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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
2018.
commencement'
(2) It shall come into force at once.
I 005
1006
Edqrrd ttqqa, frqi6 2s funER 20 t 8
Amendment
of section 2.
Insertion of
new section
l0A.
Comrnence-
ment
of
business, etc.
2. ln section 2 of the Companies Act, 2013 (hereinafter
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:-
*10A.(1) A compary incorporated after the
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
Bderrd {q[d, fu'-s 2s frrTwr 2ol s
r006 (r)
for 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),
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,-
(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.
Amendment of
section 12.
Amendment of
section 14.
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
Amendment
of section 64.
Amendment
ofsection 77.
"(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
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.".
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
Rffisrrd {M[*, frqifi 2s frsqq 26 1 g
r006 (3)
made within a further period of sixty days after payment
of such advalorem fees as may be prescribed.".
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
section shall be substituted, namely:-
*87. The Central Govemment on being satisfied that -
(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,-
(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:
Amendment of
section 86.
Substitution of
new section
for section 87.
Rectification
by
Central
Goverrment in
Register of
charges.
Amendment of
section 90.
1006 (4)
y+{Frd qsrrd, frqifi 2s frsqr 20 I 8
Amendment
ofsection 92.
Amendment
of
section
102.
Amendment
of
section
105.
Amendment of
section 117.
I
Provided 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),
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.".
13. In section 102 of the principal Act, for sub-section (5),
the following sub-section shall be substituted, namely:-
"(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.".
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),
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),
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),-
(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.
18. In section 140 of the principal Act, for sub-section (3),
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,
Amendment of
section 121.
Amendment of
section 137.
Amendment
sectioo 140.
1006 (6)
Bdqrrq {rsrd, ftni*. 2s fr{Tqr 20 1 8
Amendment
of
section
t57.
Substitution
ofnew section
for
section
159.
Penalty for
default of
certain
provisions.
Amendment
of
section
r65.
Amendment
dr
section
191.
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:-
subject to a maximum of five lakh rupees.".
19. In section 157 of the principal Act, for sub-section (2),
the following sub-section shall be substituted, namely:-
*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
section shall be substituted, namely:-
*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.".
"(i) he has not complied with the provisions of sub-
section (1) of section 165.".
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.
23, In section l9l of the principal Act, for sub-section (5),
the following sub-section shall be substituted, namely:-
*(5) If a director of the company makes any default in
complying with the provisions of this section, such director
B,o+{rrattsTtrl, frqis 25fr€qt 2oI8
1006 (7)
shall be liable to a penaity of one iakh rupees.".
z{.lnsection 197 of the principal Act,-
(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),
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.".
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.
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
Amendment of
section 197.
Amendment of
section 203.
Amendment of
section 238.
Amendment of
section 248.
1006 (8)
Bdqrc {Mqq, fuifi 2s fr€qt 20 I 8
Amendment of
section 441.
Amendment of
section 446B.
Amendment of
section 2147.
Amendment of
section 454.
(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,-
(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.".
29. In section 4468 of the principal Act, for the portion
beginning with *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.
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.
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.";
(iD in sub-section (8), -
(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
B*e..I6{qrd, frqis 2s frsqr 2o1s
r ooo (9)
"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.
32. After section 454 of the principal
section shall be inserted, namely:-
Act, the following Insertion
new
454A.
ofa
section
*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.
Penalty for
repeated default.
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