Companies Act Amendment, February 2021

SUMMARY:

Ministry of Corporate Affairs has caused myriad amendments in the Companies Act, 2013.

In this editorial, the author shall try to cover all such amendments along with the impact of the same on the Corporates.

No. of Notifications appeared in Feb, 2021 One
No. of Circulars appeared in Feb, 2021 Zero
No. of Amendments in Rules appeared in Feb, 2021 Six

amendment THROUGH NOTIFICATIONS

 Notifications of the Sections of Companies Amendment Act, 2020:

Dated: 11th February 2021

[1]Most of the important amendments in February 2021 is relating to the notification of total 2 more Sections of the Companies Act, 2020 out of the remaining 8 sections of the Companies Amendment Act, 2020 i.e. related to:

  1. Section 52 – Introduction of provisions of producer Company in Companies Act, 2013
  2. Section 66 – Repeal of certain enactment and savings.

Amendment THROUGH Circulars – NIL

Amendments in Rules 

  1. Amendment in Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2021:

[2]The Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2021 passed on 01st February 2021. This Rules came into effect immediately on publication of same in official gazette.

Increase the criterial for Fast Track Merger: Following companies can get merger through Fast Track Route:-

  • Two or more start-up Companies; or
  • One or more startup company with one or more small Company

Explanation.- For the purposes of this sub-rule, “start-up company” means a private company incorporated under the Companies Act, 2013 or Companies Act, 1956 and recognised as such in accordance with notification number G.S.R. 127 (E), dated the 19th February, 2019 issued by the Department for Promotion of Industry and Internal Trade.”

  1. Amendment in Companies (Specification of Definitions Details) Amendment Amendment Rules, 2021:

The Companies (Specification of Definitions Details) Amendment Rules, 2021 passed on 1st February 2021.

  • This Rules came into effect from 1st April 2021.

Delivering the Union Budget 2021-22, Finance Minister Nirmala Sitharaman, on Monday, proposed changes in definition of small companies under the Companies Act.

  • Definition of Small Company has been changed by these amendments.

IMPACT ON DEFINITION:

‘‘Small Company’’ means a company, other than a public company,—

Complete editorial on change in definition of Small Company, along with its impact and benefits to small company has been published on below link:

 

  1. Amendment in Companies (Incorporation) Second Amendment Rules, 2021:

[3]The Companies (Incorporation) Second Amendment Rules, 2021 passed on 1st February 2021.

  • This Rules came into effect from 1st April 2021.

Delivering the Union Budget 2021-22, Finance Minister Nirmala Sitharaman, on Monday, proposed changes in provisions of One Person Company. Like:

  • Process of conversion of One Person Company to another type of Company.
  • Allow NIR to incorporate OPC in India
  • Change in definition of resident in India w.e.f. 182 days to 120 days in immediately preceding financial year.
  • Removal of mandatory conversion of OPC in another type of company on attainment of on a specific limit of turnover.

Complete editorial on provisions relating One Person Company has been published on below link:

  1. Producer Companies Rules, 2021:

[4]New Rules, 2021 passed on 11th February 2021. This Rules came into effect from 11th February, 2021.

Ministry has already implemented section of Producer Companies in Companies act w.e.f. 11.02.2021 and simultaneously they issued some rules for the same Like:

  • Provisions of change in place of registered office from one state to another.
  • Provision for places where company can do investment form general reserve. Etc.
  1. Amendment in Companies (Share Capital and Debentures) Amendment Rules, 2021:

[5]The Companies (Share Capital and Debentures)Amendment, Rules 2021 passed on 11th February 2021.

  • This Rules came into effect from 1st April 2021.

Amendment in Section 62(a)(1), Offer for right issue shall be open atleast for 7 days and not exceeding 30 days.

  1. Amendment in Companies (Specification of Definitions Details) Second Amendment Rules, 2021:

[6]The Companies (Specification of Definitions Details) Second Amendment, Rules 2021 passed on 19th February 2021.

  • This Rules came into effect from 1st April 2021.

Definition of Listed Company has been changed by this amendment: Following companies shall not be considered as Listed Company-

  1. Public companies which have not listed their equity shares on a recognized stock exchange but have listed their –

{i) non-convertible debt securities issued on private placement  basis  in terms of SEBI (Issue and Listing of Debt Securities) Regulations, 2008; or

(ü) non-convertible redeemable preference shares issued on private placement basis in terms of SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013; or

(iii) both categories of (i) and (u) above.

  1. Private companies which have listed their non-convertible debt securities on private placement basis on a recognized stock exchange in terms of SEBI (Issue and Listing of Debt Securities) Regulations, 2008;
  1. Public companies which have not listed their equity shares on a recognized stock exchange but whose equity shares are listed on a stock exchange in a jurisdiction as specified in sub-section (3) of section 23 of the Act.”.

MCA Messages

  1. Stakeholders are hereby informed that the Central Government, in Ministry of Corporate Affairs, under section 67(1) of LLP Act, 2008 will be extending Sub- sections (1) to (11) of section 90, Sub- sections (1) and (2) of section 164 , Sub-sections (1) and (3) to (6) of section 165, Sub-section (1) to (3) of section 167, Sub-section (5) of section 206, sub-section (3) of section 207, Sub-sections (1) to (3) of section 252 and Sub-sections (1) to (4) of Section 439 of the Companies Act, 2013 to limited liability Partnerships with modification and adaptation soon. Accordingly, limited liability Partnerships, Partners and Designated partners thereof are advised to take note of the same for appropriate action.
  1. Stakeholders may please note that Scheme for condonation of delay for companies restored between 01 December 2020 and 31 December 2020 u/s 252 vide circular no. 03/2021 shall come into effective from 01st February 2021.

Companies which have obtained orders of Hon’ble NCLT under section 252 of CA 2013 dated between 01 December 2020 and 31 December 2020 are requested to approach the concerned jurisdictional ROCs along with copy of NCLT order, challan copy towards payment of cost as imposed by Hon’ble NCLT to avail the benefit of the scheme and/to mark the company’s status from ‘Strike off’ to ‘Active’.

Further, to avoid last minute rush and any hardship in filing documents on the MCA21 portal, stakeholders are advised to approach the ROCs at the earliest and shall not wait till the last date.

Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com).

Disclaimer: The entire contents of this document have been prepared based on relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness, and reliability of the information provided, I assume no responsibility, therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not professional advice and is subject to change without notice. I assume no responsibility for the consequences of the use of such information.

IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION

[1] http://www.mca.gov.in/Ministry/pdf/CommencementNotification_16022021.pdf

[2] http://www.mca.gov.in/Ministry/pdf/AmalgamationsAmndtRules_02022021.pdf

[3] http://www.mca.gov.in/Ministry/pdf/CompaniesSecondAmndtRules_16022021.pdf

[4] http://www.mca.gov.in/Ministry/pdf/ProducerCompaniesRules_16022021.pdf

[5] http://www.mca.gov.in/Ministry/pdf/CompaniesShareCapitalDebenturesRules_16022021.pdf

[6] http://www.mca.gov.in/Ministry/pdf/CompaniesSpecification2ndAmndtRules_19022021.pdf

×