In recent years there have been changes in the Companies Act, 2013. This paper highlights different amendments in the year 2020 and 2021 in Companies Act, 2013. It tells the recent changes or the revocations like which can come under listed companies or like in some amendment the penal provisions have been removed and only monetary compensation are approved. It also confirms changes in AGM/EGMs to be held in physically, online, or in a hybrid mode. Furthermore, the committee has proposed that, if an EGM must be conducted wholly in an electronic mode, the notice period for such meeting be reduced to the time prescribed by CG. Furthermore, this paper discusses that states an independent director may be compensated in accordance with Section 197 read with Schedule V of the Companies Act 2013 if a firm has no profit or insufficient profit. Reduction in penalties for certain offences as well as in timeline for rights issues, relaxation in corporate social responsibility (CSR) compliance requirements and creation of separate benches at the National Company Law Appellate Tribunal (NCLAT) are among the certain changes too.

KEYWORDS:  Companies Act, Amendment, Company Law Committee, Central Government, Corporate Social Responsibility and Board of Directors.     


Since 2013, there have been four amendments to the Companies Act: in 2015, 2017, 2019, and now, as suggested for 2020. The Minister for Corporate Affairs, Ms. Nirmala Sitharaman, introduced the Companies (Amendment) Act, 2020, in the Lok Sabha on March 17, 2020. On September 19 and September 22, 2020, respectively, the Lok Sabha and Rajya Sabha adopted the Act.

It received the assent of the Honorable President of India, Ram Nath Kovind, on September 28th and has been in effect since that date. Four new parts have been added, including provisions for Producer Companies, and sixty-one sections of the Act have been amended.

A Company Law Committee (CLC) was established in 2019 with the overall objective of decriminalizing a few Act sections while also facilitating better comfort of living for firms. The Companies (Amendment) Act, 2020, which is based on the CLC’s recommendations, aims to decriminalize several Act crimes in cases of defaults that can be determined objectively and that otherwise lack any element of fraud or wider public interest. In addition to the easing of the CSR law, provisions have been made for producer firms, non-listed companies’ quarterly financial results, non-executive directors’ compensation in the event of insufficient earnings, etc.


Doctrinal Research methodology has been followed here.


  1. “Companies (Amendment) Act 2020 – A much needed reform” by Apurv Umredkar, 2021[1].

The author speaks about the Companies (Amendment) Act, 2020, including its objectives and the various amendments made in the said Act. A critical evaluation of the said Act is also stated exclusively here. The length and complexity of the Company Laws, which frequently cause modifications to be made to the Act, were also mentioned by the author. This is because there are numerous clauses in the Companies Act 2013 that need to be changed, but doing so all at once could cause turmoil and more serious readjustment and scheduling issues.  

  • “Key Highlights of the Company Law Committee Report” by Taxmann, 2022[2].

The author speaks about the various changes to the Companies Act, 2013. The proposed improvements include recognizing new ideas, accelerating corporate procedures, enhancing compliance standards, and clarifying current clauses. The author’s goal was to facilitate and promote easier business operations in India as well as the efficient application of the Limited Liability Partnership Act of 2008, the Companies Act of 2013, and the ensuing Rules issued thereunder.  

The author speaks about the key amendments made in the 2021 Act including the involvement of SEBI, small companies, and one-person companies. The author said that the provisions of shall not apply to the authorized CSR projects or programs. The emphasis was also placed on the requirement that every business that uses accounting software to maintain its books of account for only those programs that have the ability to record an audit trail.

The authors speak about the key takeaways from various amendments in the Companies Act and the provisions inserted in it post amendment. The Companies (Amendment) Act 2020, according to the authors of this article, has 66 provisions and aims to update the Companies Act 2013. Based on the nature and seriousness of such violations, the Companies (Amendment) Act 2020 seeks to decriminalize minor, technical, and procedural non-compliance, facilitating and promoting the ease of doing business and further facilitating the ease of living for law-abiding corporates in India.    


The following are the key objectives of the Act –    

  1. Decriminalize a few specified compoundable offences that don’t involve the general public and don’t qualify as major fraud or malpractice. For various provisions, such as buyback of securities, disclosure of director interests, disqualification of directors, audit procedures, etc., the penalty of jail has been left out. Three key actions are conducted in this category:    
  2. Eliminating Criminal Offences.
  3. Converting an offence to a civil wrong and using imprisonment as punishment.
  4. Readjusting fine amounts.   
  5. Allowing the central government to exclude a certain class of businesses from the definition of “listed businesses” after consulting with the Securities Exchange Board of India. It will therefore remove the extra burden of procedural and regulatory compliance on businesses.
  6. Clearly state the trial court’s jurisdiction based on the location of the employee’s unlawful withholding of property, as defined by section 452 of the act.
  7. Delhi benches for the NCLAT are being set up. This will ease the caseload on the NCLAT’s main bench in Delhi.
  8. Easing rules relating to the imposition of harsher sanctions for failure to submit, file, or record a document in accordance with section 403 of the Act.
  9. Increasing exemption under section 117 to certain NBFCs (Non-Banking Financial Companies) and Housing corporations from filing certain resolutions.


