Comparative study between companies Act 2013 and Companies Amendment Act 2015

Topic:  Comparison between companies Act 2013 and Companies Amendment Act 2015

Introduction: - 

The companies Act 1956 had been enacted with the object to consolidate and amend the law relating to the companies and other associations. With the aim of providing an easy environment for the industrial sector, Companies Act was enacted in 2013. But still some clauses in 2013 Companies Act was still hampering the desired growth of industry in India and those clauses were either removed or modified in Companies (Amendment) Act 2015. Some of the amendments which deals with making common seal optional, requirement of minimum paid up share capital, public inspection of board resolution, fraud reporting by auditors etc.

A list of the section wise amendments in 2015 vis-à-vis, its previous states along with remarks as to their appropriateness, is appended herein below.

Section under Amendment of 2015	Companies Act 2013 brief provision	Companies Amendment Act 2015 brief provision	Remarks(as to its appropriateness )
Sec:2(68)	Private company required minimum paid up share capital of Rs.1,00,000	No requirement of minimum paid up capital	This amendment seems appropriate. As the pecuniary limit has been lift on the Article of Association of the company, it is upto them to fix the minimum paid up share capital, so as to form the company a small or large.
Sec:2(71)	Public company required minimum paid up share capital of Rs. 5,00,000	No requirement of minimum paid up capital	This is not appropriate amendment as the public company bears great responsibility in raising public money through collection of shares from the public. The minimum paid up share capital should be higher.
Sec:9,12,223	Affixation of common seal was mandatory	Use of common seal is now optional	As per the settled principles a body corporate cannot itself sign its name being an artificial person. So common seal is treated as its signature. So such amendment is not appropriate.
Sec:11	Provision related to commencement of business	This section has been omitted	This amendment was not also necessary on the same reason as explained in the case of sec :9
Sub sec(2), clause (a) of sec 22	Execution of Bills of exchange etc.	The words ” under its common seal ,if any” have been substituted	This amendment was not also necessary on the same reason as explained in the case of sec :9
Sec: 46(1)	Certificate of shares shall be prima facie its evidence of shares held by any person.	The underlines portion in the former column has been substituted by Sec 7	This is also an unnecessary amendment. Rather previous Act of 2013 clearly specifies who are authorised to sign the shares issued by the company concerned.
Sec: 76A	Not available in Companies Act 2013	New section 76A was inserted for the punishment of accepting deposits in violation of the provisions of the Act.	This is very appropriate amendment to ensure transparency and to stop corruption, cheating etc. relating to acceptance of deposits from the public.
Sec: 123	Declaration of dividend	A new proviso has been inserted to the effect that no dividend can be declared unless carried over previous losses and deprivation not provided in the previous year or years are set off against profit of the current year.	This is an important amendment as to the matter of declaration of company’s dividend and to prevent avoiding previous accounts.
Sec: 124(6)	All shares in respect of which unpaid or unclaimed dividend has been transferred under sub Sec 5 shall also be transferred by the company in the name of Investors education and protection fund.	The underlined words in the former column has been substituted “Dividend has not been paid or claimed for 7 consecutive years or more shall be” and an ‘explanation for removal of doubt has been inserted by sec 11(i) and 11(ii) respectively.	This is an important amendment fixing the limit of time for which the transfer concerned will be made. Again the ‘Explanation’ is an important one, which has been inserted to remove any doubt.
Sec: 143(2)	Power of company’s auditor to report to the Central Govt. if an offence of fraud is being or has been committed by officers or employees of the company.	By amendment u/s 14, it has been substituted with fixing pecuniary limit of fraud for reporting to the Central Govt. along with insertion of two proviso to the effect that incase of lesser amount it shall be reported to the audit committee or to the board within a prescribed time and in the event of reporting to the audit committee or to the board but not to the Central Govt., the fraud shall be disclosed to the board’s report.	The fixation of pecuniary limit to report to Central Govt. is nothing but lessening the responsibility or the workload of the Govt. hence , amendment is not necessary .
Sec: 212	Investigation in to affair of company by various fraud investigation officer	As per Sec 17, the words “offences covered under sec 447” has been inserted by substituting the previous one(as per C.A Act 42013)	This is an important amendment to prevent fraud and strengthening measures on the same.
Sec: 248	Power of the Registrar to remove the name of company from Register of companies	In Sec 248(1) a word “or” has been inserted after the sub clause (a) and also clause (b) has been omitted.	This is absolutely unnecessary amendment except for the insertion of the word “or”.
Sec: 435	Establishment of special courts	The section 435(1) has been amended by the words “trial of offences punishable under this Act with imprisonment of 2 years or more” in place of “trial of offences under this Act”	This is not an appropriate amendment as the provision of speedy trial by special courts for offences other than imprisonment of 2 years has been snatched away and the same has been sent to the overburdened criminal courts.
Sec: 436	Offences triable by special courts	In Sec:436(1)(a), the expression ”trial of offences under this Act” has been substituted by the words “all offences specified u/s 435(1)”	This is a consequence of the amendments of section 435 above
Sec: 462	Power to exempt class or classes of companies from provisions of this Act	By the substitution as made by Sec 462(2), the previous words in the same subsection namely “which may be comprised 1 or 2 or more successive sessions and if, before the expiry of session immediately following the session aforesaid” has been replaced by “for a total period of 30 days and if ”, and also 462(3) and (4) have been substituted.	This is an appropriate legislation bringing down the time span and making easy of the placing of copy of notification before the houses as per Sec 462(1)

[N.B: it is important to note that there are some amendment in different sections of C.A Act 2013 by company(Amendments) Act 2015 which are mentioned above such as,S.22(11) (3),117(3),134(3), 185,188,188(1),188(3),and 419. However, of these, the first two seem to be quite inappropriate but the rest seem to be appropriate.]

Conclusion:-

Thus from the above section wise study of the amendments made under companies (Amendment) Act 2015, and the respective remarks as made above, it appears that the amendments of 2015 in comparison with the companies Act 2013, are to some extent appropriate, necessary for the growth of the companies and their well being helping the growth of country’s economy, but to some extent the same amendments of 2015 are mere cosmetic and those (as remarked above) were not so needful. However if the study seems to be wrong in any respect, being students of law, the same may be condoned with suggestion thereon.

Q. "The 2015 amendment to the company Act 2013, has been rather cosmetic", Do you agree? Explain.