THE PROPOSED AMENDMENT TO THE COMPANIES ACT. Shajeeda Tajdeen BASICS OF LAW Tue, Jul 30, 2019, at ,11:39 AM Finance Minister Nirmala Sitharaman recently introduced before the Lok Sabha, the Companies Amendment Bill, 2019 and the same were passed. The Amended Bill aims to bring some of the following changes in the already existing law. Re-categorization of Offences: Under the present act there 81 compoundable offenses which come along with fine and/or prison as the case may be. These are the offenses which are heard and decided by the courts. However, by virtue of the Amended Bill 16 out of the 81 offenses are made as civil defaults and thus government-appointed officers are empowered to levy penalties in such situations. Compounding: With the new amendment the upper limit of penalty that can be levied by a regional director while compounding of an offense has been raised form Rs.5 Lakh to Rs.25 Lakh. Bar on Holding office: Under the existing Act, the Union Government or certain classes of shareholders were only allowed to approach the NCLT i.e. National Company Law Tribunal to seek relief or remedy in the event of any mismanagement in the affairs of the company. The Amended Bill specifies that in such a complaint the Government may also make a case against an officer of the company on the ground that he/she is unfit to continue with the post, or for reasons such as fraud, misconduct or negligence. If the NCLT passes an order against the officer, he/she will be disqualified to hold the office for a period of five years. Debarring auditors: Under the present act, NFRA i.e. the National Financial Reporting Authority has the power to prohibit a member or firm from practicing as a Chartered Accountant for period ranging from six months to 10 years as the case may be, but the new bill has more additions to this provisions under which the NFRA has the jurisdiction of debarring a member or firm to act as an auditor or internal auditor or from performing the valuation of the company for the same period as mentioned above. Issue of Dematerialized shares: The earlier act specifically stated that only particular classes of a public company can issue shares in a Demat form. The new change states that unlisted companies will also be permitted to issue certain classes of their shares in Demat form. Change in approving authority: The Bill has introduced a shift of powers from the NCLT to the Central Government in the following cases: Any modification in the period of the financial year of any company which is connected to a foreign company will now have to be approved by the Central Government. Similarly, any variation in the document of incorporation of a public company which tends to convert it into a public company will also need to be approved and sanctioned by the Central Government. Registration of charges: The earlier Act stated that a company has to mandatorily register any and all its charges within 30 days of its creation. The upper limit of 30 days could be relaxed to 300 days in certain cases only after receiving approval on the same by the Registrar of Companies. However, under the new amendment, the period of 300 days has been changed to a maximum of 60 days. Corporate Social Responsibility (CSR): As per the new bill, the companies that are now required to budget for CSR must reveal in their annual reports all the reasons owing to which they were unable to fully utilize the allocated fund. And the entire unspent amount shall be transferred to anyone of the funds under Schedule 7 of the Act within six months of the financial year.