The Companies (Amendment) Act, 2019: key takeaways

The Companies (Amendment) Bill received the President’s assent on 31 July 2019 and was published in the official gazette on the same date as the Companies (Amendment) Act, 2019 (Amendment Act).  The Amendment Act further amends the Companies Act, 2013 (Act). Majority of the provisions of the Amendment Act are deemed to have come into effect on 2 November 2018.  The remaining provisions, barring the amendment relating to corporate social responsibility, were made effective from 15 August 2019.

The key takeaways of the Amendment Act are: 

·         Dematerialized securities

·         Penalty for certain offences

·         Enhanced penalty for repeated defaults

·         Corporate social responsibility (CSR)

·         Commencement of business

·         Registration of charges

·         Beneficial ownership

·         Power of central government and National Company Law Tribunal (NCLT) in case of oppression and mismanagement 

The Amendment Act seeks to strengthen the existing governance norms and compliance management in the corporate sector by making a provision for imposition of enhanced penalties in case of repeated defaults. The central government now has a greater say in cases of oppression and mismanagement, and the individuals responsible for the same can now be directly held accountable. 

The Amendment Act has made it mandatory for all companies (required under the Act) to set aside monetary contributions for corporate social responsibility, even if such contribution is not earmarked for a specific purpose.