Indian Company Law
Companies (Amendment) Act, 2020
Updated guide to Act No. 29 of 2020, including decriminalisation, reduced penalties, CSR changes and the statutory framework for Producer Companies.
Current-law note: The Companies (Amendment) Act, 2020 is an amending enactment whose provisions were brought into force on different dates by Central Government notifications. For present compliance, the current consolidated Companies Act, 2013 and applicable rules and MCA notifications should be consulted.
Overview of the Companies (Amendment) Act, 2020
The Companies (Amendment) Act, 2020 received Presidential assent on 28 September 2020. It further amended the Companies Act, 2013 and was enacted principally to decriminalise specified procedural and technical defaults, rationalise penalties, improve ease of doing business, modify certain governance and compliance provisions, and insert a complete statutory framework for Producer Companies.
A major structural change was insertion of Chapter XXIA - Producer Companies, comprising sections 378A to 378ZU. This framework, now reflected in the Companies Act, 2013, governs incorporation, membership, management, meetings, finance, audit, loans, investments, penalties, amalgamation, dispute resolution and reconversion of Producer Companies.
Major Changes Introduced in 2020
Decriminalisation of Defaults
Several procedural and technical defaults that did not involve fraud or larger public interest were shifted away from criminal prosecution toward civil penalties or an in-house adjudication mechanism.
Reduced and Rationalised Penalties
Penalty provisions were rationalised across multiple sections, and section 446B was substituted to provide lesser penalties for specified classes such as small companies, One Person Companies, start-ups and Producer Companies, subject to the statutory conditions.
Producer Companies
Chapter XXIA, sections 378A to 378ZU, was inserted into the Companies Act, 2013, creating a dedicated legal framework for Producer Companies.
CSR Compliance
Section 135 was amended to rationalise CSR compliance, including treatment of excess CSR spending and exemptions from constituting a CSR Committee in prescribed circumstances.
Listed Company Definition
The Central Government was empowered, in consultation with SEBI, to exclude prescribed classes of companies issuing specified securities from the definition of "listed company".
Foreign Listing Framework
Section 23 was amended to enable prescribed classes of public companies to issue specified securities for listing on permitted stock exchanges in permissible foreign jurisdictions, subject to the applicable statutory and regulatory framework.
Periodical Financial Results
New section 129A empowered the Central Government to require prescribed classes of unlisted companies to prepare, audit or review and file periodical financial results in the prescribed manner.
Beneficial Ownership and Governance
Various compliance and governance provisions were adjusted, including beneficial ownership, filing requirements, remuneration and adjudication-related matters.
Section-wise Companies (Amendment) Act, 2020
The following internal pages from this website contain the detailed grouped amendments:
- Section 1, 2, 8, 16, 23 and 26 of Companies Amendment Act 2020
- Section 40, 48, 56, 59, 62, 64 of Companies Amendment Act 2020
- Section 66, 68, 71, 86, 88, 89, 90 of Companies Amendment Act 2020
- Section 92, 105, 117, 124, 128, 129a, 134 Companies Amendment Act 2020
- Section 135, 137, 140, 143, 147, 149, 165 Companies Amendment Act 2020
- Section 167, 172, 178, 184, 187, 188, 197 Companies Amendment Act 2020
- Section 204, 232, 242, 243, 247, 284, 302 Companies Amendment Act 2020
- Section 342, 347, 348, 356, 378A, Chapter XXIA of Companies Amendment Act 2020
- Section 378B, 378C, 378D, 378E, 378F, 378G, 378H of Companies Amendment Act 2020
- Section 378I, 378J, 378K, 378L, 378M and 378N of Companies Amendment Act 2020
- Section 378O, 378P, 378Q, 378R, 378S, 378T of Companies Act 2020
- Section 378U, 378V, 378W, 378X, 378Y, 378Z of Companies Act 2020
- Section 378ZA, 378ZB, 378ZC, 378ZD, 378ZE, 378ZF of Companies Amendment Act 2020
- Section 378ZG, 378ZH, 378ZI, 378ZJ, 378ZK, 378ZL of Companies Amendment Act 2020
- Section 378ZM, 378ZN, 378ZO, 378ZP of Companies Act 2020
- Section 378ZQ, 378ZR, 378ZS, 378ZT, 378ZU of Companies Act 2020
- Section 379, 392, 393A, 403, 405, 410 of Companies Amendment Act 2020
- Section 418A, 435, 441, 446B, 450, 452, 454, 465 of Companies Act 2020
Chapter XXIA - Producer Companies
The Companies (Amendment) Act, 2020 inserted Chapter XXIA into the Companies Act, 2013. The Chapter is organised into the following parts:
- Part I: Preliminary
- Part II: Incorporation of Producer Companies and Other Matters
- Part III: Management of Producer Company
- Part IV: General Meetings
- Part V: Share Capital and Members' Rights
- Part VI: Finance, Accounts and Audit
- Part VII: Loans to Members and Investments
- Part VIII: Penalties
- Part IX: Amalgamation, Merger or Division
- Part X: Resolution of Disputes
- Part XI: Miscellaneous Provisions
- Part XII: Re-conversion to Inter-State Co-operative Society
Present Legal Position
Chapter XXIA now forms part of the Companies Act, 2013, and the statutory framework must be read with the Producer Companies Rules, 2021 and other applicable Companies Rules. Because commencement dates differed among provisions of the 2020 Amendment Act, the operative date of a particular amendment should be verified from the relevant Central Government notification where timing is material.