The Companies Amendmend Bill 2019 – Free PDF Download

Consider the following statement regarding Serious Fraud Investigation Team.

1. It is a corporate fraud investigating agency set up in 2009.
2. It was formed through a statutory act.
3. It is under the jurisdiction of the Ministry of Corporate Affairs.

Select the correct answer:

(a) 2 and 3 only

(b) 1 and 2 only

(c) 1 and 3 only

(d) 1, 2 and 3

PROVISIONS OF THE BILL

• Issuance of dematerialised shares:-
• Under the original Act, certain classes of public companies are required to issue shares in dematerialised form only.
• The Bill states this may be prescribed for other classes of unlisted companies as well.

Re-categorisation of certain Offences:-

• The 2013 Act contains 81 compoundable offences. These offences are heard by courts.
• The Bill re-categorizes 16 of these offences as civil defaults, where adjudicating officers (appointed by the central government) may now levy penalties.
• Compoundable offences are those offences where, the complainant (one who has filed the case, i.e. the victim), enter into a compromise, and agrees to have the charges dropped against the accused.

• There are some offences, which cannot be compounded. They can only be quashed. The reason for this is, because the nature of offence is so grave and criminal, that the Accused cannot be allowed to go scot-free.

Corporate Social Responsibility (CSR):-

• Under the Act, the companies which have to provide for CSR, do not fully spent the funds, they must disclose the reasons for non-spending in their annual report.
• Now, any unspent annual CSR funds must be transferred to one of the funds under Schedule 7 of the Act (e.g., PM Relief Fund) within six months of the financial year.
• CSR norms are applicable on companies which has-
• (a) net worth of Rs 500 Crore or more
• (b) turnover of Rs 1000 Crore or more
• (c) net profit of Rs 5 Crore or more.
• They are required to spend at least 2% of their average net profit for the immediately preceding 3 financial years on CSR activities.

Commencement of business:-

• The Bill states that a company may not commence business, unless it
• (i) files a declaration within 180 days of incorporation, confirming that every subscriber to the Memorandum of the company has paid for the shares agreed to be taken by him.
• (ii) files a verification of its registered address with the RoC within 30 days of incorporation.
• This will help in controlling ‘shell companies’.

 Change in approving authority:-

• Before, certain alteration in the incorporation document of a public company, has to be approved by the Tribunal.
• Under the Bill, these powers have been transferred to central government.

Compounding:-

• Under the Act, a regional director can compound (settle) offences with a penalty of up to five lakh rupees.
• The Bill increases this ceiling to Rs 25 lakh.

Debarring auditors:-

• Under the Act, the National Financial Reporting Authority debar a member or firm from practising as a Chartered Accountant for a period between six months to 10 years, for proven misconduct.
• The Bill amends the punishment to provide for debarment from appointment as an auditor or internal auditor of a company, or performing a company’s valuation, for a period between six months to 10 years.

National Financial Reporting Authority

•  It is an Indian body proposed in Companies Act 2013 for the establishment and enforcement of accounting and auditing standards and oversight of the work of auditors.
• After the Satyam scandal took place in 2009, the Standing Committee on Finance proposed the concept of the National Financial Reporting Authority (NFRA) for the first time.
• The Union Cabinet approved the proposal for its establishment on 1 March 2018.

AIM OF THE BILL

• The amendments in the Companies Act, were aimed at improving ease of doing business and also reducing the compliance burden on the companies, especially the smaller ones.

•  “Four lakh companies have been identified and de-registered,” she said, adding non-maintenance of registered office will be a ground for deregistration of companies.

Consider the following statement regarding Serious Fraud Investigation Team.

1. It is a corporate fraud investigating agency set up in 2003.
2. It was formed through a statutory act.
3. It is under the jurisdiction of the Ministry of Corporate Affairs.

Select the correct answer:

(a) 2 and 3 only

(b) 1 and 2 only

(c) 1 and 3 only

(d) 1, 2 and 3

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