Amendments in the Companies Act, 2013
1. The Competition (Minimum Value of Assets or Turnover) Rules, 2024
MCA vide Notification G.S.R 547(E) dated September 09, 2024, notified the Competition (Minimum Value of Assets or Turnover) Rules, 2024.
The Rules provide that the Minimum Value of Assets and Turnover for Section 5(e) of the Competition Act are:
- the value of assets shall be INR 450 crores; and
- the value of turnover shall be INR 1250 crores.
The above Rules shall come into force with effect from September 10, 2024.
The link for the aforesaid Notification is as follows:
2. The Competition (Criteria of Combination) Rules, 2024
MCA vide Notification G.S.R 548(E) dated September 09, 2024, notified the Competition (Criteria of Combination) Rules, 2024.
The Rules inter alia deal with Criteria of Combination. It provides that under section 6(4) of the Competition Act, the parties to a combination, their respective group entities, and their affiliates who fulfill the following criteria, may give notice for such combination under that sub-section, namely:
- they do not produce or provide similar or identical or substitutable products or services;
- they are not engaged in any activity relating to production, supply, distribution, storage, sale, and service or trade-in product or provision of service:
- which are at different stages or levels of production; or
- which are complementary to each other.
The parties to the combination and their respective group entities are also defined to mean:
- the ultimate controlling person of the acquirer and other entities forming part of the same group;
- the enterprise being acquired and its downstream entities forming part of its group;
- enterprises being merged or amalgamated, their controlling persons, and entities forming part of their group.
The notification defines affiliates as entities with 10% or more shareholding or voting rights in an enterprise, the right or ability to have board representation as observers or directors in an enterprise, or access to commercially sensitive information of an enterprise.
The above Rules shall come into force with effect from September 10, 2024.
The link for the aforesaid Notification is as follows:
3. Competition (Criteria for Exemption of Combinations) Rules, 2024
MCA vide Notification G.S.R 549(E) dated September 09, 2024, notified the Competition (Criteria for Exemption of Combination) Rules, 2024.
The Rules deal with the categories of combinations that fulfill the criteria mentioned in the Schedule to the Rules shall be exempted from the requirement to comply with sub-sections (2), (2A), and (4) of section 6 of the Competition Act. The above Rules shall come into force with effect from September 10, 2024.
The exemptions include:
- acquisitions of shares in the ordinary course of business, such as those by underwriters, stockbrokers, and mutual funds, provided they do not exceed certain thresholds of shareholding or voting rights, typically capped at 25% for most cases and 10% for mutual funds.
- Acquisitions solely for investment purposes that do not lead to control over the enterprise, and internal mergers or acquisitions within the same group that do not alter control are also covered.
- Acquisitions of additional shares or voting rights of an enterprise by the acquirer or its group entities, where the acquirer or its group entities, before acquisition, holds shares or voting rights of the enterprise, but does not hold more than 25% of the shares or voting rights of the enterprise, either before or after such acquisition and which does not lead to control over the target enterprise, does not grant board representation, does not provide access to sensitive information, and does not involve competitive activities. In cases where related activities are engaged, the acquisition must be limited to 10% of shares or voting rights.
- Acquisitions increasing shareholdings to 25% or less, or from 25% to 50%, are exempt provided there is no change in control or new board representation. Acquisitions where the acquirer already holds over 50% of shares are also exempt, as long as there is no change in control.
- Certain asset acquisitions in the ordinary course of business which include stock-in-trade, raw materials, or similar assets that do not constitute a business.
- An acquisition of assets, not directly related to the business activity of the party acquiring the asset or made solely as an investment, not leading to control of the enterprise whose assets are being acquired except where the assets being acquired represent substantial business operations in a particular location or for a particular product or service of the enterprise, of which assets are being acquired, irrespective of whether such assets are organized as a separate legal entity or not
- Acquisitions resulting from bonus issues, stock splits, or rights issues that do not lead to changes in control.
- Asset transfers and mergers within the same group are exempt as long as control remains unchanged.
- Acquisition of shares, control, voting rights, or assets by a purchaser approved by the Competition Commission of India.
- Demerger of a company and issue of shares by resulting company, in consideration of demerger, either to the demerged company or to the shareholders of the demerged company in the proportion of their shareholding in the demerged company before the demerger, except for discharge of consideration for fractional shares.
The acquirer and its group entities mean the ultimate controlling person of the acquirer and other entities forming part of the same group.
An entity is considered to be an affiliate of another enterprise if that other enterprise has:
- 10% or more of the shareholding or voting rights of the enterprise; or
- right or ability to have a representation on the board of directors of the enterprise either as a director or as an observer; or
- right or ability to access commercially sensitive information of the enterprise.
