What will be the New Trend in Corporate Law after the Companies (Amendment) Act, 2020?

Must Read

Ed-Tech Companies and the Consumer Protection Act

In the present time when the whole country is getting back to normal after the wrath of the Coronavirus,...

The Right to Information and its Working of 15 years

On 12th October 2020, RTI finished fifteen years since its commencement. The question remains whether the legislation stands up to...

An Insight into Custodial Death in India

“The occurrence of Custodial deaths in the world’s greatest democracy has raised the eyebrows of every citizen and shaken...

Implications in Travel Insurance in Light of the COVID-19 Crisis

As the world, today is crippled by this once in a century pandemic and as of date more than...

Second-Round Effects of Rent Control Laws: The Argentine Case

Introduction In colonial India, a city had an issue with its cobra population, which was a problem clearly in need...

Why Are the Big Techs of Silicon Valley Accused of Anti-Competitive Behaviours?

The big tech giants of the Silicon Valley are facing major challenges with relation to their monopolistic powers after...

Follow us

The Companies (Amendment) Bill, 2020 was introduced in the Lok Sabha in light of the difficulties faced by companies due to the pandemic crisis. The Bill looks to amend various provisions of the Companies Act, 2013 and even adds new provisions. On September 29, 2020, the President of India notified his assent to the Bill, which was enforced as The Companies (Amendment) Act, 2020.

The Companies (Amendment) Bill, 2020: An Overview

The Companies (Amendment) Bill, 2020, was introduced in the Lok Sabha on March 17, 2020. The Bill is an outcome of the Company Law Committee constituted in September 2019. Shri Injeti Srinivas was announced as the Chairman of the Committee, and the Committee was set up to decriminalize certain offences under the Companies Act. After careful considerations, the Committee prepared a report of recommendations, on which the Bill was based. The Bill sought to amend 60 provisions and add 4 provisions to the existing Act, i.e. the Companies Act, 2013. The Bill also seeks to add a new chapter which will deal with Producer Companies. The following are the objectives for which the bill was introduced:

  1. To allow Public Companies to list their securities under certain prescribed classes under foreign jurisdictions
  2. To decriminalize certain activities classified as offences under the Companies Act, 2013
  3. To allow companies to carry forward of the amount set aside for Corporate Social Responsibility to the next financial year
  4. To empower the Central Government to de-list certain class of companies for the listing of debt securities
  5. To introduce provisions to govern Producer Companies
  6. To set up benches of the National Company Law Appellate Tribunal

The Bill was introduced by the Finance Minister Nirmala Sitharaman. She stated that the Bill would reduce the number of offences under the Act from 134 to 124. This will reduce the burden of litigation for small companies as well as the National Company Law Tribunal. The Bill was passed by the Lok Sabha on September 19, 2020, after which it was sent to the Rajya Sabha, which passed the bill on September 22, 2020, and then the bill received the Presidential asset on September 29, 2020.

Need for the Amendment: An Analysis

The Companies Act, 2013 is heavily criticized for not being able to provide a platform to conduct business smoothly and efficiently. The Bill was introduced as a means to establish easier business practices, a move that was required all the more due to the struggles of the Corporate Sector as a result of the Pandemic crisis. While the Committee was set up in September 2019, the onset of the Pandemic acted as a catalyst in expediting the introduction of the Bill. The major reason for the introduction of the Bill was the pendency of cases in the Courts and Tribunals. The National Company Law Tribunal (NCLT) and Appellate Tribunal (NCLAT) face the issue of overburdening of cases. It has been reported that thousands of cases are pending before the National Company Law Tribunal.

In 2019, Union Minister Anurag Singh Thakur announced that the Central Government was focusing towards the strengthening of the NCLT and NCLAT. Earlier this year, the Government announced the setting up of the Chennai bench of the NCLAT. The 2020 Amendment Act inserts a new provision, namely Section 418 A, that provides for the setting up of additional benches of the NCLAT. Additionally, the Act decriminalizes certain offences, particularly those offences under the Act which do not involve elements of fraud or are against the public interest.

