February 22, 2019:

The Companies (Amendment) Second Ordinance, has been promulgated with a view, to empower the Central Government to allow certain companies to have a different financial year instead of as determined by the Tribunal.

The Union Cabinet chaired by PM Narendra Modi had earlier approved the Promulgation of the Companies (Second Amendment) Ordinance 2019 and for replacement of the said Ordinance in Parliament by a replacement Bill.

It is based on the recommendations of the Committee to review offences under the Companies Act, 2013, so as to fill critical gaps in the corporate governance & compliance framework as enshrined in the Companies Act 2013, while simultaneously extending greater Ease of Doing Business to law abiding corporate.

This will incentivize compliance of law while simultaneously meting out exemplary punishment for serious violations.

The Companies (Amendment) Bill, 2018 later renamed as the Companies (Amendment) Bill, 2019) was introduced in the Lok Sabha on 20th Dec, 2018 and was considered and passed by the Lok Sabha on 4th Jan 2019. The Bill was transmitted to the Rajya Sabha but it could not be considered and passed in the Upper House in the Winter Session or in the Budget Session.

A total of 29 Sections were amended and 2 new sections were inserted through the earlier ordinances, which were promulgated on 2nd Nov, 2018 (Ordinance 9 of 2018) and on 12th Jan, 2019 (Ordinance 3 of 2019).

The amendments have been brought in to address the need to impose civil liability for technical & procedural defaults of a minor nature & to plug gaps in the corporate governance & enforcement framework covering a wide range of issues such as:

a. Re-categorization of 16 minor offences as purely civil defaults which will de-clog special courts.

b. Transfer of certain routine functions from NCLT to the central government such as dealing with applications for change of financial year and conversion from public to private companies.

c. Making non-maintenance of registered office and non-reporting of commencement of business grounds for striking of from register of companies.

d. Stringent provisions with reduced timelines for creation and modification of charges

e. Breach of ceiling on directorships being made a ground for disqualification.

Read Gazette : The Companies (Amendment) Bill, 2018 

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