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THE COMPANIES (AMENDMENT) ACT, 2000
No. 53 of 2000
[13th December, 2000.]
An Act further to amend the Companies Act, 1956.
BE it enacted by Parliament in the Fifty-first Year of the Republic of India as follows:—
Short title and commencement
1. (1) This Act may be called the Companies (Amendment) Act, 2000.
(2) The provisions of this Act, other than sections 7 and 80, shall come into force at and commencement once and sections 7 and 80 shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.
Amendment of section 2.
2. In section 2 of the Companies Act, 1956 (hereinafter referred to as the principal
Act),—
(a) clause (7) shall be re-numbered as clause (1A) thereof and before the clause as so re-numbered, the following clause shall be inserted, namely:—
'(1) "abridged prospectus" means a memorandum containing such salient features of a prospectus as may be prescribed;';
(b) clauses (3) and (4) shall be omitted;
(c) after clause (12), the following clauses shall be inserted, namely:—
'(12A) "Depository" has the same meaning as in the Depositories Act, 1996;
(12B) "derivative" has the same meaning as in clause (aa) of section 2 of the 42 of 1956. Securities Contracts (Regulation) Act, 1956;';
(d) after clause (14), the following clause shall be inserted, namely:—
'(14A) "dividend" includes any interim dividend;';
(e) after clause (75), the following clause shall be inserted, namely:—
'(15A) "employees stock option" means the option given to the whole-time directors, officers or employees of a company, which gives such directors, officers or employees the benefit or right to purchase or subscribe at a future date, the securities offered by the company at a pre-determined price;';
(f) after clause (19), the following clauses shall be inserted, namely:—
'(19A) "hybrid" means any security which has the character of more than one type of security, including their derivatives;
(19B) "information memorandum" means a process undertaken prior to the filing of a prospectus by which a demand for the securities proposed to be issued by a company is elicited, and the price and the terms of issue for such securities is assessed, by means of a notice, circular, advertisement or document;';
(g) after clause (23), the following clause shall be inserted, namely:—
'(23A) "listed public companies" means a public company which has any of its securities listed in any recognised stock exchange;';
(h) clause (25) shall be omitted;
(i) for clause (50), the following clause shall be substituted, namely:—
'(30) "officer" includes any director, manager or secretary or any person in accordance with whose directions or instructions the Board of directors or any one or more of the directors is or are accustomed to act;';
(j) after clause (31), the following clause shall be inserted, namely:—
'(31 A) "option in securities" has the same meaning as in clause (d) of section 2 of the Securities Contracts (Regulation) Act, 1956;';
(k) clause (44) shall be omitted.
(l) after clause (45A), the following clause shall be inserted,-namely:—
'(45AA) "securities" means securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956, and includes hybrids;';
(m) after clause (46), the following clause shall be inserted, namely:—
'(46A) "share with differential rights" means a share that is issued with differential rights, in accordance with the provisions of section 86;'.
Amendment of section 3.
3. In section 3 of the principal Act,—
(a) in sub-section (1),—
(i) in clause (iii),—
(A) in the opening portion, for the words "means a company which, by its articles,—", the words "means a company which has a minimum paid-up capital of one lakh rupees or such higher paid-up capital as may be prescribed, and by its articles,—" shall be substituted;
(B) after sub-clause (c), before the proviso, the following clause shall be inserted, namely:—
"(d) prohibits any invitation or acceptance of deposits from persons other than its members, directors or their relatives:";
(ii) for clause (iv), the following clause shall be substituted, namely:—
'(iv) "public company" means a company which—
(a) is not a private company;
(b) has a minimum paid-up capital of five lakh rupees or such higher paid-up capital, as may be prescribed;
(c) is a private company which is a subsidiary of a company which is not a private company;';
(b) after sub-section (2), the following sub-sections shall be inserted, namely:—
"(3) Every private company, existing on the commencement of the Companies (Amendment) Act, 2000, with a paid-up capital of less than one lakh rupees shall, within a period of two years from such commencement, enhance its paid-up capital to one lakh rupees.
(4) Every public company, existing on the commencement of the Companies (Amendment) Act, 2000, with a paid-up capital of less than five lakh rupees shall, within a period of two years from such commencement, enhance its paid-up capital to five lakh rupees.
