Sections 40, 48, 56, 59, 62 and 64 of Companies Act: Amendments by Companies Amendment Act 2020

Updated: 18 September 2026

The Companies (Amendment) Act, 2020 amended several provisions of the Companies Act, 2013. This article explains the amendments affecting Sections 40, 48, 56, 59, 62 and 64, with the practical effect of each change and the current rights issue notice period prescribed under the Companies (Share Capital and Debentures) Rules, 2014.

Official text: The enacted amendments can be checked in the Companies (Amendment) Act, 2020. The consolidated principal legislation is available through India Code - Companies Act, 2013.

Quick summary of the amendments

Companies Act section	Subject	Effect of 2020 amendment
Section 40	Securities to be dealt with in stock exchanges	Imprisonment was removed from the default provision in sub-section (5), leaving monetary punishment.
Section 48	Variation of shareholders' rights	Sub-section (5), which contained a punishment provision, was omitted.
Section 56	Transfer and transmission of securities	Sub-section (6) was replaced with a fixed penalty of Rs. 50,000 for the company and every officer in default.
Section 59	Rectification of register of members	Sub-section (5) was omitted.
Section 62	Further issue of share capital	The Act enabled a rights offer acceptance period shorter than 15 days where prescribed. Rule 12A prescribes a minimum of 7 days.
Section 64	Notice to Registrar for alteration of share capital	Daily penalty was reduced to Rs. 500 and separate maximum limits were specified for the company and officers in default.

Amendment to Section 40 - securities to be dealt with in stock exchanges

Section 40 regulates the offering of securities to the public where the securities are intended to be dealt with on a recognised stock exchange. The 2020 amendment changed sub-section (5) by removing the words providing for imprisonment up to one year and by removing the words that allowed both imprisonment and fine.

Effect: The amendment decriminalised this default to the extent of removing imprisonment from Section 40(5). The monetary consequence under the provision remained.

Amendment to Section 48 - variation of shareholders' rights

Section 48 deals with variation of the rights attached to a class of shares where a company's share capital is divided into different classes. The Companies (Amendment) Act, 2020 omitted sub-section (5).

The omitted sub-section contained a penal consequence connected with failure to comply with the section. Its omission formed part of the wider rationalisation and decriminalisation of offences under the 2020 amendment.

Amendment to Section 56 - transfer and transmission of securities

Section 56 governs transfer and transmission of securities and contains requirements concerning instruments of transfer, delivery and issue of certificates. The 2020 amendment substituted sub-section (6).

Current penalty under Section 56(6): Where a default is made in complying with sub-sections (1) to (5), the company and every officer of the company who is in default are liable to a penalty of Rs. 50,000.

For practical compliance, the Ministry of Corporate Affairs also publishes forms, rules and stakeholder guidance relevant to transfer of securities. See the Ministry of Corporate Affairs portal.

Amendment to Section 59 - rectification of register of members

Section 59 provides a statutory remedy for rectification of the register of members in specified circumstances. The Companies (Amendment) Act, 2020 omitted sub-section (5), which had contained a punishment provision.

The substantive remedy for seeking rectification under Section 59 continues to be governed by the remaining provisions of the section and the applicable procedural law.

Amendment to Section 62 - further issue of share capital and rights issue period

Section 62 governs further issue of share capital. In Section 62(1)(a)(i), the 2020 amendment inserted the words allowing the offer period to be a lesser number of days than 15 days where such lesser period is prescribed.

The Companies (Share Capital and Debentures) Amendment Rules, 2021 inserted Rule 12A with effect from 1 April 2021. Rule 12A provides that, for Section 62(1)(a)(i), the period within which a rights offer is made for acceptance shall be not less than seven days from the date of offer.

Practical point: The statutory language in Section 62 permits the prescribed shorter period, while Rule 12A fixes the present minimum at seven days. Companies should also check their articles, applicable rules and any other regulatory requirements relevant to the proposed issue.

Amendment to Section 64 - notice to Registrar for alteration of share capital

Section 64 requires notice to the Registrar in prescribed circumstances involving alteration or increase of share capital or redemption of redeemable preference shares. The 2020 amendment modified the penalty in sub-section (2).

Penalty structure: The daily penalty was changed from Rs. 1,000 to Rs. 500 for each day during which the default continues. The maximum is Rs. 5 lakh for a company and Rs. 1 lakh for an officer who is in default.

Why these amendments matter

The changes reflect the 2020 Act's broader approach of rationalising criminal consequences for specified corporate defaults and replacing or modifying several punishment provisions with civil penalties. For compliance purposes, the precise consequence depends on the section involved: Sections 48 and 59 had specified sub-sections omitted, Section 56 received a fixed penalty provision, Section 64 received a revised daily penalty structure, and Section 62 was made more flexible for rights issue timelines through prescribed rules.

Readers should use the statutory text, applicable rules, notifications and MCA filings relevant to the transaction or default in question. This article is a general legal information resource and is not a substitute for advice on particular facts.