Indian Company Law
Companies (Amendment) Act, 2019
Updated guide to Act No. 22 of 2019, which further amended the Companies Act, 2013.
Current-law note: This is an amending Act. Many provisions of the Companies Act, 2013 were amended again by the Companies (Amendment) Act, 2020 and through later rules and notifications. For compliance or legal advice, read the present text of the Companies Act, 2013 together with current rules, notifications and applicable MCA filings.
Overview and Commencement
The Companies (Amendment) Act, 2019 received Presidential assent on 31 July 2019 and was published as Act No. 22 of 2019. It replaced the Companies (Amendment) Second Ordinance, 2019 and made a series of changes to enforcement, corporate governance, CSR, filing defaults, commencement of business, registration of charges and adjudication of penalties.
Except for the provisions specifically excluded by section 1(2), the Act was deemed to have come into force on 2 November 2018. The remaining specified provisions were to commence on dates notified by the Central Government.
Major Changes Introduced by the 2019 Amendment
Dematerialisation of Securities
Section 29 was expanded so that prescribed classes of unlisted companies may also be required to issue, hold or transfer securities in dematerialised form. The detailed compliance framework is governed by the Companies (Prospectus and Allotment of Securities) Rules, 2014, as amended from time to time.
Re-categorisation of Offences
A number of defaults were shifted from criminal prosecution to an in-house adjudication framework, enabling monetary penalties to be imposed by adjudicating officers for specified non-compliances.
Corporate Social Responsibility
Section 135 was amended to create a statutory framework for dealing with unspent CSR amounts. The current position distinguishes amounts relating to ongoing projects from other unspent CSR amounts, with transfer and utilisation requirements governed by section 135 and the Companies (CSR Policy) Rules.
NFRA and Auditor Debarment
The National Financial Reporting Authority's enforcement powers were strengthened, including the ability to debar specified professionals or firms from appointment or performance of audit, internal audit or valuation functions for the period prescribed by law.
Commencement of Business
Section 10A requires certain companies having share capital to file a declaration regarding payment for shares subscribed to by the memorandum subscribers before commencing business or exercising borrowing powers, subject to the statutory requirements and prescribed filing process.
Registration of Charges
The amendment revised section 77 and the statutory timelines for registration of charges. The applicable filing period and additional-fee consequences must now be read with the current section 77 and the Companies (Registration of Charges) Rules.
Approving Authority
Specified powers, including approval relating to a different financial year under section 2(41) and conversion of a public company into a private company under section 14, were shifted from the Tribunal to the Central Government.
Compounding of Offences
The monetary jurisdiction of the Regional Director for compounding eligible offences under section 441 was increased, reducing the number of matters requiring Tribunal consideration.
Unfit Officers and Management
Sections 241 to 243 were strengthened to permit proceedings concerning persons considered unfit to hold office in connection with oppression, mismanagement, fraud, negligence or other specified misconduct, subject to an order of the Tribunal.
Significant Beneficial Ownership
The amendment strengthened section 90 by placing obligations on companies to take necessary steps to identify significant beneficial owners and secure compliance with statutory disclosure requirements.
Section-wise Companies (Amendment) Act, 2019
The following internal pages contain grouped section-wise material retained from this page:
Present Legal Position
The Companies (Amendment) Act, 2019 remains important for understanding how several provisions entered the Companies Act, 2013, but it should not be treated as a complete statement of current company law. Subsequent amendments, particularly the Companies (Amendment) Act, 2020, and later subordinate legislation have altered several compliance, penalty and governance provisions.