(5) Where a private company or a public company fails to enhance its paid-up capital in the manner specified in sub-section (3) or sub-section (4), such company shall be deemed to be a defunct company within the meaning of section 560 and its name shall be struck off from the register by the Registrar.
(6) A company registered under section 25 before or after the commencement of the Companies (Amendment) Act, 2000, shall not be required to have minimum paid-up capital specified in this section.".
Amendment of section 4.
4. In section 4 of the principal Act, in sub-section (2), in clause (b), the words Amendment of ", managing agent, secretaries and treasurers" shall be omitted. section 4.
Amendment of section 11.
5. In section 11 of the principal Act, in sub-section (5), for the words "one thousand Amendment of rupees", the words "ten thousand rupees" shall be substituted.
Amendment of section 16.
6. In section 16 of the principal Act, in sub-section (3), the words ", managing Amendment of agent, secretaries and treasurers" shall be omitted.
Insertion of new section 17A.
7. After section 17 of the principal Act, the following section shall be inserted Insertion of namely:—
"17A. (1) No company shall change the place of its registered office from one chance of place to another within a State unless such change is confirmed by the Regional registered Director. office within a State.
(2) The company shall make an application in the prescribed form to the Regional Director for confirmation under sub-section (1).
(3) The confirmation referred to in sub-section (/) shall be communicated to the company within four weeks from the date of receipt of application for such change. •
Explanation.—For the removal of doubts, it is hereby declared that the provisions of this section shall apply only to the companies which change the registered office from the jurisdiction of one Registrar of Companies to the jurisdiction of another Registrar of Companies within the same State.
(4) The company shall file, with the Registrar a certified copy of the confirmation by the Regional Director for change of its registered office under this section, within two months from the date of confirmation, together with a printed copy of the ' memorandum as altered and the Registrar shall register the same and certify the registration under his hand within one month from the date of filing of such document.
(5) The certificate shall be conclusive evidence that all the requirements of this Act with respect to the alteration and confirmation have been complied with and henceforth the memorandum as altered shall be the memorandum of the company.".
Amendment of section 22.
8. In section 22 of the principal Act, in sub-section (2), for the words "one hundred rupees", the words "one thousand rupees" shall be substituted.
Amendment of section 25
9. In section 25 of the principal Act, in sub-section (70), for the words "five hundred rupees", the words "five thousand rupees" shall be substituted.
Amendment of section 39.
10. In section 39 of the principal Act,—
(a) in sub-section (7), clause (c) shall be omitted;
(b) in sub-section (2), for the words "fifty rupees", the words "five hundred rupees" shall be substituted.
Amendment of section 40
11. In section 40 of the principal Act,—
(a) in sub-section (1), the words, brackets, letter and figures "in the agreement referred to in clause (c) of sub-section (/) of section 39 or in any other agreement" shall be omitted;
(b) in sub-section (2), for the words "ten rupees", the words "one hundred rupees" shall be substituted.
Amendment of section 43A
12. In section 43A of the principal Act,—
(a) after sub-section (2), the following sub-section shall be inserted, namely:—
'(2A) Where a public company referred to in sub-section (2) becomes a private company on or after the commencement of the Companies (Amendment) Act, 2000, such company shall inform the Registrar that it has become a private company and thereupon the Registrar shall substitute the words "private company" for the words "public company" in the name of the company upon the register and shall also make the necessary alterations in the certificate of incorporation issued to the company and in its memorandum of association within four weeks from the date of application made by the company.';
(b) after sub-section (/0), the following sub-section shall be inserted, namely:—-
"(11) Nothing contained in this section, except sub-section (2A), shall apply on and after the commencement of the Companies (Amendment) Act, 2000".
Amendment of section 44
13. In section 44 of the principal Act,—
(a) in sub-section (3), for the words "five hundred rupees", the words "five thousand rupees" shall be substituted;
(b) in sub-section (4), for the words "five thousand rupees", the words "fifty thousand rupees" shall be substituted.