Following are the key provisions in the Amendment Act, 2020[5]

  1. Amendments for Ease of Compliance –
  2. Section 18 of the Amendment Act –

By adding section 89(11), the central government is given the ability to limit the application of section 89 of the primary act to a particular class of people. The declaration of beneficial ownership and beneficial interest by a shareholder of a company is covered under Section 89.

  • Section 22 of the Amendment Act –

In the event that the company’s articles and memorandum of association are altered or modified, resolutions agreements must be submitted to the ROCs within thirty days, according to section 117 of the primary legislation. The only exception to this rule is banking institutions. With this change, non-banking financial institutions and other housing finance companies are also eligible for relief. This was justified by the fact that NBFCs and HFCs also provide lending and other financial services. This clause was therefore made relevant to them.

  • Amendments Strengthening the Corporate Governance –  
  • Section 40 of the Amendment Act –

In the event of significant losses or insufficient profits for the firm, the directors (including managing and full-time directors) are entitled to the maximum amount of compensation under Section 197 of the principal act. Non-executive and independent directors will be qualified for remittance of their remuneration following the application of this amendment.

  • Section 25 of the Amendment Act –

The Companies Act of 2013 now includes a new section 129A. The recently implemented clause relates to the mandatory order that mandates that certain unlisted or classes of unlisted companies prepare and submit periodic financial statistics in the prescribed format, obtain board approvals, complete the audit review process, and file a copy of all pertinent documents with ROC within thirty days.

  • Amendments for Winding up –
  • Section 50 of the Amendment Act –

The amended section 348(6) of the principal act states that the provisions of the Insolvency and Bankruptcy Code 2016 and rules and regulations therein shall apply to the Company Liquidator or Insolvency Professional in the event that he violates this section’s requirements in carrying out his duties. The main focus of Section 348 is ongoing liquidation processes. Section 348(7) has also been repealed.

  • Section 51 of the Amendment Act –

In this amendment, section 356(2) has been replaced with a clause that states that NCLT must send a copy of the order to the Registrar and must instruct the person on whose application the order was made to submit a certified copy of the order to the Registrar within thirty days or any other time frame specified in advance.

  • Amendments Curtailing Monetary Penalties –
  • Section 12 of the Amendment Act –

Section 64 of the main act lays out the punishment for failing to notify the ROC of a revision to the share capital arrangements within thirty days of that adjustment. Currently, the prescribed penalties are Rs 1,000 per day the default persists, or Rs 5,00,000, whichever is less. After the change, the fine is decreased to Rs. 500 per day, or Rs. 100,000, whichever is less, as long as the default persists.

  • Section 20 of the Amendment Act –

This amendment modifies the fine specified in section 92 of the original act for filing an annual return later than sixty days after the annual general meeting. For the first missed payment, the sum drops from Rs. 50000 to Rs. Charges are decreased to Rs 50,000 for an officer and to Rs 2,00,000 for a firm in cases of ongoing payment delinquency.

  • Amendments for Removal of Penal Provisions –
  • Section 8 of the Amendment Act –

Section 48(5)’s previous clause has been removed. According to the new clause, a corporation that violates section 48 of the main act will be fined between Rs 25,000 and Rs 5,000,000. If an officer makes a mistake, they can be fined between Rs. 25,000 and Rs. 5,00,000 and/or imprisoned for a maximum of six months.

  • Section 13 of the Amendment Act –

Section 66 of the main act, subsection 11, is left out. The mechanism by which the corporation reduces its share capital is covered in this section. The amendment stipulates that failure to publish the confirmation decision of the Tribunal’s reduction of share capital will result in fines ranging from Rs. 5,00,000 to Rs. 25,00,000.  

  • Amendments for Foreign Companies –
  • Section 53 of the Amendment Act –

By way of this revision, the clause referring to sub-section 1 of Section 379 of the Constitution has been removed. The clause gave the Central Government the authority to treat a foreign company as an Indian Registered Company and require it to adhere to Indian Company Law Standards if not less than 50% of its share capital is owned by Indian nationals, Indian-incorporated companies, or people of Indian ancestry. Through this adjustment, this clause has now been removed.

  • Section 55 of the Amendment Act –

The main act’s Section 393A has been used to introduce a new provision. It stipulates that the Central Government has the right and ability to exempt any class of foreign firms or corporations formed outside of India from any requirements, guidelines, or laws under the firms Act 2013. The Central Government may accomplish this by issuing a unique notification or official order, a copy of which must be presented to the Parliament[6].


