The much awaited Companies (Amendment) Act, 2015 has finally received the assent of the President. The Act aims to simplify the process of conducting business. Some of the most significant changes that have been brought out by the Act are briefly listed below:
- The minimum capital requirement for formation of private and public companies have been removed.
- The requirement of common seal has been made optional. Where the company does not have a common seal, the authorisation shall be given by either two directors or a director and a Company secretary (where the Company has appointed a Company Secretary).
- Companies with share capital no longer need to apply for commencement of business. They can commence business and exercise borrowing powers immediately after incorporation.
- Companies hereafter, cannot declare dividends unless they have carried over previous losses and depreciation not provided in previous year or years and set it off against profit of the current year.
- Shares on which dividends have not been paid or claimed for a period of 7 (Seven) or more consecutive years, has to be transferred to Investor Education and Protection Fund.
- Related Party Transactions can now be approved by the passing of an ordinary resolution as opposed to a special resolution that needed to be passed earlier.
- The Act has set a threshold limit for auditors to report frauds to Central Government. Frauds below the threshold limit have to be reported to the Audit Committee.
- The Audit Committee has been vested with the authority to grant omnibus approval for Related Party Transactions subject to the satisfaction of the prescribed conditions.
- Penal provisions for acceptance of deposits in contravention of the law and regulations have been introduced.