Companies Amendment Act 2020: Sections 2, 8, 16, 23 and 26 Explained

The Companies (Amendment) Act, 2020 (Act No. 29 of 2020) received Presidential assent on 28 September 2020. It amended the Companies Act, 2013 in stages, with different provisions brought into force on different notified dates.

Important: The section numbers 2, 8, 16, 23 and 26 below refer to provisions of the Companies Act, 2013 that were amended by sections 2 to 6 of the Companies (Amendment) Act, 2020. This distinction avoids confusion between the amending Act and the principal Act.

Section 1 of the Companies (Amendment) Act, 2020: Short title and commencement

Section 1 names the legislation as the Companies (Amendment) Act, 2020. It also authorises the Central Government to appoint commencement dates by notification in the Official Gazette and permits different provisions to commence on different dates.

Statutory effect: A provision of the Amendment Act does not necessarily take effect merely because the Act received assent. Its operative date depends on the commencement notification applicable to that provision.

Amendment Act provision	Companies Act, 2013 provision affected	Main change	Effective date
Section 2	Section 2(52)	Proviso concerning classes of companies excluded from the definition of listed company	22 January 2021
Section 3	Section 8(11)	Removed imprisonment from the specified punishment	21 December 2020
Section 4	Section 16	Reduced the relevant name-rectification period and provided for allotment of a new name on default	22 July 2021
Section 5	Section 23	Inserted sub-sections (3) and (4) enabling prescribed overseas/direct listing framework	30 October 2023
Section 6	Section 26(9)	Removed imprisonment from the specified punishment for contravention relating to prospectus requirements	21 December 2020

Amendment to Section 2(52): Meaning of listed company

Section 2(52) of the Companies Act, 2013 defines a listed company. Section 2 of the 2020 Amendment inserted a proviso allowing prescribed classes of companies, which have listed or intend to list prescribed classes of securities, not to be treated as listed companies. The change took effect on 22 January 2021.

The practical purpose is to prevent every company with a prescribed category of listed security from automatically attracting the full legal treatment applicable to a listed company. The precise exclusion depends on the classes prescribed under the Companies (Specification of Definitions Details) Rules, 2014, as amended.

Amendment to Section 8(11): Section 8 companies

Section 8 deals with companies formed for charitable or other permitted not-for-profit objects and licensed subject to statutory conditions. Section 8(11) addresses punishment where an officer in default is involved in specified contraventions.

Section 3 of the 2020 Amendment omitted the words providing imprisonment for a term extending to three years and correspondingly removed the reference to punishment "with both". The monetary fine provision remained. This formed part of the wider decriminalisation of specified company-law defaults and took effect on 21 December 2020.

Amendment to Section 16: Rectification of company name

Section 16 provides for rectification where a company has been registered with a name that is identical with or too nearly resembles another name or, in the circumstances covered by the section, a registered trade mark.

Section 4 of the 2020 Amendment changed the relevant period in section 16(1)(b) from six months to three months. It also substituted section 16(3). If a company defaults in complying with a direction under section 16(1), the Central Government may allot a new name in the prescribed manner; the Registrar then enters that name in the register and issues a fresh certificate of incorporation. The company remains free to subsequently change its name in accordance with section 13. The amendment took effect on 22 July 2021.

Amendment to Section 23: Public offer and direct listing

Section 23 concerns public offer and private placement. Section 5 of the 2020 Amendment inserted sub-sections (3) and (4), effective from 30 October 2023.

Under section 23(3), prescribed classes of public companies may issue prescribed classes of securities for listing on permitted stock exchanges in permissible foreign jurisdictions or other prescribed jurisdictions. Section 23(4) empowers the Central Government, by notification, to exempt qualifying classes of public companies from specified provisions of Chapter III, Chapter IV, sections 89, 90 or 127, subject to the statutory notification process.

The framework was operationalised further in 2024 through the Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024 and the Direct Listing of Equity Shares of Companies Incorporated in India on International Exchanges Scheme, 2024. The rules apply to qualifying unlisted public companies and, subject to the applicable SEBI or IFSCA framework, listed public companies issuing equity shares for listing on permitted international exchanges.

Amendment to Section 26(9): Prospectus contravention

Section 26 sets out matters and regulatory requirements connected with a prospectus. Section 6 of the 2020 Amendment modified sub-section (9) by removing imprisonment of up to three years from the specified punishment for a person knowingly party to the issue of a prospectus in contravention of section 26. The words referring to punishment "with both" were also removed, leaving the applicable monetary fine framework. The amendment took effect on 21 December 2020.

What these amendments mean in practice

These provisions illustrate three major themes of the 2020 reforms: rationalisation of criminal penalties for specified corporate defaults, procedural changes in company-name rectification, and creation of a statutory route for eligible Indian public companies to access permitted international stock exchanges. Compliance should be checked against the Companies Act, 2013 as currently in force, the relevant rules, commencement notifications and, for direct listing, the applicable foreign-exchange and securities framework.

Official legal resources

This article is an informational summary. For filing, compliance or transaction decisions, refer to the current statutory text, rules, notifications and regulatory directions applicable to the company and transaction.