement for starting a private limited company. The words “of five lakh rupees or such higher paid-up capital,” has also been removed wherein it pertains to the minimum paid-up share capital of a Limited Company. Hence, a public limited company can also be started without a minimum capital of rupees five lakhs.
2. No Requirement for Commencement of Business Certificate: The requirement of obtaining Commencement of Business Certificate after incorporation has been removed in the Companies Amendment Act, 2015. 
3. Common Seal is Optional: The requirement for common seal has now been made optional and the Directors signature is acceptable instead of the common seal of the Company.
4. Board Resolution are Confidential: So far Board Resolutions executed by the Company had to be filed with the Ministry of Corporate Affairs. The Board Resolutions were public documents and could be downloaded by paying a fee. However, to protect company confidentiality, the clause ““provided that no person shall be entitled under section 399 to inspect or obtain copies of such resolutions” has been inserted. Therefore, board resolutions now cannot be accessed publicly.
5. Loan can be provided by Holding Company to Subsidiary Company: Loans or guarantees can be provided by the holding company to the subsidiary company. Though the Companies Act, 2013 did not have any restrictions on holding company providing loan to subsidiary company, the new Companies Amendment Act, 2015 has clarified the same.
6. Dividends: The Companies Amendment Act, 2015 has clearly stated 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’. Companies having losses or negative reserves cannot declare dividends.
7. Penalty for Company Inviting or Accepting Deposit: Through the Companies Amendment Act, 2015, the following sections have been added to the Companies Act, 2013 prescribing penalty for inviting or accepting or renewing public deposit:

• “Where a company accepts or allows or causes any other person to accept or invite on its behalf any deposit in contravention of the manner or the conditions prescribed under section 73 or section 76 or rules made thereunder or if a company fails to repay the deposit or part thereof or any interest due thereon within the time specified under section 73 or section 76 or rules made thereunder or such further time as may be allowed by the Tribunal under section 73,
• the company shall, in addition to the payment of the amount of deposit or part thereof and the interest due, be punishable with fine which shall not be less than one crore rupees but which may extend to ten crore rupees; and
• every officer of the company who is in default shall be punishable with imprisonment which may extend to seven years or with fine which shall not be less than twenty-five lakh rupees but which may extend to two crore rupees, or with both
• Provided that if it is proved that the officer of the company who is in default, has contravened such provisions knowingly or wilfully with the intention to deceive the company or its shareholders or depositors or creditors or tax authorities, he shall be liable for action under section 447.”

The above items are some of the major highlights of the Companies Amendment Act, 2015.

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Munim Team

Your Personal Munim

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