Recently there have been many amendments in the Companies Act, 2013 which is effective from various dates but in this article, we are going to discuss about the Top Amendments made in the Companies Act 2013 in 2021 which came in to effect from 01.04.2021 and therefore impact the Financial Year 2021-22

Let’s discuss top amendments one by one.

1. AMENDMENT IN CRITERIA OF SMALL COMPANY

On 1^st February 2021, MCA has notified the amendment in the Companies (Specification of Definitions Details) Amendment Rules, 2014, and the same shall come into force from 01.04.2021

As per this amendment definition of a small company has been changed with the new threshold limits. The paid-up capital and turnover of the small Company shall not exceed Rupees Two crores and Rupees Twenty Crores respectively.

Previously the Paid-up capital and turnover limit of the small Company does not exceed Rupees Fifty Lakhs and Rupees Two Crores respectively.

2. AMENDMENT  IN RULE OF CONVERSION OF ONE PERSON COMPANY INTO PUBLIC/PRIVATE COMPANY

An OPC can be converted into a Public/ Private Company through  its memorandum and articles of association by passing the special resolution as required under the Act.

An OPC may be converted into a Public/ Private Company by increasing the number of members and directors as required under the act and by maintaining the minimum paid-up capital as per the Act.

E-form INC-6 shall be required to be filed for conversion of OPC into Public/ Private Company. 

Also, OPC is not required to mandatorily convert into another type of Company irrespective of its turnover.

3. AMENDMENT  IN DEFINITION OF LISTED COMPANY

Again an important amendment has been done in the Companies (Specification of Definitions Details) Amendment Rules by changing the definition of the Listed Company.

After Rule 2 of Companies (Specification of Definitions Details) Amendment Rules, a new rule 2A has been inserted which says that:

The following class of Companies shall not be considered as Listed Companies:

(a) Public companies which have not listed their equity shares on a recognized stock exchange but have listed their –

(i) non-convertible debt securities issued on private placement basis in terms of SEBI (Issue and Listing of Debt Securities) Regulations, 2008; or

 (ii) non-convertible redeemable preference shares issued on private placement basis in terms of SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013; or

 (iii) both categories of (i) and (ii) above.

(b) Private companies which have listed their non-convertible debt securities on private placement basis on a recognized stock exchange in terms of SEBI (Issue and Listing of Debt Securities) Regulations, 2008;

(c) Public companies which have not listed their equity shares on a recognized stock exchange but whose equity shares are listed on a stock exchange in a jurisdiction as specified in sub-section (3) of section 23 of the Act.”

4. AMENDMENT IN DISCLOSURE OF DIRECTOR REPORT

The MCA has notified vide notification dated 24^th March 2021 amendment in the Companies (Account) Amendment Rules, 2021.

In rule 8 sub-rule 5 after clause X, the following clauses has been inserted:

(xi) the details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the financial year.

(xii) the details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof.

The above two clause shall require to be included in the director report of the Company along with the other disclosures with effect from 01.04.2021

5. AMENDMENT IN DISCLOSURE OF AUDIT REPORT

The Companies (Audit and Auditors) Rules, 2014 has been amended by MCA on 24^th March 2021 which is now called as Companies (Audit and Auditors) Amendment Rules, 2021 which come into force with effect from 01.04.2021.

In the Companies (Audit and Auditors) Rules, 2014, in rule 11,-

(1) clause (d) shall be omitted.

(2) after clause (d), the following clauses shall be inserted, namely:-

(e) (i) Whether the management has represented that, to the best of it’s knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

 (ii) Whether the management has represented, that, to the best of it’s knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been received by the company from any person(s) or entity(ies), including foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and

(iii) Based on such audit procedures that the auditor has considered reasonable and appropriate in the circumstances, nothing has come to their notice that has caused them to believe that the representations under sub-clause (i) and (ii) contain any material mis-statement.

(f) Whether the dividend declared or paid during the year by the company is in compliance with section 123 of the Companies Act, 2013.

(g) Whether the company has used such accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all transactions recorded in the software and the audit trail feature has not been tampered with and the audit trail has been preserved by the company as per the statutory requirements for record retention.

6. AMENDMENT IN ANNUAL RETURNS OF ONE PERSON COMPANY AND SMALL COMPANY

A major amendment has been done in the Companies (Management and Administration) Rules 2014 on 05^th March 2021 and shall come into force on the date of their publication in the Official Gazette.

Every Company except One Person Company and small company shall file its annual return in form MGT-7. And One Person Company and small company shall file its annual return in the form MGT-7A from the financial year 2020-21 onwards.

7. AMENDMENT IN DISClOSURE OF SHAREHOLDING OF PROMOTERS IN BALANCE SHEET

MCA vide its notification dated 24^th March 2021 made the amendments in the Schedule III to the Act with effect from 01^st day of April 2021.

The following changes are required to be done from now on:

Heading ―

1. Share Capital after the item (l) and the entries relating thereto, the following shall be inserted, namely:

(m) A company shall disclose Shareholding of Promoters* as below:

*Promoter here means promoter as defined in the Companies Act, 2013.

** Details shall be given separately for each class of shares

 *** percentage change shall be computed with respect to the number at the beginning of the year or if issued during the year for the first time then with respect to the date of issue.

8. AMENDMENT IN MINIMUM OFFER PERIOD FOR RIGHT OFFER

After Rule 12 in Companies (Share Capital and Debenture) Rules 2014 a new rule 12A shall be inserted

Under (i) of clause (a) of sub-section (1) of section 62, the time period within which the offer shall be made for acceptance shall be not less than seven days from the date of offer which previously was of 15 days.

9. E-FORM CSR-1 LAUNCHED ON 01.04.2021

As per rule 4 (1) and (2) of the Companies (Corporate Social Responsibility Policy) Rules, 2014 the following class of Companies are required to file CSR-1

1. Registered Public Trust
2. Registered Society
3. Section 8 Company

A unique CSR Registration number will be allotted to the entities who fall under the criteria of sec 135 and requires to file form CSR-1.

 The system will automatically generate the CSR Registration number once the form is filed by the entity on MCA Portal.