Important Points from the Report of the Company Law Committee are as follows[7]

  1. Section 53 Will Be Amended to Permit Distressed Enterprises to Issue Shares at A Discount –  

Section 53 makes it illegal for a firm to issue shares at a discount. The Committee remarked that it may cause hardship for troubled enterprises where the market value of the shares falls below the nominal value, making it difficult to raise new share capital for the company’s resurrection.  

The committee proposed that troubled enterprises be permitted to issue discounted shares to the Central Government or State Governments, or to such class or classifications of persons as may be defined.

  • Removal Of the Explanation Under Section 398 (1) For Supporting E-Enforcement And E-Adjudication in Section 398 Amendment – 

Section 398 of the Companies Act of 2013 empowers the Central Government to establish rules for electronic filing of applications, documents, inspections, and so on.

Whereas the explanation appended to section 398 (1) states that the regulations adopted under this section shall not relate to the imposition of fines or other pecuniary penalties, the demand or payment of fees, the violation of any of the provisions of this Act, or the penalty for such violation.

The Committee proposed removing the Explanation under Section 398 of the Companies Act, 2013 to allow the Central Government to make Rules for conducting enforcement-related actions in a transparent and non-discretionary manner with a proper trail through an electronic platform established under the Act, which will strengthen the e-enforcement and e-adjudication process.

  • AGM/EGM Holding in Physical, Virtual, Or Hybrid Mode – 

The committee has suggested empowering the CG to dictate how firms can convene AGM/EGMs physically, online, or in a hybrid mode. Furthermore, the committee has proposed that, if an EGM must be conducted wholly in an electronic mode, the notice period for such meeting be reduced to the time prescribed by CG.

The existing regulations provide no explicit provision for holding meetings via video conferencing (VC) or other audio-visual means (OAVM). Keeping Statutory Registers

  • Up-To-Date Using an Electronic Platform –    

According to Section 120 of the Companies Act of 2013, “any document, record, register, minutes, or other record required to be kept by the company may be kept by the company in an electronic form in the form and manner prescribed.” According to Rule 27 of the Companies (MGT) Rules, 2014, any listed business or corporation with 1,000 or more shareholders, debenture holders, and other security holders may keep its records in electronic form.

As a result, it is evident that there is no legal necessity to keep registers in electronic form. The committee has now suggested mandating that certain types of firms keep their statutory registers on an electronic platform in the form and manner stipulated by CG.


Following are the key provisions in the Amendment Act, 2021[8]

  1. NGO Registration with MCA Is Required in Order to Raise CSR Funds –   
  2. Starting on April 1, 2021, every entity covered by Rule 4 of the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, that plans to engage in any CSR activity must register with the Central Government by submitting the form CSR-1 electronically to the Registrar. As long as the rules of this sub-rule do not apply to CSR projects or programs that were approved before April 1, 2021.   
  3. The entity must electronically sign and submit Form CSR-1, and a Chartered Accountant in practice, a Company Secretary in practice, or a Cost Accountant in practice must verify the signature digitally.
  4. When the Form CSR-1 is submitted on the portal, the system will produce a special CSR Registration Number.
  5. Companies that should not be regarded as Listed Companies –

The following classes of companies shall not be regarded as listed companies for the purposes of the proviso to clause (52) of section 2 of the Act, namely –

  1. Public companies that have listed their non-convertible debt securities issued on a private placement basis in accordance with SEBI’s (Issue and Listing of Debt Securities) Regulations, 2008; non-convertible redeemable preference shares issued on a private placement basis in accordance with SEBI’s (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013; or both categories, but not their equity shares, on a recognised stock exchange.
    1. Private businesses who have complied with the SEBI (Issue and Listing of Debt Securities) Regulations, 2008, and listed their non-convertible debt securities on a private placement basis on a reputable stock exchange.
    1. Public corporations whose equity shares are listed on a stock market in a jurisdiction that is listed in subsection (3) of section 23 of the Act but whose equity shares have not been listed on a recognised stock exchange.
  2. Businesses To Utilise Accounting Software with A Transaction Audit Trail[9]

Every business that uses accounting software to keep track of its books of account must only use programmes that have the ability to record an audit trail of every transaction, create and edit log of every change made to the books of accounts along with the date the change was made, and ensure that the audit trail cannot be turned off.

