Companies (Amendment) Act, 2015

Changes to the Companies Act, 2013

The Ministry of Corporate Affairs (MCA), on 25th May 2015, notified changes to the Companies Act, 2013 in form of a Companies (Amendment) Act, 2015. The Amendment Act came into force on 29th May 2015.

Some of the Key changes to the Companies Act, 2013

One lakh rupees as minimum paid-up capital done away with

The Companies Act, 2013 defines a private company as a company having a minimum paid-up share capital of one lakh rupees. The amendment has done away with the requirement of having one lakh rupees as the minimum paid-up share capital for such companies.

Similarly, the requirement of five lakh rupees as the minimum paid-up share capital for public companies has been done away with.

As a result, private and public companies will need to have a minimum paid-up capital as prescribed by MCA.

Common seal not mandatory anymore

The amendment has done away with the mandatory requirement of having a common seal. However, if a company has/plans to have a common seal, it can do so.

Accordingly, sections which have mentions of a common seal, are suitably amended to make its role non-mandatory in nature. For Sections 22 and 46, the requirement of a common seal is replaced by authorization by either two directors or a director and the company secretary.

Penalty for violation of rules regarding acceptance of deposit

The amendment mandates penalties to companies and its officers in default of/ violating rules regarding acceptance of deposits from the public u/s 73 and 76. The penalties range from monetary fines of one crore rupees to ten crore rupees for companies and twenty-five lakh rupees to two crore rupees for officers, including an imprisonment for upto 7 years.

 Public cannot access Board resolution documents from the RoC/MCA

The existing Act gave powers to the public to access any document filed by a company with the RoC, by paying a fee. There were concerns of competitors and persons being able to access key information regarding the operations of the company and use it with an ulterior motive.

The amendment addressed these concerns as it prohibits people from inspecting or obtaining copies of board resolutions from the registrar, u/s 399.

No dividend until previous year’s loss is set off

The amendment restricts companies declaring a dividend unless previous year’s losses and depreciation that are not provided for, are set off against profit for the current year.

Frauds reported by auditors to the central govt. need to be over a particular amount

The existing Act requires an auditor to report any fraud committed by officers or employees of the company, to the central govt. The amended Act requires frauds reported to the central govt. needs to be over a particular amount. Frauds involving amount lesser than the prescribed amount will have to be reported to the audit committee or the Board of the company.

The amendments also require details of frauds reported by auditors to be included in report of directors in the company’s annual report.

This amendment is yet to be effected.

Exemption of a shareholder meeting resolution for loans to/investment in subsidiaries

A company can now extend loan/ give guarantee/provide security in its subsidiary without a shareholder meeting resolution. However, the loans provided should be utilized by the subsidiary for its principal business activities.

Just an ordinary resolution for related party transactions

Companies Act 2013 mandated approval of related party transactions through a special resolution at the shareholders meeting. The amendment relaxes the norms as now only an ordinary resolution is required to approve such transactions.

However, the concerned direct related party is still not allowed to vote on such proposals.


Most of the amendments are brought out to enhance ease of business in the country and will be welcomed by companies and directors. However, the ease of rules regarding approvals for related party transactions is a dilution of rights of minority shareholders. Since only the concerned related party, and not the entire related parties, is barred from voting for a related party transaction, obtaining approval through ordinary resolutions will not be a difficult task for promoters and potentially contentious transactions will always likely be approved without any real resistance.