Amendment of section 49
14. In section 49 of the principal Act, in sub-section (9), for the words "five thousand section 49. rupees", the words "fifty thousand rupees" shall be substituted.
Amendment of section 54
15. In section 54 of the principal Act, the words "the managing agent, the secretaries section 54 and treasurers," shall be omitted.
Insertion of
16. After section 55 of the principal Act, the following section shall be inserted new section 55A namely:—
Powers of
55A. The provisions contained in sections 55 .to 58, 59 to 81 (including Securities and Exchange sections 68A.77A and 80A), 108, 109, 110,112, 113, 116, 117, 118, 119, 120, 121, Board of India. 122, 206, 206A and 207, so far as they relate to issue and transfer of securities and non-payment of dividend shall,—
(a) in case of listed public companies;
(b) in case of those public companies which intend to get their securities listed on any recognized stock exchange in India, be administered by the Securities and Exchange Board of India; and
(c) in any other case, be administered by the Central Government.
Explanation.—For the removal of doubts, it is hereby declared that all powers relating to all other matters including the matters relating to prospectus, statement in lieu of prospectus, return of allotment, issue of shares and redemption of irredeemable preference shares shall be exercised by the Central Government, the Company Law Board or the Registrar of Companies, as the case may be.".
Amendment of section 56
17. In section 56 of the principal Act, in sub-section (3), after the second proviso, for the words "five thousand rupees", the words "fifty thousand rupees" shall be substituted.
Amendment of section 58A
18. In section 58A of the principal Act,—
(a) in sub-section (6), in clause (a), in sub-clause (ii),—
(i) for the words "one lakh rupees", the words "ten lakh rupees" shall be substituted;
(ii) for the words "five thousand rupees", the words "fifty thousand rupees" shall be substituted;
(b) in sub-section (10), for the words "not less than rupees fifty", the words "not less than rupees five hundred" shall be substituted.
Insertion of new sections 58AA and 58AAA.
19. After section 58A of the principal Act, the following sections shall be inserted, namely:—
Small depositors.
'58AA. (1) Every company, which accepts deposits from small depositors, shall intimate to the Company Law Board any default made by it in repayment of any such deposits or part thereof or any interest thereupon.
(2) The intimation under sub-section (1) shall—
(a) be given within sixty days from the date of default;
(b) include particulars in respect of the names and addresses of each small depositor, the principal sum of deposits due to them and interest accrued thereupon.
Explanation.—For the removal of doubts, it is hereby declared that the intimation under this section shall be given on monthly basis.
(3) Where a company has made a default in repayment of any deposit or part thereof or any interest thereupon to a small depositor, the Company Law Board, on receipt of intimation under sub-section (7) shall,—
(a) exercise, on its own motion, powers conferred upon it by sub-section (9) of section 58A;
(b) pass an appropriate order within a period of thirty days from the date of receipt of intimation under sub-section (7):
Provided that the Board may pass order after expiry of the period of thirty days, after giving the small depositors an opportunity of being heard:
Provided further that it shall not be necessary for a small depositor to be present at the hearing of the proceeding under this sub-section.
(4) No company shall, at any time, accept further deposits from small depositors, unless each small depositor, whose deposit has matured, had been paid the amount of the deposit and the interest accrued thereupon:
Provided that nothing contained in this sub-section shall apply to—
(a) any deposit which has been renewed by the small depositor voluntarily; or
(b) any deposit, whose repayment has become impracticable due to the death of the small depositor or whose repayment has been stayed by a competent court or authority.
(5) Every company, which has on any occasion made a default in the repayment of a deposit or part thereof or any interest thereupon to a small depositor, shall state, in every future advertisement and application form inviting deposits from the public, the total number of small depositors and amount due to them in respect of which such default has been made.
(6) Where any interest accrued on deposits of the small depositors has been waived, the fact of such waiver shall be mentioned by the company in every advertisement and application form inviting deposits issued after such waiver.
(7) Where a company had accepted deposits from small depositors and subsequent to such acceptance of deposits, obtains funds by taking a loan for the purposes of its working capital from any bank, it shall first utilise the funds so obtained for the repayment of any deposit or any part thereof or any interest thereupon to the small depositor before applying such funds for any other purpose.