  • Additional Disclosures to be Made in Balance Sheet And P/L A/C. –
    • Trade Payables ageing schedule with age 1 year, 1–2-year, 2-3 year & more than 3 years.
    • Reconciliation of the gross and net carrying amounts of each class of assets
    • Trade Receivables ageing schedule with age 1 year, 1–2-year, 2-3 year & more than 3 years.
    • Detailed disclosure regarding title deeds of Immovable Property.
    • Disclosure regarding revaluation & CWIP.  
    • Loans or Advances granted to promoters, directors, KMPs and the related parties.
    • Details of Benami Property held.
    • Disclosure where a company is a declared wilful defaulter by any bank or financial Institution.
    • Relationship with Struck off Companies.
    •  Pending registration of charges or satisfaction with Registrar of Companies.
    •  Compliance with number of layers of companies.
    • Disclosure of 11 Ratios.  
    • Compliance with approved Scheme(s) of Arrangements.
    • Utilisation of Borrowed funds and share premium.
    • Details of transaction not recorded in the books that has been surrendered or disclosed as income in the tax assessments.
    • Disclosure regarding Corporate Social Responsibility.
    • Under section 16 of companies at 2013 if a company’s name resembles a registered trademark such company has a specific time limit to allow it to rectify its name the time limit has reduced from six months to 3 months[10].
  • Further Issue of Share Capital – 

Section 62 of companies act 2013 says that further issue of company share had to remain open between 15 to 30 days. However, in the New Amendment it is open for less than 15 days thereby reducing the timeline and speed up the process of issuing rights[11].

  • Inclusion of Section 129A –   

The Companies (Amendment) Act 2020 has a new section that allows the central government to mandate that particular classes of unlisted companies prepare periodic financial statements for specific periods, along with the manner of their audit or limited review by the board of directors, and file them with the registrar[12].

  • Company To Have Board of Directors –

A caveat has been included that states an independent director may be compensated in accordance with Section 197 read with Schedule V of the Companies Act 2013 if a firm has no profit or insufficient profit. The caveat has been added to ensure that independent directors are fairly compensated for the important time and experience they devote in helping boards function objectively.   

  • Lesser Penalties for Certain Companies –

Startups and production firms are now also subject to less severe penalties than those listed in the relevant rules.

In addition to the changes described above, certain criminal provisions of the Companies Act 2013 that dealt with compoundable offences were altered by doing away with imprisonment and only allowing monetary penalties. As a result, the National Company Law Tribunal’s and special courts’ overall workloads have been significantly decreased. The MCA has given notice of most of the provisions in its notifications from 21 December 2020 and 23 January 2021[13]


As an overall viewpoint, it can be said that the amendments made in the Companies Act, 2013 in the year 2020 & 2021, are beneficial and scope for improvement of the Companies Act and the interpretation of its statutes. The insertion of the new provisions can be strongly implied to be a torch-bearer in the recent corporate litigation/proceedings.  

The amendments made in the penalty system is also to be noted and the further regulatory changes in the Board structure, issuing of shares and other working prospects, which are to be considered as the backbone of any corporate proceedings, are a matter of great substance.       


The strategy of the central government to decriminalizing company legislation is not limited to the Companies Act; it also intends to decriminalize various elements of the Limited Liability Partnership Act. These changes are expected to make doing business easier. The legislature must, however, maintain the deterrence impact established by the original Act. Offences involving the misappropriation of a significant quantity of public funds must still be prosecuted through the criminal justice system. Finally, the balance required to achieve the Act’s overall objectives must not be lost.   

The Companies (Amendment) Act 2020 was introduced by the Central Government to address the requirements of company law and to alter, add, and remove the relevant provisions and sections that needed to be replaced by new ones. The Companies Act of 2013 has long been a concern for those who create regulations. A significant overhaul of corporate legislation was required to improve the economic climate in India for start-up companies and to draw in international capital. Big companies will undoubtedly be enticed by liberal regimes to settle in India and increase their commercial footprint. Small businesses and startup foundations will benefit from this new amendment act’s assistance in adhering to regulatory requirements.




[1] Umredkar A. (2021), Companies (Amendment) Act 2020 – A much needed reform,

[2] Taxmann (2022), Key Highlights of the Company Law Committee Report,

[3] Master C. (2021), 9 Amendments in the Companies Act, 2013 Applicable from 1st April, 2021,

[4] Ahuja N., Sinha S. (2021), Key takeaways from Companies (Amendment) Act,  

[5] Umredkar A. (2021), Companies (Amendment) Act 2020 – A much needed reform,

[6] Ibid 1   

[7] Key Highlights of the Company Law Committee Report (2022) | CLC-2022, Taxmann ,

[8] Master C. (2021), 9 Amendments in the Companies Act. 2013 Applicable from 1st April, 2021,

[9] Ibid 4

[10] Ibid 4 

[11] Ahuja N., Sinha S. (2021), Key takeaways from Companies (Amendment) Act, Lexology,

[12] Ibid 7

[13] Ibid 7