Certain provisions of Companies (Amendment) Act, 2019 - Notified

Ministry of Corporate Affairs has notified certain provisions of Companies (Amendment) Act, 2019 from 15 August, 2019. Insights of the provisions which are notified and made effective are as follows: 

1. Registration of Prospectus with ROC –Now, instead of registration of prospectus with ROC at the time of IPO, prospectus is to be filed with ROC [Section no.26 and 35] 

2. Demat of shares – The Central Government has been power to prescribe the unlisted class of companies for issuance, holding or transferring of securities in dematerialised format. Private Company may come under purview of the same [Section no. 29] 

3. Obligation on the Company to identify SBO - Obligation is casted on the Company to take necessary steps to identify Significant Beneficial Owner (SBO) and require him to disclose. Failure to take necessary steps will lead to penal action u/s 90(11) which include imprisonment. [Section no.90(4A)] 

4. NFRA - In case of professional or other misconduct – NFRA may debar Member or firm For a minimum period of 6 months or such higher period not exceeding 10 years from: 

(a) being appointed as auditor/internal auditor 

(b) undertaking audit in respect of financial statements of company or body corporate 

(c) undertaking internal audit of the functions or activities of company or body corporate 

(d) performing any valuation as provided u/s 247 [Section no.132] 

5. Disgorgement of properties of Director/KMP: If the investigation report submitted by SFIO, states that a fraud has taken place and any director, KMP or officer has taken undue advantage or benefit, then the Central Government may file an application before Tribunal with regard to disgorgement and such director, KMP or officer may be held personally liable without any limitation of liability [Section 212] 

6. A case for deciding whether a person is a fit and proper person to hold the office of director: 

o Empowered Central Govt. to request the tribunal to inquire into the case, whether a person is a fit and proper person to hold the office of director or any other office connected with the conduct and management of the company 

o If tribunal found that the person is not a fit and proper at the conclusion of the hearing, the tribunal may pass the order to prohibit the person for holding the office of director or other offices by recording the reasons of the same. [Section 241 to 243] 

7. Petition for winding up– Registrar empowered to present a petition of winding up on the ground of just and equitable to do so.[Section 272]