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MINISTRY OF LAW AND JUSTICE (Legislative Department)
New Delhi, the 2nd l'{ovembe4 2018/Kartika 11, 1940 (Saka)
THE COMPANIES (AMENDMENT) ORDINANCE, 201 8
No. 9 or 2018
Promulgated by the President in the Sixty-ninth Year of the Republic of
India.
An Ordinance fuither to amend the Companies Act,2013.
WHEREAS Parliament is not in session and the President is satisfied that
circumstances exist which render it necessary for him to take immediate action;
Now, THERETonE, in exercise of the powers conferred by clause (l) of article 123 of the Constitution, the President is pleased to promulgate the following
C)rdinance :-
l. (1) This Ordinance may be called the Companies (Amendment) Ordinance, Short title and commencement' 2018.
(2) It shall come into force at once.
I 005
1006 Edqrrd ttqqa, frqi6 2s funER 20 t 8
2. ln section 2 of the Companies Act, 2013 (hereinafter
Amendment of section 2. referred to as the principal Act), in clause (41),-
(a) for the first proviso, the following provisos shall be
substituted, namely:-
"Provided that where a company or body corporate, which is a holding company or a subsidiary or associate company of a company incorporated outside India and is required to follow a different financial year for consolidation of its accounts outside India, the Central Government may, on an application made by th6t company or body corporate in such form and manner as may be prescribed, allow any period as its financial year, whether or not that period is a Year:
Provided further that any application pending before the Tribunal as on the date of commencement of the Companies (Amendment) Ordinance, 2018, shall be disposed of by the Tribunal in accordance with the provisions applicable to it before such commencement.";
(b) in the second proviso, for the words "Provided further that", the words "Provided also thaf' shall be
substituted.
3. After section 10 of the principal Act, the following
section shall be inserted, namely:-
Insertion of new section l0A.
Comrnence-
{{^{{FOOTNOTE *10}}}}A.(1) A compary incorporated after the
ment of
business, etc.
corlmencement of the Companies (AmendmenQ Ordinance, 2018 and having a share capital shall not commence any business or exercise any borrowing powers unless-
(a) a declaration is filed by a director within a period of one hundred and eighty days of the ,date of incorporation of the company in such fonn and verffied in such manner as may be prescribed, with the Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of making of such declaration; and
(b) the company has filed with the Registrar' a verification of its registered office as provided in sub- section (2) of section 12.
Q) lf any default is made in complying with the
requirements of this sectior5 the company shall be liable to a penalty of fiffy thousand rupees and every officer who is in default shall be liable to a penalty of one thousand rupees
r006 (r) Bderrd {q[d, fu'-s 2s frrTwr 2ol sfor each day during which such default continues but not exceeding an amount of one lakh rupees
(3) Where no declaration has been filed with the Registrar under clause (a) of sub-section (1) within a period of one hundred and eighfy days of the date of incorporation of the company and the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he may, without prejudice to the provisions of sub-section (2), initiate action for the removal of the narne of the company from the register of companies under Chapter XVI[.
4. In section 12 of the principal Act, after sub-section (8), Amendment of section 12.
the following sub-section shall be inserted, namely:-
"(9) If the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he may cause a physical verification of &e registered office of the company in such manner as may be prescribed and if any default is found to be made in complying with the requirements of sub-section (1), he may without prejudice to the provisions of sub-section (8), initiate action for the removal of the name of the company from the register of companies under Chapter XVIII.".
5. In section 14 of the principal Act,-
Amendment of section 14.
(1) in sub-section (1), for the second proviso, the
following provisos shall be substituted, namely:-
"Provided firther that any alteration having the effect of conversion of a public company into a private company shall not be valid unless it is approved by an order of the Cental Government on an application made in such form and manner as may be prescribed:
Provided also tbat any application pending before the Tribunal, as on the date of commencement of the Companies (Amendment) Ordinance, 2018, shall be disposed of by the Tribunal in accordance with the provisions applicable to it before such commencement.";
(ii) in sub-section (2), for the word "Tribunal", thb
words "Central Government" shall be substituted.
6. In section 53 of the principal Act, for sub-section (3), the Amendment of following sub-section shall be substituted, namely:- section 53'
1006 (2) BdslTd {Mrrd, frqis 2s frgEr 20 I 8
"(3) Where any comparly fails to comply with the provisions of this sectiorL such company and every officer who is in default shall be liable to a penalty which rnay extend to an amount equal to the amount raised through the issue of shares at a discount or five lakh rupees, whichever is less, and the company shall also be liable to refund all monies received with interest at the rate of twelve per cent. per annum from the date of issue of such shares to the persons to whom such shares have been issued.".
