Amendment Companies Act, 2015
It was always the intention of the legislature to make an environment which will burgeon naïve entrepreneurs. A much needed amendments were needed in the Companies Act, 2013 in this direction. These changes were brought about by Amendment Act of 2015 in Companies act. These changes made sure that there is an ease of doing business in India. Changes are enlisted below:
- No Minimum Paid-up Share Capital (Section 2(68) & 2(71)): Minimum share capital for incorporating company has done away with. One can setup asetup a Private company without paying minimum paid up share capital of one lakh in case of public company five lakhs.
- Common Seal is now Optional (Section 9, 12, 22, 46, 223): Company Act,2013 required a common seal for authorisation of certain documents. Now Common seal requirement has been made optional.
- Copies of Board resolution: Under Section 399, no person shall be entitled to obtain copy of board resolutions passed by the company under section 179(3), filled with registrar under Section 117(3).
- Reporting Fraud by Editor: Amendment act 2015 says that a threshold limits will be prescribed for reporting of frauds to the central government. Frauds which are below the threshold will be reported to the Board or the Audit committee and will be needed to report in the annual report of the company. Now it will be accessible to the public.
- Related party transaction (Section 188): Amendment Act of 2015 has prescribed for relaxing the approval requirement from a special resolution to an ordinary resolution in case of related party transactions which require shareholders’ approval. Further ithas done away with the requirement of a special resolution in the certain casesfor providing the accounts of the wholly owned subsidiary consolidated with the accounts of the holding company, and placed before the shareholders at a general meeting for approval.
- Loan to Directors (Section 185): Section 185 deals with loans, guarantees and securities provided by the company to its directors or any other person. Two provisions have been added to the exceptions list in this section which includes (i) Loan made or guarantee given or security provided by the holding company to its wholly owned subsidiary company, (ii) Guarantee given or security provided by the company in respect of loan made by the bank or financial institution to its subsidiary.
- Commencement of Business (Section 11): Section 11 has been now omitted, which provided for a requirement for making a declaration that every subscriber has paid the value of shares paid by him or her, before the commencement of business.
These six changes provided by the Company amendment act will help in ease of doing business in India. These are welcome moves towards encouraging start-ups every day.
Author: This blog is written by Mr. Vishal Aggarwal, a passionate blogger & intern at Aapka Consultant.
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