Amendments in the Companies Act, 2013
1. Notice inviting comments on the review of Rules prescribed under the Companies Act, 2013, and the Limited Liability Partnership Act, 2008
MCA vide Notice dated January 15, 2024, stated that pursuant to the Budget Speech (2023-24), a Policy for Pre-Legislative consultation and comprehensive review of existing Rules and Regulations (“Policy”) prescribed under various legislations administered by MCA has been released.
This Policy focuses on consulting with the public before making laws and thoroughly reviewing the current rules and regulations under the different laws it manages which are as follows:
- The Companies Act, 2013
- The Limited Liability Partnership Act, 2008
- The Competition Act, 2002.
- The Insolvency and Bankruptcy Code
- The Chartered Accountants Act, 1949
- The Cost and Works Accountants Act, 1959
- The Company Secretaries Act, 1980
Accordingly, comments/suggestions have been invited from the stakeholders through the e-Consultation Platform on the MCA website on the Rules issued under such legislation. In the first phase, rules relating to the Companies Act, 2013 and the LLP Act, 2008 shall be posted on the e-consultation module for inviting comments/suggestions with effect from 25 January 2024.
The link for the aforesaid Notice is as follows:
https://www.mca.gov.in/bin/dms/getdocument?mds=6hps1VR8FPMqNId82rZxVw%253D%253D&type=open
2. Policy for Pre-Legislative Consultation and Comprehensive review of existing Rules and Regulations
MCA on January 15, 2024, had decided to frame a policy for pre-legislative consultation and for a comprehensive review of rules/regulations.
The draft policy is divided into two parts i.e. Part A and Part B. Part A deals with “Policy for Pre-Legislative consultation with regard to framing of rules and regulations” while Part B deals with “Policy for Pre-Legislative consultation with regard to a comprehensive review of existing rules and regulations”.
The exercise of a comprehensive review of existing rules and regulations shall commence with effect from January 01, 2024, and be completed within the financial year 2024-25.
The link for the aforesaid Notice is as follows:
https://www.mca.gov.in/bin/dms/getdocument?mds=%252B5QQJN9xKy3XFY5c4mPsfQ%253D%253D&type=open
3. The Companies (Listing of Equity Shares in permissible jurisdictions) Rules, 2024
MCA vide Notification dated January 24, 2024, introduced the Companies (Listing of Equity Shares in Permissible Jurisdictions) Rules, 2024 allowing the direct listing of Equity Shares by Indian public companies on International Exchanges.
These Rules apply to:
- Unlisted public companies, and
- Listed public companies, to the extent that they align with regulations or directives established by the SEBI or the Authority, which issues their securities for listing on permitted stock exchanges in permissible jurisdictions.
Permissible Jurisdiction refers to the International Financial Services Centre in India and Permitted Stock Exchange refers to the India International Exchange and NSE International Exchange.
- An unlisted public company, not being a Company ineligible as per the Rules and which has no partly paid-up shares, can issue equity shares for listing on a stock exchange in a permissible jurisdiction. This includes the offer for the sale of equity shares by existing shareholders of the unlisted public company for listing on a stock exchange in a permissible jurisdiction.
- The unlisted public company or its existing shareholders is also required to comply with the requirements of the Scheme. The Scheme means a direct listing of equity shares of companies incorporated in India on the International Exchanges Scheme made by the Central Government in the Ministry of Finance.
- If an unlisted public company intends to get its equity shares listed on any recognized stock exchange as defined under the Securities Contracts (Regulation) Act, 1956, along with the listing of equity shares on the permitted stock exchange in permissible jurisdiction should adhere to the conditions specified by SEBI.
- The unlisted public company to file the prospectus in e-Form LEAP-1along with the applicable fees within 7 days after the prospectus is finalized and submitted to the permitted exchange.
- After the listing of the equity shares of a company on any stock exchange in a permissible jurisdiction, the company is required to comply with the Indian Accounting Standards as mentioned in the Companies (Indian Accounting Standards) Rules, 2015.
- A Company shall not be eligible to issue equity shares in the permissible jurisdiction if it is a:
- Section 8 companies or a Nidhi company;
- Company limited by Guarantee having a share capital;
- Company having any outstanding depositsaccepted from the public as per Chapter V of the Companies Act, 2013;
- Company having a negative net worthas defined under section 2(57) of the Companies Act, 2013;
- Company has defaulted in payment of duesto any bank, public financial institution, non-convertible debenture holder, or any other secured creditor. However, if the company has repaid the amount owed and two years have passed since the repayment, this rule doesn’t apply;
- Company has made an application for winding upunder the Companies Act, 2013 or for resolution or winding up under the Insolvency and Bankruptcy Code, 2016, and any proceedings against the company for winding up under the Companies Act or for resolution or winding up under the Insolvency and Bankruptcy Code, 2016 is pending;
- Company has defaulted in filing the Annual Returnunder section 92 or the Financial Statement under section 137 of the Companies Act, 2013.
Format of Form No. LEAP-1 is also provided in this Circular.
The link for the aforesaid Notice is as follows:
https://www.mca.gov.in/bin/dms/getdocument?mds=qcIDsiX0Le%252F2EMv7m1iyEw%253D%253D&type=open