Friday, April 8, 2016

Report of the Company Law Committee -II

I. Introduction:
The first part of this article was published in Taxmann's Corporate Professionals Today ,Vol. 35 , February 16 To 29, 2016, Pp. 325-339.
Carrying forward the spirit of enhancing 'ease of doing business' the Central Government has accepted mostly all recommendations of the Company Law Committee Report submitted in February,2016 and introduced the Companies (Amendment) Bill,2016 in the Lok Sabha on 16thMarch 2016. Major changes introduced in the Bill include -

Allowing incorporation of companies without specific object clause;

Raising money through private placement without regulatory oversight and just by filing return of allotment;

Allowing six months remedial period when minimum membership of a company falls below the prescribed minimum level;

Allowing authentication of documents by any employee of the company authorised by the Board;

Complexity involved in the preparation of prospectus arising out of dual compliance of company law and SEBI requirements is removed by elimination company law requirements - Matters to be stated in the prospectus and reports to be included therein shall be as per the SEBI Guidelines to be developed in consultation with the Central Government;

No penalty on co. if cash in excess of Rs. 20,000 was received from directors for meeting business exigency

a)    Assessee, a private limited company, received share application money of Rs. 5 lakh in cash from its directors.
b)    Assessing Officer (AO) imposed penalty on it under Section 271D for violating the provisions of Section 269SS since the amount had been received in cash exceeding the limit of Rs. 20,000.
c)    Assessee contended that amount was received to meet business exigency warranting immediate discharge of certain liability. Therefore, such genuine transactions would not attract penalty under section 271D as envisaged in section 273B.

d)    Commissioner (Appeals) confirmed the order of the AO. Aggrieved assessee filed the instant appeal before the tribunal.