Introduction

The Companies Amendment Bill 2016 was tabled before the Lok Sabha on 16^th March, 2016 to further amend the Companies Act 2013. The bill seeks to amend 87 sections out of 470 sections of the Companies Act, 2013 giving an impression that whether it be called Companies Act 2013 or Companies Act 2016.

However, many of the amendments sought are very much appreciable and would make India a better place to do business if passed by both the houses of the Parliament.

 

Among many important and significant changes that have been proposed under the Companies Amendment Bill 2016, a brief understanding of the changes in provisions related to company incorporation or newly formed company has been highlighted below:

 

Section 4(I)(5)- Reservation of Name

At present as per the Companies Act 2013, the name was kept under reservation for a period of 60 days from the date of application of such reservation; but by the Companies Amendment Bill 2016, the word 60 days shall be substituted with the word “20 days from the date of approval”. In other words, the stakeholders will have to file the incorporation documents within 20 days from the date of name approval.

 

Analysis – This amendment shall put a pressure on the stakeholders to complete the process without any negligence; also the Ministry should give approval much faster than in the present scenario. However, the provision got much clearer as compared to the Companies Act 2013. Further, the Ministry has tactfully managed to keep them at bay by saying that post approval the complete onus will be on the applicant.

 

Section 7(1)(C) – Affidavit in respect of Subscribers to Memorandum

In the Companies Act 2013, there was a requirement of an affidavit from each of the subscribers to the memorandum and from persons named as the first directors, if any, in the articles that he is not convicted of any offence in connection with the promotion, formation or management of any company, or that he has not been found guilty of any fraud or misfeasance or of any breach of duty to any company under this Act or any previous company law during the preceding five years and that all the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of his knowledge and belief. By the amendment the word “an affidavit” shall be substituted with the word”a declaration”.

 

Analysis – The above provision seems to be very much in sync with the Government’s motto of providing a platform for ease of doing business by simplifying the company registration process.  This may escape the subscribers from stamping and notary of the documents which will definitely be a big relief for the subscribers indeed.

 

Section 12(1) – Registered Office of the Company

Sub-section (1) of Section 12 of the Companies Act 2013 states that a company shall have a registered office which is capable of receiving and acknowledging all communications and notices as may be addressed to it within 15 days from the date of incorporation. The Companies Amendment Bill 2016 proposed to amend this provision to provide more time to the new generation entrepreneurs by increasing the time-limit to 30 days from the date of incorporation.

 

Analysis – The above change would give a time of 15 more days to search for a registered office of the company and registering and intimating the same to the registrar of companies.

 

Section 12(4) – Intimation regarding Change in Registered Office to Registrar of Companies

Under the Companies Act 2013, the total time-limit for notifying any change in the registered office of the Company to the Registrar of Companies is 15 days from such change; however the Companies Amendment Bill 2016 proposes to increase the time-limit to 30 days from the date of change in registered office of the Company.

 

Analysis – This amendment is a significant change in regard to the registered office of a company as the stakeholders would get a time of 15 more days for notifying any change in the registered office of the company.

 

Conclusion

The changes or amendments highlighted above are a very small part of the amendments that the Companies Amendment Bill 2016 seeks to bring. There are many other significant changes proposed by the Companies Amendment Bill 2016 which is a forward looking vision of the Government of India and would make the life of entrepreneurs easier in the coming days if amendment is passed by the both Lok Sabha and Rajya Sabha.

 

______________________________________________________