7. In section 64 of the principal Act, for sub-section (2), the
Amendment of section 64. following sub-section shall be substituted, namely:-
"(2) Where any company fails to comply with the provisions of sub-section (1), such company and every officer who is in default shall be liable to a penalty of one thousand rupees for each day during which such default continues, or five lakh rupees whichever is less.".
Amendment ofsection 77.
8, In sectionTT ofthe principal Act, in sub-section (1), for the fust and second provisos, the following provisos shall be substituted, narnely :-
"Provided that the Registrar may, on an application by
the company, allow such registration to be made-
(a) in case of charges created before the commencement of the Companies (Amendment)
Ordinance, 20t8, within a period of three hundred days of such creation; or
(b) in case of charges created on or after the commencement of the Companies (Amendment) Ordinance, 2018, within a period of sixty days of such
_ creation,
on payment of such additional fees as may be prescribed:
Provided firther that if the registration is not made
within the period specified-
(a) in clause (a) to the first proviso, the registration of the charge shall be made within six months from the date of corrmencement of the Companies (Amendment) Ordinance, 2018, on payment of such additional fees as may be prescribed and different fees may be prescribed for different classes of companies;
(b) in clause O) to the fust proviso, the Registrar may, on an application, allow such regishation to be
r006 (3) Rffisrrd {M[*, frqifi 2s frsqq 26 1 gmade within a further period of sixty days after payment of such advalorem fees as may be prescribed.".
Amendment of section 86.
9. Section 86 of the principal Act shall be numbered as sub- section (1) thereof and after sub-section (1) as so numbered, the following sub-section shall be inserted, namely:-
*Q) If any person wilfully fumishes any false or
incorrect information or knowingly suppresses any material information, required to be registered in accordance with the provisions of section 77,he shall be liable for action under section 447 .".
10. For section 87 of the principal Act, the following Substitution of new section section shall be substituted, namely:-
for section 87.
Rectification
by Central {{^{{FOOTNOTE *87}}}}. The Central Govemment on being satisfied that -
Goverrment in Register of
charges.
(a) the omission to give intimation to the Registrar of the paylent or satisfaction of a charge, within the time required under this Chapter; or
(b) the omissionor misstatement of any particulars with respect to any such charge or modification or with respect to any memorandum of satisfaction or other entry made in purswmce of section 82 or section 83,
was accidental or due to inadvertence or some other sufficient cause or it is not of a nature to prejudice the position of creditors or shareholders of the compaoy, it may, on the application of the company or any person interested and on such terms and conditions as the Central Government deems just and expedient, direct that the time for the giving of intimation of payment or satisfaction shall be extended or, as the case may require, that the omission or misstatement shall be rectified.".
11. In section 90 of the principal Act,-
Amendment of section 90.
(i) for sub-section (9), the following sub-section shall be
substituted, namely:-
"(9) The company or the person aggrieved by the order of the Tribunal may make an application to the Tribunal for relaxation or lifting of the restrictions placed under sub-section (8), within a period of one yeal from the date of such order:
1006 (4) y+{Frd qsrrd, frqifi 2s frsqr 20 I 8Provided that if no such application has been filed within a period of one year from the date of the order under sub-section (8), such shares shall be tansferred to the authority constituted under sub-section (5) of section 125, in such manner as may be prescribed;
(ii) in sub-section (10),-
(a) after the word "punishable", the words *wittr imprisonment for a term which may extend to one year or" shall be inserted;
(b) after the words "ten lakh rupees", the words "or
with both" shall be inserted.
12. In section 92 of the principal Act, for sub-section (5),
Amendment ofsection 92.
the following sub-section shall be substituted, namely:-
*(5) If any company fails to file its annual retum under sub-section (4), before tlre expiry of the period specified therein, such company and its every officer who is in default shall be liable to a penalty of fifty thousand rupees and in case of continuing failure, with further penalty of one hundred rupees for each day during which such failure continues, subject to a maximum of five lakh rupees.".
Amendment
13. In section 102 of the principal Act, for sub-section (5),
of section
the following sub-section shall be substituted, namely:-
102.
"(5) Without prejudice to the provisions of sub-section (4), if any default is made in complying with the provisions of this section, every promoter, director, manager or other key managerial personnel of the company who is in default shall be liable to a penalty of fifty thousand rupees or five times the arnount of benefit accruing to the promoter, director, manager or other key managerial personnel or any of his relatives, whichever is higher.".