The detailed criteria for these exemptions are outlined in the appended schedule, specifying conditions under which combinations can benefit from these exemptions.
The link for the aforesaid Notification is as follows:
4. Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Second Amendment Rules, 2024
MCA vide Notification G.S.R. 552 (E) dated September 09, 2024, amended the Companies (Accounting, Audit, Transfer and Refund) Rules, 2016, under the Companies Act, 2013 vide the Companies (Accounting, Audit, Transfer and Refund) Second Amendment Rules, 2024.
The word “shares” has been replaced with “securities” throughout Schedule II of the rules.
In cases where a copy of the legal heir certificate issued by the revenue authority, not below the rank of Tahsildar having jurisdiction is submitted, the same shall be accompanied with:
- a notarized indemnity bond from the legal heir or claimant to whom the securities are transmitted; and
- a no objection certificate from all legal heirs other than claimants, stating that they have relinquished their rights to the claim for transmission of securities, duly attested by a notary public or by a gazetted officer.
The value of the securities as of the date of application shall be quantified by the applicant based on the closing price of such securities at any one of the recognized stock exchanges a day prior to the date of such submission in the application, for listed securities, and for unlisted securities, the value shall be the quantified basis on the face value or the maturity value of the security, whichever is more.
In Schedule III, the following explanations are inserted, namely:
Explanation I: A foreign national or non-resident Indian, instead of documents mentioned in item 1, shall be permitted to provide self-declaration of securities lost or misplaced or stolen which shall be duly notarised or apostilled or consularised in their country of residence, along with self-attested copies of valid passport and overseas address proof.
Explanation II: The value of the securities as of the date of application shall be quantified by the applicant based on the closing price of such securities at any one of the recognized stock exchanges a day prior to the date of such submission in the application, for listed securities, and for unlisted securities, the value shall be the quantified basis on the face value of the maturity value of the securities, whichever is more.
In Schedule IV the following is inserted which states that the company shall take a special contingency insurance policy from the insurance company towards the risk arising out of such claim in respect of the verification report under sub-rule (3) of rule 7 or the revised verification report under the second proviso of sub-rule (7) of the said rule, as the case may be.
The link for the aforesaid Notification is as follows:
5. The Companies (Indian Accounting Standards) Second Amendment Rules, 2024
MCA vide Notification G.S.R. 554 (E) dated September 09, 2024, amended the Companies (Indian Accounting Standards) Rules, 2015, under the Companies Act, 2013 vide the Companies (Indian Accounting Standards) Second Amendment Rules, 2024.
One of the significant changes is the addition of new clauses pertaining to leaseback transactions under Indian Accounting Standard (Ind AS) 116. The changes ensure that gains or losses related to retained rights are not recognized unless specific requirements are met, providing seller-lessees with greater clarity on how to use lease obligations and the right-of-use asset.
Additionally, illustrative examples are provided to demonstrate the proper application of the modified rules, including how to manage sale and leaseback transactions including both variable and fixed payments. These rules aim to simplify accounting processes while ensuring compliance with the Ind AS laws.
These changes will take effect for reporting periods beginning on or after April 1, 2024.
The link for the aforesaid Notification is as follows:
6. The Companies (Compromises, Arrangements, and Amalgamations) Amendment Rules, 2024
MCA vide Notification G.S.R. 555(E) dated September 09, 2024, amended the Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016, under the Companies Act, 2013 (“the Act”) vide the Companies (Compromises, Arrangements, and Amalgamations) Amendment Rules, 2024. These amendments are effective from September 17, 2024.
In rule 25A with respect to the Merger or amalgamation of a foreign company with a Company and vice versa, a new sub-rule (5) is being inserted, namely:
Where the transferor foreign company incorporated outside India being a holding company and the transferee Indian company being a wholly owned subsidiary company incorporated in India, enter into merger or amalgamation, –
- both the companies shall obtain the prior approval of RBI;
- the transferee Indian company shall comply with the provisions of section 233 of the Act;
- the application shall be made by the transferee Indian company to the Central Government under section 233 of the Act and provisions of rule 25 shall apply to such application; and
- the declaration referred to in sub-rule (4) shall be made at the stage of making an application under section 233 of the Act.
This amendment ensures compliance with regulatory authorities and the Act by providing clarification and procedural requirements for cross-border mergers involving foreign holding Companies and their Indian subsidiaries.
The link for the aforesaid Notification is as follows:
7. Declaration of National Bank for Financing Infrastructure and Development (NaBFID) as a Public Financial Institution
MCA vide Notification G.S.R. 557(E) dated September 12, 2024, officially designated the National Bank for Financing Infrastructure and Development (NaBFID) as a public financial institution under the Companies Act, 2013.
