Sections 102, 105, 117, 121, 132 and 135 of the Companies (Amendment) Act, 2019
The Companies (Amendment) Act, 2019 changed important provisions of the Companies Act, 2013 relating to explanatory statements for meetings, proxies, filing of resolutions, annual general meeting reports, the National Financial Reporting Authority and Corporate Social Responsibility. This article explains those 2019 amendments and identifies later changes that matter when applying the law today.
Section 102 - Statement to be annexed to notice
What section 102 covers: Section 102 of the Companies Act, 2013 requires an explanatory statement containing material facts for each item of special business proposed at a general meeting. The disclosure is intended to enable members to understand the nature, scope and implications of the business and the relevant interests of directors, managers, key managerial personnel and specified relatives.
2019 amendment
The Companies (Amendment) Act, 2019 substituted section 102(5). Where the section is not complied with, every promoter, director, manager or other key managerial personnel of the company who is in default is liable to a penalty of Rs. 50,000 or five times the amount of benefit accruing to that person or any of his or her relatives, whichever is higher. This operates without prejudice to section 102(4), which addresses benefit arising from non-disclosure or insufficient disclosure.
Section 105 - Proxies
What section 105 covers: Section 105 regulates appointment and use of proxies at company meetings. Subject to the Act, a member entitled to attend and vote may appoint another person as proxy. The notice calling a meeting must prominently state the member's proxy entitlement where the provision applies.
2019 amendment
In section 105(3), the earlier expression providing for a fine up to Rs. 5,000 was replaced with a civil penalty of Rs. 5,000 for default in complying with the proxy statement requirement in the meeting notice.
Section 117 - Resolutions and agreements to be filed
What section 117 covers: Section 117 requires specified resolutions and agreements, together with the explanatory statement under section 102 where applicable, to be filed with the Registrar within the statutory period.
2019 amendment and later position
The 2019 amendment substituted section 117(2) and converted the default into a penalty regime. The 2019 text prescribed a penalty of Rs. 1 lakh for the company, with a continuing penalty of Rs. 500 per day subject to Rs. 25 lakh, and Rs. 50,000 for every officer in default, including the liquidator where applicable, with a continuing penalty of Rs. 500 per day subject to Rs. 5 lakh.
Later amendment: The Companies (Amendment) Act, 2020 subsequently reduced these amounts. Under the later substituted section 117(2), the company is liable to Rs. 10,000 plus Rs. 100 per day for continuing failure, subject to Rs. 2 lakh; every officer in default, including the liquidator if any, is liable to Rs. 10,000 plus Rs. 100 per day, subject to Rs. 50,000.
Section 121 - Report on annual general meeting
What section 121 covers: Every listed public company must prepare a prescribed report on each annual general meeting, including confirmation that the meeting was convened, held and conducted in accordance with the Act and rules, and file the report with the Registrar within thirty days of the conclusion of the AGM.
2019 amendment
Section 121(3) was substituted so that failure to file the AGM report within the specified period attracts a penalty of Rs. 1 lakh and, for continuing failure, Rs. 500 for each day after the first, subject to a maximum of Rs. 5 lakh. Every officer in default is liable to a penalty of not less than Rs. 25,000 and, for continuing failure, Rs. 500 per day after the first, subject to a maximum of Rs. 1 lakh.
Section 132 - National Financial Reporting Authority
What section 132 covers: Section 132 provides for the National Financial Reporting Authority (NFRA), including its role in accounting and auditing standards, monitoring and enforcement, quality oversight and disciplinary action in cases of professional or other misconduct within its statutory jurisdiction.
2019 amendment
The amendment inserted section 132(1A), enabling NFRA to perform its functions through prescribed divisions. It also inserted sections 132(3A) and 132(3B) concerning the presiding authority for each division and NFRA's executive body. Section 132(4)(c)(B) was widened so that, where professional or other misconduct is proved, NFRA may debar a member or firm from appointment as auditor or internal auditor, from undertaking specified audit work, or from performing valuation under section 247, for at least six months and up to ten years as determined by NFRA.
Section 135 - Corporate Social Responsibility
What section 135 covers: Section 135 contains the statutory Corporate Social Responsibility framework for companies meeting the prescribed financial thresholds. It deals with CSR governance, spending, treatment of unspent amounts, ongoing projects and related compliance.
2019 amendment
The 2019 amendment addressed companies that had not completed three financial years since incorporation, introduced transfer requirements for unspent CSR amounts, created the Unspent Corporate Social Responsibility Account mechanism for ongoing projects, and empowered the Central Government to issue directions for compliance.
The 2019 version of section 135(7) contained criminal consequences for specified defaults. That is no longer the current penalty formulation.
Current section 135(7): Following the Companies (Amendment) Act, 2020, a company in default under section 135(5) or (6) is liable to a penalty of twice the amount required to be transferred to the Schedule VII Fund or the Unspent CSR Account, as applicable, or Rs. 1 crore, whichever is less. Every officer in default is liable to one-tenth of the amount required to be transferred or Rs. 2 lakh, whichever is less. Section 135(9) also provides that where the CSR spending obligation under section 135(5) does not exceed Rs. 50 lakh, constitution of a CSR Committee is not required and its functions are discharged by the Board.
Quick compliance summary
| Section | Subject | Practical point |
|---|---|---|
| 102 | Explanatory statement | Disclose material facts and relevant interests for special business. |
| 105 | Proxies | Meeting notices must carry the required proxy statement where applicable. |
| 117 | Filing resolutions | Specified resolutions and agreements must be filed within the statutory period; later 2020 penalty amounts should be used for current compliance. |
| 121 | AGM report | Listed public companies must prepare and file the prescribed AGM report within thirty days. |
| 132 | NFRA | NFRA has statutory oversight and disciplinary powers, including specified debarment powers. |
| 135 | CSR | Track spending and transfer of unspent amounts carefully; current penalty provisions differ from the 2019 text. |
This article is a general legal-information summary. For a filing, adjudication, audit, CSR decision or other compliance action, verify the current Act, applicable rules, notifications, circulars and exemptions relevant to the company.