Sections 77, 86, 87, 90 and 92: Companies (Amendment) Act, 2019
The Companies (Amendment) Act, 2019 amended important provisions of the Companies Act, 2013 dealing with registration and rectification of charges, false information relating to charges, significant beneficial ownership and penalties connected with annual returns.
Amendment of Section 77 - Registration of Charges
Section 77 of the Companies Act, 2013 requires a company creating a charge on its property, assets or undertaking to register the prescribed particulars of that charge with the Registrar of Companies. The 2019 amendment revised the additional time framework for delayed registration of charges.
Section 11 of the Companies (Amendment) Act, 2019: In section 77(1), the first and second provisos were substituted.
For charges created before commencement of the 2019 amendment, registration could be allowed within 300 days of creation. For charges created on or after commencement, the Registrar could allow registration within 60 days of creation on payment of the prescribed additional fee.
If registration was still not completed within the specified period, the amendment provided the further statutory window and prescribed additional or ad valorem fee mechanism stated in the substituted provisos.
The practical purpose of section 77 is public notice of security interests created over company property. Companies should therefore complete charge filings within the statutory period and use the current MCA form and fee framework applicable on the date of filing.
Amendment of Section 86 - Punishment for Contravention Relating to Charges
Section 86 deals with consequences for contravention of the provisions governing registration of charges. The 2019 amendment renumbered the existing provision as sub-section (1) and inserted sub-section (2).
Section 12 of the Companies (Amendment) Act, 2019: A person who wilfully furnishes false or incorrect information, or knowingly suppresses material information required to be registered under section 77, is liable for action under section 447.
Section 447 is the Companies Act provision dealing with punishment for fraud. The section 86(2) consequence is therefore materially more serious than an ordinary filing default where the statutory ingredients of wilful false information or knowing suppression are established.
Section 87 - Rectification in the Register of Charges
Section 87 provides a mechanism for rectification where specified omissions or misstatements concerning a charge occurred accidentally, through inadvertence or for another sufficient cause, or are not of a nature that prejudices creditors or shareholders.
Section 13 of the Companies (Amendment) Act, 2019: Section 87 was substituted. The Central Government may, on the application of the company or another interested person and on such terms and conditions as it considers just and expedient, extend the time for giving intimation of payment or satisfaction of a charge or direct rectification of an omission or misstatement.
The relevant procedural requirements are also governed by the Companies (Registration of Charges) Rules, 2014, as amended. The applicable form, supporting material and filing route should be checked on the MCA portal before filing.
Amendment of Section 90 - Significant Beneficial Owners
Section 90 regulates significant beneficial ownership in a company. In broad terms, the provision requires identification and disclosure of individuals who meet the statutory and prescribed tests for significant beneficial ownership.
Section 14 of the Companies (Amendment) Act, 2019: Sub-section (4A) was inserted to require every company to take necessary steps to identify an individual who is a significant beneficial owner in relation to the company and to require that individual to comply with section 90.
The 2019 Act also amended the mechanism relating to restrictions imposed by the Tribunal under section 90(8), provided rule-making power through sub-section (9A), and extended the compliance consequence in sub-section (11) to a company's duty under sub-section (4A).
Significant beneficial ownership compliance must be read with the Companies (Significant Beneficial Owners) Rules, 2018, as amended. Because beneficial ownership structures can involve indirect holdings and control rights, the current statutory definitions and rules should be applied to the facts of each company.
Amendment of Section 92 - Annual Return
Section 92 governs the annual return of a company, including prescribed particulars and filing with the Registrar. The 2019 amendment substituted section 92(5) to convert the consequence for failure to file the annual return within the statutory period into a monetary penalty structure.
Section 15 of the Companies (Amendment) Act, 2019: The substituted provision prescribed an initial penalty of Rs. 50,000 and a further penalty of Rs. 100 for each day of continuing failure, subject to the maximum then specified by the 2019 amendment.
Commencement and Context of the 2019 Amendments
The Companies (Amendment) Act, 2019 received Presidential assent on 31 July 2019. Its commencement provision deemed many provisions, including sections 11, 12, 13 and 15, to have come into force on 2 November 2018. Section 14 had a split commencement treatment, so the commencement of its individual clauses must be read with section 1 of the 2019 Act and the relevant notification where applicable.
Compliance Checklist
For practical compliance, verify the latest consolidated Companies Act, 2013; the Companies (Registration of Charges) Rules, 2014 for charge filings; the Companies (Significant Beneficial Owners) Rules, 2018 for section 90; the current annual-return rules and forms for section 92; and any MCA notifications, circulars or V3 filing instructions applicable on the filing date.