Companies Amendment (Ordinance), 2018 promulgated - (02 Nov 2018)

Company

President of India gives his assent for promulgation of the Companies Amendment (Ordinance), 2018 approved by the Union Cabinet. The Ordinance is based on the recommendations of the Committee appointed by the Government to review offences under the Companies Act, 2013. In order to promote Ease of Doing Business along with better corporate compliance and to strengthen in-house adjudication mechanism, Ordinance has been promulgated.

Major amendments are relating to shifting of jurisdiction of 16 types of corporate offences from the special Courts to in-house adjudication, which is expected to reduce the case load of Special Courts by over 60%, thereby enabling them to concentrate on serious corporate offences. With this amendment, the scope of in-house adjudication would go up. Further, the penalty for small companies and one person companies has been reduced to half of that applicable to normal Companies. A transparent and technology driven in-house adjudication mechanism instituted on an online platform and the orders would be published on the website.

The NCLT would be de-clogged by expanding the pecuniary jurisdiction of Regional Director by enhancing the limit up to Rs. 25 Lakh as against earlier limit of Rs. 5 Lakh under Section 441 of the Act. Further, the Central Government is now vested with power to approve the alteration in the financial year of a Company under Section 2(41); and to approve cases of conversion of public companies into private companies. Recommendations related to corporate compliance and corporate governance includes re-introduction of declaration of commencement of business provision to better tackle the menace of ‘shell companies’; greater disclosures with respect to public deposits; greater accountability with respect to filing documents related to creation, modification and satisfaction of charges; non-maintenance of registered office to trigger de-registration process; and holding of directorships beyond permissible limits to trigger disqualification of such directors.

Tags : ASSENT PROMULGATION ORDINANCE