The Companies Amendment Ordinance, 2018 (“Ordinance”) promulgated effective from 2nd November, 2018, made amendments to the provisions of Companies Act, 2013 (“Act”). This primer seeks to flag some significant changes:

• Change of ‘financial year’ by companies having holding/subsidiary/ associate companies overseas would now need to approved by the Central Government instead of the National Company Law Tribunal (“NCLT”).
• Alteration of the Articles of Association having the effect of converting a public company into private, now needs to be approved by an order to the Central Government instead of the NCLT.
• A declarations and verifications for the payment of the value of shares agreed to be taken by every subscriber to the memorandum is again required to be filed with the registrar before the commencement of any business, failing which would attract a penalty of fifty thousand rupees for every company and one thousand rupees for ever officer for each day during which the default continues. Deletion of erstwhile Section.11 of the Act in 2015 has been revisited.
• If the Registrar of Coanies (“Registrar”) has “reasonable cause to believe” that the company not carrying on any business or operations, he (the registrar) may cause “physical verification” of the registered office of the company and also initiate action for the removal of name of the company from the register upon a default or failure to have a registered office capable of receiving and acknowledging communication and notices.
• The penalty for issue of shares at a discount would be amount equivalent to that raised (not minimum one lac rupees) apart from imprisonment as prescribed.
• The Companies and officers would be treated uniformly for failing to comply with Section.92 (Annual Returns) – a penalty of Rs, 50,000/- and in case of continuing failure Rs, 100/- per day of continuance upto five lakh rupees, a change from the earlier provision which provided differential and harsher treatment to officers.
• The period for registration process for the creation of charges is reduced to 60- days instead of 300-days span provided under section 77 of the Act, on the payment of the advalorem fees. The Ordinance also prescribes that any contravention of section 77, by wilfully furnishing false or incorrect information or knowingly suppressing material information would specifically attract penalties under Section 447 of the Companies Act, 2013 (Punishment for Fraud), in addition to other generally prescribed penalties.
• The Ordinance brings back the power by the Registrar of Companies for compulsory removal of name of a company in the on two grounds. viz., not filed declaration and the e-form INC-22.

The softening of penalties coupled with shifting of approvals of administrative matters from NCLT to Central Government is expected to create a more enabling compliance regime going forward. There however is a need to replace the Ordinance with an amendment of the Act through a Bill of the Parliament, failing which uncertainties of consequential liabilities upon the Ordinance lapsing may limit the compliance positive aspects of the Ordinance.