Expected Changes in the Companies Act 2013 before Sept 2024

Details of pending recommendations suggested in the Report of 2022 by the Company Law Committee

The Term of the Company Law Committee (CLC) of 2022 is nearing its conclusion, scheduled to end by September 16, 2024. Prior to its expiration, it is anticipated that certain amendments to the Companies Act, 2013, which were proposed by the Committee, will be enacted. Given the evolving economic landscape and the initiative to establish a framework for Direct Listing at the International Exchange in GIFT City in accordance with IFSCA Regulations, it is likely that the recommendations put forth by the Committee will soon be implemented. As professionals in the field, we stand ready to provide substantial support to business owners in navigating these forthcoming changes.

1. Issue and holding of fractional shares, Restricted Stock Units (RSUs), and Stock Appreciation Rights (SARs): Section 62

2. Permit distressed companies to issue shares at a discount: Section 53

3. Allow including free reserves for buyback calculation of 25%: Section 68

4. Permitting holding of GM in electronic mode: Sections 96, 100 & 101

5. Changes related to the Investor Education Protection Fund (IEPF): Section 124

6. Strengthening the National Financial Reporting Authority (NFRA): Section 132

7. Central Government to mandate joint audits for certain companies: Section 139

8. Enable the Central Government to order forensic audits in cases of investigation: Chapter XIV

9. Mandating certain companies to establish a Risk Management Committee: Chapter XII

10. Certain matters related to Independent Directors: Section 149

11. Cooling-off period before Auditors join the same company as Directors: Section 164

12. Cooling-off period before an Independent Directors join the same company as managerial personnel: Section 196

13. Allowing Key Managerial Personnel like the Director to file their resignation directly with RoC: Chapter XIII

14. Easing restoration of struck-off companies by the Regional Director: Section 252

15. Recognise SPACs and allow entrepreneurs to list SPAC (Special Purpose Acquisition Companies)  incorporated in India on domestic and global exchanges: A new Chapter may be added

16. Not to permit co-operative society to convert into a company: Section 366

17. Enable the Central Government to make Rules for electronically imposing fines, penalties, and payment of fees (e-enforcement and e-adjudication): Section 398

18. Relating to Nidhi Company formation and its regulations, to include more stringent and robust provisions: Chapter XXVI

19. New concept of Producer LLPs: a new Chapter may be inserted in the LLP Act 2008

20. Prescribe certain classes of companies to maintain registers on an electronic facility provided by the Central Government: Section 120

21. Standardising qualifications by the Statutory Auditors: Section 143

22. In addition, there could be amendments relating to the provisions of Corporate Social Responsibilities (CSR) by widening the scope, the penalty, suggestions for local area preference, and transfer of unspent funds: Section 135 

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