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The Companies (Amendment) Bill, 2019 was passed by the Rajya Sabha on the 30th day of July, 2019. Earlier the Amendment Bill, 2019 was passed by Lok Sabha on the 27th day of July, 2019. While introducing the Bill in the Lok Sabha, the Hon’ble Finance and Corporate Affairs Minister, Nirmala Sitharaman said, “the Bill seeks to ensure more accountability and better enforcement to strengthen the corporate governance norms and compliance management in corporate sector as enshrined in the Companies Act, 2013”.


  • The Companies Act, 2013 (the Act) was enacted with a view to consolidate and amend the law relating to companies.
  • In order to review the existing provisions of the Act dealing with the offences and to make recommendations to promote better corporate compliance, the Government of India constituted a Committee in July, 2018.
  • The said Committee, after taking the views of several stakeholders, submitted its Report in August, 2018.
  • The Committee recommended that the existing rigour of the law should continue for serious offences, whereas the lapses that are essentially technical or procedural in nature may be shifted to in- house adjudication process
  •  Accordingly, it was proposed to amend certain provisions of the Companies Act, 2013.
  • However, in view of the urgency, the Companies (Amendment) Ordinance, 2018 was promulgated on 2nd day of November, 2018.
  • To replace the aforesaid Ordinance, a bill, namely, the Companies (Amendment) Bill, 2018 was introduced in the Lok Sabha and passed in the said House on the 4th day of January, 2019.
  • However, the saidBill could not be taken up for consideration in the Rajya Sabha.
  • In order to give continued effect to the Companies (Amendment) O r d i n a n c e , 2018, the President promulgated the Companies (Amendment) Ordinance, 2019 and the Companies (Amendment) Second Ordinance, 2019 on the 12th day of January, 2019 and the 21stday of February, 2019 respectively.

Amendments through the Companies (Amendment) Second Ordinance, 2019

The main reforms undertaken through the Ordinance include the following:

  • Re-categorising of offences which are in the category of compoundable offences to an in-house adjudication framework.
  • However, no change has been made in respect of any of the non-compoundable offences.
  • Ensuring compliance of the default and prescribing stiffer penalties in case of repeated defaults.
  • De-clogging the NCLT by:

- enlarging the jurisdiction of Regional Director (“RD”) by enhancing the pecuniary limits up to which they can compound offences under section 441 of the Act.

- vesting in the Central Government the power to approve the alteration in the financial year of a company under section 2(41); and

- vesting the Central Government the power to approve cases of conversion of public companies into private companies.

  • Other reforms include re-introduction of declaration of commencement of business provision; greater accountability with respect to filing documents related to creation, modification and satisfaction of charges; non-maintenance of registered office to trigger de-registration process; holding of directorships beyond permissible limits to trigger disqualification of such directors.

Apart from replacing the Second Ordinance 2019, the newly introduced Amendment Bill seeks to provide for certain additional amendments.

To read more in details, find the enclosed attachment

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