Amendment
of section
105.
14. In section 105 of the princrpal Act, in sub-section (3), for the words "punishable with fine which may extend to five thousand rupees", the words "liable to a penalty of five thousand rupees" shall be substituted.
15. In section 117 of the principal Act, for sub-section (2),
Amendment of section 117.
I
the following sub-section shall be substituted, namely:-
"(2) If any company fails to file the resolution or the agreement under sub-section (1) before the expiry of the period specified therein, such company shall be liable to a penalty of one lakh rupees and in case of continuing failure,
Bdsrrqrmrd, ftnis 2s freqq 261 g 1006 (s)with further penalty of five hundred rupees for each day after the first during which such failure continues, subject to a maximum of twenty-five lakh rupees and every officer of the company who is in default including liquidator of the company, if ani, shall be liable to a penalty of fifty thousand rupees and in case of continuing failure, with further penalty of five hundred rupees for each day after the first during which such failure continues, subject to a maximum of five lakhrupees.".
16. In section l2l of the principal Act, for sub-section (3), Amendment of section 121.
the following sub-section shall be substituted, namely:-
"(3) If the company fails to file the report under sub- section (2) before the expiry of the period specified therein, such company shall be liable to a penalty of one lakh rupees and in case of continoing failure, with further penalty of five hundred rupees for each day after the first during which such failure continues, subject to a maximum of five lalili rupees and every officer of the company who is in default shall be liable to a penalty which shall not be less than twenty-five thousand rupees and in case of continuing failure, with further penalty of five hr:ndred rupees for each day after the fust during which such failure continues, subjectto amaximum of one lakh rupees.".
LT.lt section 137 ofthe principal Act, in sub-section (3),- Amendment of section 137.
(a) for the words "punishable with fine", the words
"liable to a penalty" shall be substituted;
(b) for the words "punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees or with both", the wogds "shall be liable to a penalty of one lakh rupees and in case of continuing failure, with firther penalty of one hundred rupees for each day after the first during which zuch failure continues, subject to a maximum of five lakh rupees" shall be
substituted.
Amendment 18. In section 140 of the principal Act, for sub-section (3),
sectioo 140.
the following sub-section shall be substituted, namely:-
"(3) If the auditor does not comply with the provisions of sub-section (2), he or it shall be liable to a penalty of frfty thousand rupees or an amount equal to the remuneration of ttre auditor, whichever is less, and in case of continuing failure, with firther penalty of five hundred rupees for each day after the fust during which such failure continues,
1006 (6) Bdqrrq {rsrd, ftni*. 2s fr{Tqr 20 1 8
subject to a maximum of five lakh rupees.".
Amendment
19. In section 157 of the principal Act, for sub-section (2),
of section
the following sub-section shall be substituted, namely:-
t57.
{{^{{FOOTNOTE *}}}}Q) If any company fails to furnish the Director
Identification Number under sub-section (1), such company shall be liable to a penalty of twenty-five thousand rupees and in case of continuing failure, with firther penalty of one hundred rupees for each day after the first dwing which such failure continues, subject to a maximum of one lakh rupees, and every officer of the company who is in default shall be liable to a penalty of not less than twenty-five thousand rupees and in case of continuing failure, with further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a manimum of one lakh rupOes.".
20. For section 159 of the principal Act, the following
Substitution ofnew section
section shall be substituted, namely:-
for section
159.
Penalty for default of
certain provisions.
{{^{{FOOTNOTE *159}}}}. If any individual or director of a company makes any default in complying with any of the provisions of section 152, section 155 and section 156, such individual or director of the company shall be liable to a penalty which may extend to fifty thousand rupees and where the default is a continuing one, with a further penalty which may extend to five hundred rupees for each day after the first during which such default continues.".
Amendment 2l.In section 164 of the principal Act, in sub-section (l), lt. section after clause (h), the following thuse shall be inserted, t64. namely:-
"(i) he has not complied with the provisions of sub-
section (1) of section 165.".
Amendment
of section
r65.
22.|n section 165 of the principal Act, in sub-section (6), for the portion beginning with "punishable with fine" and ending with "contravention continues", the words "liable to a penalty of five thousand rupees for each day after the first during which such contravention continues" shall be substifuted.
Amendment
23, In section l9l of the principal Act, for sub-section (5),
dr section
the following sub-section shall be substituted, namely:-
191.