(8) Every application form, issued by a company to a small depositor for accepting deposits from him, shall contain a statement to the effect that the applicant had been apprised of—
(a) every past default by the company in the repayment of deposit or interest thereon, if any, such default has occurred; and
(b) the waiver of interest under sub-section (6), if any, and reasons therefor.
(9) Whoever knowingly fails to comply with the provisions of this section or comply with any order of the Company Law Board shall be punishable with imprisonment which may extend to three years and shall also be liable to fine for not less than five hundred rupees for every day during which such non-compliance continues.
(10) If a company or any other person contravenes any provision of this section, every person, who at the time the contravention was committed, was a director of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.
(ii)The provisions of section 58 A shall, as far as may be, apply to the deposits made by a small depositor under this section.
Explanation.—For the purposes of this section, "a small depositor" means a depositor who has deposited in a financial year a sum not exceeding twenty thousand rupees in a company and includes his successors, nominees and legal representatives.
Default in acceptance or refund of deposits to be cognizable.
58AAA. (1) Notwithstanding anything contained in sections 621 and 624, every offence connected with or arising out of acceptance of deposits under section 58A or section 58AA shall he cognizable offence under the Code of Criminal Procedure, 1973.
(2) No court shall take cognizance of any offence under sub-section (1) except on a complaint made by the Central Government or any officer authorised by it in this behalf.'
Amendment of section 59
20. In section 59 of the principal Act, in sub-section (/), for the words "five thousand rupees", the words "fifty thousand rupees" shall be substituted.
Amendment of section 60.
21. In section 60 of the principal Act, in sub-section (5), for the words "five thousand rupees", the words "fifty thousand rupees" shall be substituted.
Insertion of new sections 60A and 60B.
22. After section 60 of the principal Act, the following sections shall be inserted, namely:—
Shelf prospectus.
'60A. (1) Any public financial institution, public sector bank or scheduled bank whose main object is financing shall file a shelf prospectus.
(2) A company filing a shelf prospectus with the Registrar shall not be required to file prospectus afresh at every stage of offer of securities by it within a period of validity of such shelf prospectus.
(3) A company filing a shelf prospectus shall be required to file an information memorandum on all material facts relating to new charges created, changes in the financial position as have occurred between the first offer of securities, previous offer of securities and the succeeding offer of securities within such time as may be prescribed by the Central Government, prior to making of a second or subsequent offer of securities under the shelf prospectus
(4) An information memorandum shall be issued to the public along with shelf prospectus filed at the stage of the first offer of securities and such prospectus shall be valid for a period of one year from the. date of opening of the first issue of securities under that prospectus:
Provided that where an update of information memorandum is filed every time an offer of securities is made, such memorandum together with the shelf prospectus shall constitute the prospectus.
Explanation.—For the purpose of this section,—
(a) "financing" means making loans to, or subscribing in the capital of, a private industrial enterprise engaged in infrastructural financing or such other company as the Central Government may notify in this behalf;
(b) "shelf prospectus" means a prospectus issued by any financial institution or bank for one or more issues of the securities or class of securities specified in that prospectus.
Information memorandum.
60B. (1) A public company making an issue of securities may circulate information memorandum to the public prior to filing of a prospectus.
(2) A company inviting subscription by an information memorandum shall be bound to file a prospectus prior to the opening of the subscription lists and the offer as a redherring prospectus, at least three days before the opening of the offer.
(3) The information memorandum and redherring prospectus shall carry same obligations as are applicable in the case of a prospectus.
(4) Any variation between the information memorandum and the redherring prospectus shall be highlighted as variations by the issuing company.
Explanation.—For the purposes of sub-sections (2), (3) and (4), "redherring prospectus" means a prospectus which does not have complete particulars on the price of the securities offered and the quantum of securities offered.
(5) Every variation as made and highlighted in accordance with sub-section (4) above shall be individually intimated to the persons invited to subscribe to the issue of securities.
(6) In the event of the issuing company or the underwriters to the issue have invited or received advance subscription by way of cash or post-dated cheques or stock-invest, the company or such underwriters or bankers to the issue shall not encash such subscription moneys or post-dated cheques or stock-invest before the date of opening of the issue, without having individually intimated the prospective subscribers of the variation and without having offered an opportunity to such prospective subscribers to withdraw their application and cancel their post-dated cheques or stock-invest or return of subscription paid.
