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Legislations, The Law

The Companies (Amendment) Bill, 2020

The existing companies Act of 2013 hasn’t allowed for the effective implementation of many of the practices of business which not only discourage entrepreneur’s morale while running their enterprises; but also delays the proceedings of the court by criminalising the offences of minor nature. Contrary to this, The Companies (Amendment) bill of 2020 eliminates the shortcomings mentioned under the prevailing Act.

By: Rushil Midha, BBA.LLB, 3rd year, Geeta Institute of Law, Panipat.


The Companies (Amendment) Bill, 2020 was introduced in Lok Sabha by the Minister for Corporate Affairs, Ms. Nirmala Sitharaman, on March 17, 2020. The bill seeks to amend the Companies Act, 2013. The bill focuses on decriminalising various offences mentioned under the Act and also aims to reduce the burden on the National Company Law Tribunal.


The proposed bill deals with the following changes as to the Companies Act, 2013:

  • Producer Companies:

Some of the provisions regarding producer companies covered under the Companies Act, 1956 have had continued to exist in the Act of 2013. While the bill seeks to repeal such provisions by adding on a new chapter similar to the earlier provisions.

  • Direct Listing in Foreign Jurisdictions:

The bill by authorising the central government, allows certain classes of public companies to list classes of securities of a foreign jurisdiction. This provision will help the companies in raising their capital, which further helps in setting-up the start-up companies or businesses.

  • Remuneration to Non-Executive Directors:

With respect to the provisions for payment of remuneration to the executive directors of the company as provided by the Act, now, will extend to the non-executive directors also; as proposed by the bill. This likely will boost the morale of the non-executive directors by securing their payment of remuneration which directly results in increasing their potential.

  • Corporate Social Responsibility (CSR):

With reference to Section 135 of the Act, companies with net worth, turnover, or profits above a specified amount are required to constitute CSR committees and spend 2% of their average net profits in the last three financial years, towards its CSR policy.

While the bill exempts the companies with a CSR liability of up to 50 lakhs a year from setting up CSR committees. In addition to this, it allows eligible companies to set-off the excess amount towards their CSR obligations in the subsequent financial years.

  • Decriminalisation:

The bill proposed 72 amendments to the Companies Act, 2013 to decriminalise various offences by making three major changes as follows:

  1. By removing the penalty for certain offences.
  2. By removing imprisonment in certain offences.
  3. By reducing the amount of fine payable in certain offences.

The changes to offences will lead to emphasis more on the major offences and help in disposing of the cases without much delay. Hence, enhancing the overall productivity of employees.

  • Benches of NCLAT:

The bill aims to establish benches of the National Company Law Appellate Tribunal, which ordinarily sit in New Delhi or such other place as may be notified.

  • Auditing of Unlisted Companies:

The unlisted companies according to the proposed bill, have to prepare and file their financial reports periodically along with the completion of their audit or review of such reviews. The objective of the said provision is to bring transparency in the governance of such companies.

  • Beneficial Shareholding:

A person is required to make a declaration of his interest to the company if he holds a beneficial interest of at least 10% shares in a company or exercises significant influence or control over the company; which has to register separately. It also empowers the central government to exempt any class of persons from complying with these requirements if it’s not in the public interest.

  • Exemptions from filing resolution:

The Companies Act, 2013 requires companies to file certain resolutions with the registrar of companies that exempts banking companies from filing the same. While the bill now extends the exemption to non-banking and house finance companies too.


The bill, if passed by the parliament, would help in speedy trial and proceedings of the court in respect to major offences; the efficiency and productivity of employees would help the business to attain great opportunities ahead. Hence, increasing GDP along with the social welfare on the part of entrepreneurs.

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