*(5) If a director of the company makes any default in
complying with the provisions of this section, such director
1006 (7)
B,o+{rrattsTtrl, frqis 25fr€qt 2oI8
shall be liable to a penaity of one iakh rupees.".
z{.lnsection 197 of the principal Act,-
Amendment of section 197.
(a) sub-section (7) shall be omitted;
@) for sub-section (15), the following sub-section shall
be substituted, namely:-
"(15) If any person makes any default in complying with the provisions of this section, he shall be liable to a penalty of one lakh rupees and where any default has been made by a company, the company shall be liable to a penalty of five lak*t rupees.".
25. In section 203 of the principal Act, for sub-section (5), Amendment of section 203.
the following sub-section shall be substituted, namely:-
"(5) If any company makes any default in complying with the provisions of this section, such company shall be liable to a penalty of five lakh rupees and every director and key managerial personnel of the company who is in default shall be liable to a penalty of fifty thousand rupees and where the default is a continuing one, with a further penalty of one thousand rupees for each day after the first during which such default continues but not exceeding five lakh rupees.".
Amendment of section 238.
26.In section 238 of the principal Act, in sub-section (3), for the words "punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees", the words "liable to a penalty of one laktr rupees" shall be substituted.
Amendment of section 248.
2T.lnsection 248 of the principal Act, in sub-section (1), -
(a) in clause (c), for the word and figures "section 455,",
the words and figures "section 455; or" shall be substituted;
(b) after clause (c) and before the long line, the
following clauses shall be inserted, namely:-
:'(d) the subscribers to the memorandum have not paid the subscription which they had undertaken to pay at the time of incorporation of a company and a declaration to this effect has not been filed within one hundred and eighty days of its incorporation under sub- section (1) of section 10A; or
1006 (8) Bdqrc {Mqq, fuifi 2s fr€qt 20 I 8
(e) the company is not carrying on any business or operations, as revealed after the physical verification carried out under sub-section (9) of section 12.".
28.In section 441 of the principal Act,-
Amendment of section 441.
(a) in sub-section (1), in clause (b), for the words "does not exceed five lakh rupees", the words "does not exceed twenty-five lakh rupees" shall be substituted;
(b) for sub-section (6), the following sub-section shall
be substituted, namely:-
"(6) Notwithstanding anything contained in the Code
of Criminal Procedure, 1973, Ly offence which is Zof 1974' punishable under this Act with imprisonment only or with imprisonment and also with fine shall not be
compoundable.".
Amendment of section 446B.
29. In section 4468 of the principal Act, for the portion beginning with {{^{{FOOTNOTE *}}}}punishable with fine" and ending with "specified in such sections", the words "liable to a penalty which shall not be more than one half of the penalty specified in such sections" shall be substituted.
Amendment of section 2147.
30. In section 447 of the principal Act, in the second proviso, for the words "twenty lakh rupees", the words "fifty lakh rupees" shall be substituted.
Amendment of section 454.
31. In section 454 ofthe principal Act, -
(i) for sub-section (3), the following sub-section shall be
substituted, namely: -
"(3) The adjudicating officer may, by an order-
(a) impose the penalty on the company, the officer who is in default, or any other person, as the case rnay be, stating therein any non-compliance or default under the relevant provisions of this Act; and
(b) direct such company, or officer who is in default, or any other person, as the case may be, to rectiffie default, wherever he considers fit.";
(a) in clause (i), for the words "does not pay the penalty imposed by the adjudicating officer or the Regional Director", the wofds, brackets and figures
r ooo (9) B*e..I6{qrd, frqis 2s frsqr 2o1s"fa.ils to comply with tle order rnade under sr:b-section (3) or sub-section (7), as the case may be," shall be substituted;
(b) in clause (ii), for the words "does not pay the penalty", the words, brackets and figures "fails to comply with the order made under sub-section (3) or suFsection (7), as the case may be," shall be substituted.
ofa
Act, the following Insertion 32. After section 454 of the principal
section section shall be inserted, namely:-
new 454A.
Penalty for
repeated default.
*4544,. Where a company or an officer of a company or any other person having already been subjected to penalty for default under any provisions of this Act, again commits such default within a period of three years from the date of order imposing such penalty passed by the adjudicating officer or the Regional Director, as the case may be, it or he shall be liable for the second or subsequent defaults for an amount equal to twice the amount of penalty provided for such default under the relevant provisions of this Act.".
RAM NATH KOVIND, President.
DR. G. NARAYANA RAJU, Secretary to the Govt. of India.
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