(7) The applicant or proposed subscriber shall exercise his right to withdraw from the application on any intimation of variation within seven days from the date of such intimation and shall indicate such withdrawal in writing to the company and the underwriters.
(8) Any application for subscription which is acted upon by the company or underwriters or bankers to the issue without having given enough information of any variations, or the particulars of withdrawing the offer or opportunity for cancelling the post-dated cheques or stock-invest or stop payments for such payments shall be void and the applicants shall be entitled to receive a refund or return of its post-dated cheques or stock-invest or subscription moneys or cancellation of its application, as if the said application had never been made and the applicants are entitled to receive back their original application and interest at the rate of fifteen per cent, from the date of encashment till payment of realisation.
(9) Upon the closing of the offer of securities, a final prospectus stating therein the total capital raised, whether by way of debt or share capital and the closing price of the securities and any other details as were not complete in the redherring prospectus shall be filed in a case of a listed public company with the Securities and Exchange Board of India and Registrar, and in any other case with the Registrar only.'.
Amendment of section 63
23. In section 63 of the principal Act, in sub-section (1), for the words "five thousand rupees", the words "fifty thousand rupees" shall be substituted.
Amendment of section 67
24. In section 67 of the principal Act,—
(a) in sub-section (3), the following provisos shall be inserted, namely:—
"Provided that nothing contained in this sub-section shall apply in a case where the offer or invitation to subscribe for. shares or debentures is made to fifty persons or more:
Provided further that nothing contained in the first proviso shall apply to the non-banking financial companies or public financial institutions specified in section 4A of the Companies Act, 1956."; 1 of 1956.
(b) after sub-section (3), the following sub-section shall be inserted, namely:—
"(3A) Notwithstanding anything contained in sub-section (3), the Securities and Exchange Board of India shall, in consultation with the Reserve Bank of India, by notification in the Official Gazette, specify the guidelines in respect of offer or invitation made to the public by a public financial institution specified under section 4A or non-banking financial company referred to in clause (f) of section 45-1 of the Reserve Bank of India Act, 1934.". 2 of 1934.
Amendment of section 68
25. In section 68 of the principal Act, for the words "ten thousand rupees", the words section 68. "one lakh rupees" shall be substituted.
Insertion of new section 68B
26. After section 68A of the principal Act. the following section shall be inserted, namely:--
Initial offer of securities to be dematerialised form in certain cases.
"68B. Notwithstanding anything contained in any other provisions of this Act, every listed public company, making initial public offer of any security for a sum of rupees ten crores or more, shall issue the same only in dematerialized form by complying with the requisite provisions of the Depositories Act, 1996 and the 22 of 1996. regulations made thereunder.".
Amendment of section 69
27. In section 69 of the principal Act, in sub-section (4), for the words "five thousand section 69. rupees", the words "fifty thousand rupees" shall be substituted.
Amendment of section 70.
28. In section 70 of the principal Act,—
(a) in sub-section (4), for the words "one thousand rupees", the words "ten thousand rupees" shall be substituted;
(b) in sub-section (5), for the words "five thousand rupees", the words "fifty thousand rupees" shall be substituted.
Amendment of section 72.
29. In section 72 of the principal Act, in sub-section (3), for the words "five thousand rupees", the words "fifty thousand rupees" shall be substituted.
Amendment of section 73.
30. In section 73 of the principal Act, in sub-sections (2B) and (3), for the words "five thousand rupees", the words "fifty thousand rupees" shall be substituted.
Amendment of section 75
31. In section 75 of the principal Act, in sub-section (4),—
(a) for the words "five hundred rupees", the words "five thousand rupees" shall be substituted;
(b) in the proviso, for the words "five thousand rupees", the words "fifty thousand rupees" shall be substituted.
Amendment of section 76
32. In section 76 of the principal Act, in sub-section (5), for the words "five hundred rupees", the words "five thousand rupees" shall be substituted.
Amendment of section 77.
33. In section 77 of the principal Act,—
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