Section 26 – Matters to be stated in Prospectus.
The requirement of registration of prospectus to be replaced with filing of prospectus with the Registrar.
Section 29 – Public offer of Securities to be in Dematerialised form. Under the Act, certain classes of public companies are required to issue shares in dematerialised form only. The Bill states this may be prescribed for other classes of unlisted companies as well.
Section 35- Civil liability for mis statements in prospectus.The copy of the prospectus shall be filed with the registrar instead of delivery for registration.Section 90 – Register of Significant beneficial Owners in a company.Every company shall take necessary steps to identify an individual who is a significant beneficial owner in relation to the company.
Sub- Section 9A The Central Government may make rules for the purposes of this section.
Section 132 – Constitution of National Financial Reporting Authority.
The National Financial Reporting Authority shall perform its functions through such divisions as may be prescribed.
Each division of the National Financial Reporting Authority shall be presided over by the Chairperson or a full-time Member authorised by the Chairperson.
There shall be an executive body of the National Financial Reporting Authority consisting of the Chairperson and full-time Members of such Authority for efficient discharge of its functions.
Debarring the member or firm by NFRA in case of professional or other misconduct is proved.
Section 135- Corporate Social Responsibility.
Under the Bill, any unspent annual CSR funds must be transferred to one of the funds under Schedule 7 of the Act (e.g., PM Relief Fund) within six months of the financial year.
However, if the CSR funds are committed to certain ongoing projects, then the unspent funds will have to be transferred to an Unspent CSR Account within 30 days of the end of the financial year, and spent within three years. Any funds remaining unspent after three years will have to be transferred to one of the funds under Schedule 7 of the Act. Any violation may attract a fine between Rs 50,000 and Rs 25,00,000 and every defaulting officer may be punished with imprisonment of up to three years or fine between Rs 50,000 and Rs 25,00,000, or both.
Section 212- Investigation in to affairs of company by Serious Fraud Investigation Office.
If any officer not below the rank of Assistant Director of Serious Fraud Investigation Office authorised in this behalf by the Central Government by general or special order, has on the basis of material in his possession reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of any offence punishable under sections referred to in sub-section (6), he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest.
The person so arrested may be taken to a special court or judicial magistrate or metropolitan magistrate with 24 hours of his arrest.
Where the report states that fraud has taken place in a company and due to such fraud any director, key managerial personnel, other officer of the company or any other person or entity, has taken undue advantage or benefit, whether in the form of any asset, property or cash or in any other manner, the Central Government may file an application before the Tribunal for appropriate orders with regard to disgorgement of such asset, property or cash and also for holding such director, key managerial personnel, other officer or any other person liable personally without any limitation of liability.
Section 135- Corporate Social Responsibility.
Under the Bill, any unspent annual CSR funds must be transferred to one of the funds under Schedule 7 of the Act (e.g., PM Relief Fund) within six months of the financial year.
However, if the CSR funds are committed to certain ongoing projects, then the unspent funds will have to be transferred to an Unspent CSR Account within 30 days of the end of the financial year, and spent within three years. Any funds remaining unspent after three years will have to be transferred to one of the funds under Schedule 7 of the Act. Any violation may attract a fine between Rs 50,000 and Rs 25,00,000 and every defaulting officer may be punished with imprisonment of up to three years or fine between Rs 50,000 and Rs 25,00,000, or both. Section 212- Investigation in to affairs of company by Serious Fraud Investigation Office.
If any officer not below the rank of Assistant Director of Serious Fraud Investigation Office authorised in this behalf by the Central Government by general or special order, has on the basis of material in his possession reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of any offence punishable under sections referred to in sub-section (6), he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest.
The person so arrested may be taken to a special court or judicial magistrate or metropolitan magistrate with 24 hours of his arrest.
Where the report states that fraud has taken place in a company and due to such fraud any director, key managerial personnel, other officer of the company or any other person or entity, has taken undue advantage or benefit, whether in the form of any asset, property or cash or in any other manner, the Central Government may file an application before the Tribunal for appropriate orders with regard to disgorgement of such asset, property or cash and also for holding such director, key managerial personnel, other officer or any other person liable personally without any limitation of liability.
Section 241- Application to Tribunal for relief in cases of oppression etc.
Central Government prescribe that applications under this sub-section, in respect of such company or class of companies, as may be prescribed, shall be made before the Principal Bench of the Tribunal which shall be dealt with by such Bench.
In certain circumstances Central Government may initiate a case against such person and refer the same to the Tribunal with a request that the Tribunal may inquire into the case and record a decision as to whether or not such person is a fit and proper person to hold the office of director or any other office connected with the conduct and management of any company.
Section 242 – Powers of Tribunal.
At the conclusion of the hearing of the case in respect of sub-section (3) of section 241, the Tribunal shall record its decision stating therein specifically as to whether or not 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 any company At the conclusion of the hearing of the case in respect of section 241, the Tribunal shall record its decision stating therein specifically as to whether or not 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 any company.
Section 243- Consequences of Termination or Modification of certain agreement.The person who is not a fit and proper person pursuant to sub-section (4A) of section 242 shall not hold the office of a director or any other office connected with the conduct and management of the affairs of any company for a period of five years from the date of the said decision.
Central Government may, with the leave of the Tribunal, permit such person to hold any such office before the expiry of the said period of five years.
On the removal of a person from the office of a director or any other office connected with the conduct and management of the affairs of the company, that person shall not be entitled to, or be paid, any compensation for the loss or termination of office.
Section 272- Powers of Court to stay or restrain proceedings Registrar allowed to present a petition of winding up on the ground that it is just and equitable to do so under clause (e) of section 271
Section 441 – Compounding of certain offence
The pecuniary limits of Regional Director (“RD”) to compound offences of the Act is proposed to be increased. The threshold is proposed to be increased to fine up to Rs 25 lakhs.
Section 398 – Provision relating to filing of applications,documents, inspection etc in electronic forms .
Prospectus not required to be registered by the registrar.
Modification of punishment of fine
Sixteen sections of the Act are proposed to amended so as to modify the punishment as provided in the said sections from fine to monetary penalties to lessen the burden upon the Special Courts.