The Amendment Act has reduced the penalties, which include fines and imprisonment, for certain offences. These amendments ensure that the Courts and Tribunals are less overburdened, and it also benefits the small businesses, who are granted some relief from litigations.

The 2013 Act continued to govern the Producer Companies using provisions from the Companies Act, 1956 however, the Bill removes the outdated provisions and introduces new provisions to govern the same. It also empowers the Central Government to order certain classifications of unlisted businesses to prepare and file their financial returns. These returns are further audited or reviewed.

Concluding Remarks

The Companies (Amendment) Act, 2020 is an addition to the long list of the amendments and changes made to the legislation governing Corporate Law in India. Corporate Law in India has not only seen various legislations but has also witnessed multiple amendments in the same. The Amendment brings about a high number of significant changes in the existing Legislation. The functions or objectives of the amendments can be divided into two major divisions.

While the provisions for setting up additional benches of the NCLAT would help lessen the burden by dividing the cases according to territorial jurisdiction. The decriminalization of offences can be misused. While small companies might truly benefit from the decriminalization of offences, large corporations may misuse such benefit from the amendments. The results of the amendments are yet to be observed in the coming times.


Libertatem.in is now on Telegram. Follow us for regular legal updates and judgments from the court. Follow us on Google News, InstagramLinkedInFacebook & Twitter. You can also subscribe to our Weekly Email Updates. You can also contribute stories like this and help us spread awareness for a better society. Submit Your Post Now.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Latest News

Bombay High Court Passes Order To Clarify and Modify Previous Order When State of Maharashtra Moved Praecipe

Division Bench of Bombay High Court consisting of Justice S. V. Gangapurwala and Justice Shrikant D. Kulkarni had passed an Order on 25th October...

The European Court of Human Rights Orders Germany To Pay Non-Pecuniary Damages for Prison Strip-Searches 

A serving German prisoner was repeatedly stripped searched for non-legitimate purposes. The European Court of Human Rights (ECHR) found that Germany had violated the...

Lack of Independent Witness Doesn’t Vitiate Conviction: Supreme Court

A three-judge Bench of the Supreme Court in Rajesh Dhiman v State of Himachal Pradesh clarified the law in case of lack of independent...

Madras High Court Observes Unexplained Delay in Procedural Safeguards, Quashes Detention Through Writ Petition

A Writ Petition was filed under Article 226 to issue a writ of Habeas Corpus. The petitioner P. Lakshmi, called for records of the...

UK Court of Appeal Rules Home Department’s Deportation Policy of Immigrants Unlawful

Britain’s Court of Appeal quashed the Home Department’s deportation policy, declaring it unlawful; criticizing it for being too stringent on immigrants to comply with. Background The...

Supreme Court Stays Order Restraining Physical Campaigns in the Madhya Pradesh Bye-Elections

On the 26th of October, a Bench was set up which comprised Justice AM Khanwilkar, Justice Dinesh Maheshwari, and Justice Sanjiv Khanna. They heard...

Inordinate and Unexplained Delay in Considering Representation by Government Renders Detention Order Illegal: Madras High Court

A Petition under Article 226 of the Constitution was filed in the Madras High Court to declare the detention order of the husband of...

Supreme Court Asks Petitioner to Approach Bombay High Court in PIL for CBI Probe in Disha Salian Case

On the 26th of October 2020, the Apex Court heard the PIL praying for a CBI probe into the death of Disha Salian. The...

Privy Council Clarifies Approach To Winding up in “Deadlock” Cases in the Case of Chu v. Lau

The Judicial Committee of the Privy Council clarified several aspects of the law concerning just and equitable winding-up petitions, as well as shareholder disputes...

Madras High Court Directs Hospital To Submit Necessary Medical Reports to Authorization Committee for Approval of Kidney Transplant

A Writ Petition was filed under Article 226 to issue a Writ of Mandamus to K.G. Hospital, Coimbatore by P. Sankar & V. Sobana....

More Articles Like This

- Advertisement -