The link for the aforesaid Notification is as follows:
8. Clarification on the holding of Annual General Meetings (AGM) and Extra-Ordinary General Meetings (EGM) through Video Conference (VC) or Other Audio-Visual Means (OAVM) and passing of Ordinary and Special Resolutions by the companies under the Companies Act, 2013 read with Rules made thereunder
MCA vide General Circular 09/2024 dated September 19, 2024, issued a clarification with respect to the procedures for conducting Annual General Meetings (AGMs) and Extraordinary General Meetings (EGMs) via Video Conferencing (VC) or Other Audio Visual Means (OAVM).
In continuation to this Ministry’s General Circular No. 20/2020 dated May 05, 2020, General Circular No. 02/2022 dated May 05, 2022, General Circular No. 10/2022 dated December 28, 2022, and General Circular No. 09/2023 dated September 25, 2023, after due examination, it has been decided to allow companies whose AGMs are due in the Year 2024 or 2025, to conduct their AGMs through VC or OAVM on or before September 30, 2025, in accordance with the requirements laid down in Para 3 and Para 4 of the General Circular No. 20/2020 dated May 05, 2020.
However, it is hereby clarified that the General Circular shall not be construed as conferring any extension of statutory time for holding of AGMs by the companies under the Companies Act, 2013 (the Act) and the companies which have not adhered to the relevant statutory timelines shall be liable to legal action under the appropriate provisions of the Act.
The link for the aforesaid General Circular is as follows:
9. The Competition (Amendment) Act, 2023
MCA vide Notification G.S.R. 4031(E) dated September 19, 2024, notified the enforcement of Section 19(f) of the Competition (Amendment) Act, 2023, effective from September 19, 2024.
This clause amends Section 26 of the Competition Act by adding sub-section (9). The new sub-section allows the Competition Commission of India (CCI) to either close an investigation or pass an order under Section 27 upon completing its inquiry. However, before issuing a final order, the CCI is required to issue a show-cause notice to the concerned parties, detailing the alleged violations. The notice will provide the parties an opportunity to respond and present their case before any decision is finalized. This amendment strengthens procedural fairness by ensuring that the parties involved are given a reasonable opportunity to be heard before the CCI takes action.
The link for the aforesaid Notification is as follows:
10. The Companies (Prospectus and Allotment of Securities) Amendment Rules, 2024
MCA vide Notification G.S.R. 583(E) dated September 20, 2024, amended the Companies (Prospectus and Allotment of Securities) Rules, 2014, under the Companies Act, 2013 (“the Act”) vide the Companies (Prospectus and Allotment of Securities) Amendment Rules, 2024.
Rule 9B of the Companies (Prospectus and Allotment of Securities) Rules, 2014 relates to the Issue of securities in dematerialized form by private companies. As per the amendment, a producer company covered under rule 9B (2) shall issue the securities only in dematerialized form and facilitate the dematerialization of all its securities, in accordance with provisions of the Depositories Act, 1996 and regulations made thereunder and shall comply with the provision within a period of five years of closure of such financial year.
The link for the aforesaid Notification is as follows:
11. The Companies (Accounts) Amendment Rules, 2024
MCA vide Notification G.S.R. 587(E) dated September 24, 2024, amended the Companies (Accounts) Rules, 2014, under the Companies Act, 2013 (“the Act”) vide the Companies (Accounts) Amendment Rules, 2024.
As per the amendments a new proviso is being inserted in the Companies (Accounts) Rules, 2014, in rule 12 (1B) which reads that for the financial year 2023-2024, Form CSR-2 shall be filed separately on or before December 31, 2024, after filing Form No. AOC-4 or Form No. AOC-4-NBFC (Ind AS), as specified in these rules or Form No. AOC-4 XBRL as specified in the Companies (Filing of Documents and Forms in Extensible Business Reporting Language) Rules, 2015 as the case may be.
The link for the aforesaid Notification is as follows:
12. The Companies (Indian Accounting Standards) Third Amendment Rules, 2024
MCA vide Notification G.S.R. 602 (E) dated September 28, 2024, amended the Companies (Indian Accounting Standards) Rules, 2015, under the Companies Act, 2013 vide the Companies (Indian Accounting Standards) Third Amendment Rules, 2024.
In Rule 5 (exemptions), a new proviso has been inserted which states that an insurer or insurance company may provide its financial statement as per Ind AS 104 for consolidated financial statements by its parent or investor or venturer till the Insurance Regulatory and Development Authority notifies Ind AS 117 and for this purpose, Ind AS 104 shall, as specified in the Schedule (inserted vide this Notification) to these rules, continue to apply.
The link for the aforesaid Notification is as follows: