Govt notifies amendments to Companies Act

The government has notified amendments to the Companies Act, which makes it easier to do business and provides for stricter penalties for fraud cases.
The amendments, which were passed by Parliament earlier this month, have been made to the Companies Act, 2013, mainly to deal with board resolutions, utilisation of unclaimed dividends and setting-up of a firm among others as well as to bring the law in tune with the global standards.
The Act has removed threshold limit for minimum capital required for formation of private or public sector firm.
For setting-up a private company, new Act has done away with the norms of Rs 1 lakh minimum capital requirement and Rs 5 lakh in case of a public sector unit.

Besides, the concept of company seal has also been done away with.
"Provided that in case a company does not have a common seal, the authorisation...Shall be made by two directors or by a director and the company Secretary, wherever the company has appointed a company Secretary," the notification said.

With regard to acceptance of deposits by the companies, in contravention with regulations, the new law said that if a firm fails to repay the deposit or any interest due thereon within the time specified, it will be "punishable with fine which shall not be less than Rs 1 crore but which may extend to Rs 10 crore" in addition to payment of deposits.

"...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 Rs 25 lakh but which may extend to Rs 2 crore, or with both," said the notification.
In case of dividend, the amended Act said that no company will 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."
The unclaimed dividend will not be transferred to Investor Education and Protection Fund.
With regard to trying fraud cases, the new norms said that all cases under the Companies Act cannot be tried by a special court and that only serious offences will go to such courts, while the others would be tried by normal magisterial court.