Newly Inserted Sections as per Companies Amendment Act, 2017

INTRODUCTION

The Companies Act 2013, came with significant changes and challenges in the Companies law in India. The Government of India in order to address the difficulties posed in the implementation of rigorous compliances, facilitate with the ease of doing business, harmonizing with the various Acts and regulations came up with the introduction of Companies (Amendment) Bill 2016 in the Lok Sabha after rectifying inconsistencies in the Act. The Bill was referred to the Standing Committee on Finance, it was further examined and renamed as Companies (Amendment) Bill 2017 after making related changes as per the suggestions received by the committee. The Bill was further reintroduced in the Lok Sabha and passed on 27^th July 2017. Then the Bill was approved by the Rajya Sabha on 19^th December 2017 and got the assent by the Honourable President Mr. Ram Nath Kovind on 3^rd January 2018.

The Ministry has appointed 9th February 2018 as the date on which these sections will come into force.  Sections Newly Inserted 1.       Members severally liable in certain cases (Section 3A)

This section has been newly inserted which says that if at any time the number of members of a company is reduced, in the case of a public company, below seven, in the case of a private company, below two, and the company carries on business for more than six months, every person who is a member of the company during the time that it so carries on business, after those six months shall be severally liable for the payment of the whole debts of the company contracted during that time.

2. Factors for determining level of punishment (Section 446 A)

This section prescribes different factors (size, nature of business of the company and the type of default and injury to the public) to courts for determining the level of punishment. This change will give due justice according to the default done by the companies.

3.Lesser Penalties for OPC and small companies (Section 446 B)

This section provides a relaxation to OPC and small companies with regards to penalties occurred in non-compliance of filing annual returns, financials and resolution.

If any such default occurs, then the company and any officer in default shall be punishable with fine or/and imprisonment which shall not be more than one-half of the fine or/and imprisonment of the minimum or maximum fine or/and imprisonment specified in such sections.