Proposed Amendments in the Companies Act, 2013

To strengthen the corporate governance & enforcement framework, the Ministry of Corporate Affairs (MCA) has proposed amendments in the Companies Act, 2013 and invited comments on it.  The key highlights of the proposed amendment are as follows:

1. Provision for conversion of section 8 Company into any other kind is omitted
2. Only intimation is required Instead of approval from Registrar (ROC) for prospectus
3. Company is now required to take all necessary steps to find out individual who is Significant Beneficial Owner (SBO) and if there is any, make such SBO comply with the provisions
4. A Company who has not completed 3 financial years since inception, is now required spend as per Corporate Social Responsibility(CSR) policy
5. Any amount remaining unspent on CSR is required to be transferred to special account within 30 days from the date of end of that financial year and such amount is required to be spent by the company in pursuance of CSR policy within a period of 3 financials years from the date of such transfer 
6. The sitting fees and expenses incurred for participation in the meetings of Board and Committees shall not be considered for the purpose of assessing pecuniary relationship of an Independent Director (ID)
7. Pecuniary relationship of an ID is restricted to 25 % of total income of ID out of which professional or any other services rendered by an ID shall not account for more than 10% of the total income
8. ID is required to file return with ROC containing particulars of Declaration of Independence u/s 149
9. ID is mandatorily required to file DIR-11 with ROC u/s 168
10. The effective date of resignation of ID will be 30th day from the date of receipt of such notice by the company or any other date as specified in the notice whichever is latter
11. Central Government may prescribe rules for merger or amalgamation between two or more small companies or between a holding company and its wholly-owned subsidiary company or such other companies as may be prescribed.   
12. In case of oppression and mismanagement (fraud, misfeasance, breach of trust etc.), if tribunal passes order specifying that the respondent is not a fit and proper person, he will be disqualified to act as director in that company and other companies for a period of 5 years from the date of said order
13. In case of struck off Companies, all the property and rights held by such Company  or held in trust for such Company before the date of strike off, shall vest absolutely in the Central Govt., which shall be free from all encumbrances for the Central Govt

The link of  Notice inviting comments is:

http://www.mca.gov.in/Ministry/pdf/NoticeAmendmentsCA2013_05112018.pdf