Sections 242, 243, 248, 272, 398 and 441: Companies Amendment Act 2019

The Companies (Amendment) Act, 2019 amended several provisions of the Companies Act, 2013. This article explains the amendments concerning the Tribunal's powers, consequences for persons found not fit and proper, striking off company names, winding-up petitions, electronic filing and compounding of offences.

Legal text should be read with the Companies Act, 2013 as subsequently amended and the applicable rules and notifications.

On this pageSection 242 Section 243 Section 248 Section 272 Section 398 Section 441

Context: Sections 34 to 39 of the Companies (Amendment) Act, 2019 made the amendments reproduced and explained below. The provisions form part of the wider statutory framework of the Companies Act, 2013.

Amendment of Section 242 - Powers of Tribunal

Section 242 deals with the powers of the National Company Law Tribunal when granting relief in proceedings relating to oppression and mismanagement under Chapter XVI of the Companies Act, 2013.

2019 amendment - Section 34: After sub-section (4), sub-section (4A) was inserted. At the conclusion of the hearing of a case concerning section 241(3), the Tribunal must record a specific decision on whether the respondent is a fit and proper person to hold the office of director or any other office connected with the conduct and management of a company.

The amendment therefore requires an express finding by the Tribunal on the respondent's fitness to participate in company management in proceedings covered by section 241(3).

Amendment of Section 243 - Consequences of Tribunal Orders

Section 243 specifies consequences that follow when the Tribunal terminates, sets aside or modifies specified management agreements and also regulates the consequences of a finding under section 242(4A).

2019 amendment - Section 35: Sub-sections (1A) and (1B) were inserted. A person found not to be a fit and proper person under section 242(4A) is barred for five years from holding the office of director or another office connected with the conduct and management of the affairs of a company, subject to the statutory power of the Central Government, with leave of the Tribunal, to permit an earlier return. The amendment also provides that a person removed from such office is not entitled to compensation for loss or termination of office. Section 243(2) was correspondingly extended to cover sub-section (1A).

Later amendments to the Companies Act should also be consulted for the current penalty wording in section 243(2).

Amendment of Section 248 - Removal of Company Name from Register

Section 248 empowers the Registrar of Companies to remove a company's name from the register when one or more statutory grounds are satisfied.

2019 amendment - Section 36: Clauses (d) and (e) were inserted in section 248(1). These added grounds connected with failure by subscribers to pay the subscription undertaken at incorporation together with non-filing of the declaration under section 10A(1), and a finding through physical verification under section 12(9) that the company is not carrying on business or operations.

Section 248 must be read with sections 249 to 252, including the restrictions on voluntary applications, effect of dissolution and the statutory mechanism for restoration of a company's name.

Amendment of Section 272 - Petition for Winding Up

Section 272 governs who may present a petition for winding up of a company and related procedural requirements.

2019 amendment - Section 37: In section 272(3), the earlier words referring specifically to clause (e) were replaced by the broader words "of that section". The change aligned the provision with the relevant grounds for winding up contained in section 271.

Amendment of Section 398 - Electronic Filing and Inspection

Section 398 concerns electronic filing, maintenance and inspection of documents and information under the Companies Act framework.

2019 amendment - Section 38: In section 398(1)(f), the word "prospectus" was omitted.

This was a targeted textual amendment to the statutory provision governing electronic filing and related functions.

Amendment of Section 441 - Compounding of Certain Offences

Section 441 provides the statutory framework for compounding offences under the Companies Act, subject to the conditions and exclusions contained in that section.

2019 amendment - Section 39: The monetary limit in section 441(1)(b) was increased from five lakh rupees to twenty-five lakh rupees. Sub-section (6) was also substituted to provide that, notwithstanding the Code of Criminal Procedure, 1973, an offence punishable under the Companies Act with imprisonment only, or with imprisonment and fine, is not compoundable.

For present application, section 441 should be checked in the current consolidated Companies Act, 2013 because subsequent amendments may affect connected provisions and procedural consequences.

Official statutory reference

For current law, amendments, commencement details and footnotes showing later legislative changes, consult the consolidated Companies Act, 2013 on India Code and notifications or rules issued by the Ministry of Corporate Affairs.