THE COMPANIES (AMENDMENT) BILL, 2006
(As passed by the Rajya Sabha on 21/3/2006 and the Lok Sabha on 15/5/2006)
A
Bill
further to amend the Companies Act, 1956.
BE it enacted by Parliament in the Fifty-seventh Year of the Republic of India as
follows:—
Short title and commencement
1.(1) This Act may be called the Companies (Amendment) Act, 2006.
(2) It shall come into force on such date as the Central Government may, by notification,
appoint and different dates may be appointed for different provisions of this Act.
Amendment of section 253
2.In section 253 of the Companies Act, 1956 (hereinafter referred to as the principal
Act), the following proviso shall be inserted, namely:—
"Provided that no company shall appoint or re-appoint any individual as director of
the company unless he has been allotted a Director Identification Number under section
266B.".
Insertion of new sections 266A, 266B, 266C, 266D, 266E, 266F and 266G
3. After section 266 of the principal Act, the following sections shall be inserted,
namely:—
'Director Identification Number
Application for allotment of Director Identification Number
266A. Every—
(a)Individual, intending to be appointed as director of a company; or
(b)Director of a company appointed before the commencement of the
Companies (Amendment) Act, 2006,
shall make an application for allotment of Director Identification Number to the Central
Government in such form, and manner (including electronic form) along with such fee, as
may be prescribed:
Provided that every director appointed before the commencement of the
Companies (Amendment) Act, 2006 shall make, within sixty days of the commencement
of the said Act, such application to the Central Government:
Provided further that every applicant, who has made an application under this
section for allotment of Director Identification Number, may be appointed as a director in a
company, or, hold office as director in a company till such time such applicant has been
allotted Director Identification Number.
Allotment of Director Identification Number
266B. The Central Government shall, within one month from the receipt of the
application under section 266A, allot a Director Identification Number to an
applicant, in such manner as may be prescribed.
Prohibition to obtain more than one Director Identification Number
266C. No individual, who had already been allotted a Director Identification Number
under section 266B, shall apply, obtain or possess another Director Identification
Number.
Obligation of Director to intimate Director Identification Number to concerned
company or companies
266D. Every existing director shall, within one month of the receipt of Director
Identification Number from the Central Government, intimate his Director Identification
Number to the company or all companies wherein he is a director.
Obligation of company to inform Director Identification Number to Registrar
266E. (1) Every company shall, within one week of the receipt of intimation under
section 266D, furnish the Director Identification Number of all its directors to the
Registrar or any other officer or authority as may be specified by the Central
Government.
(2) Every intimation under sub-section (1) shall be furnished in such form and
manner as may be prescribed.
Obligation to indicate Director Identification Number
266F. Every person or company, while furnishing any return, information or
particulars as are required to be furnished under this Act, shall quote the Director
Identification Number in such return, information or particulars in case such return,
information or particulars relate to the director or contain any reference of any
director.
Penalty for contravention of provisions of section 266A or section 266C or
section 266D or section 266E
266G If any individual or director, referred to in section 266A or section 266C or section
266D or a company referred to in section 266E, contravenes any of the provisions of those
sections, every such individual or director or the company, as the case may be, who or
which, is in default, shall be punishable with fine which may extend to five thousand
rupees and where the contravention is a continuing one, with a further fine which may
extend to five hundred rupees for every day after the first during which the contravention
continues.
Explanation - For the purposes of sections 266A, 266B, 266C, 266D, 266E and 266F,
the Director Identification Number means a identification number which the Central
Government may allot to any individual, intending to be appointed as director or to any
existing directors of a company, for the purpose of his identification as such".
Insertion of new sections 610B, 610C, 610D, and 610E
4. After section 610A of the principal Act, the following sections shall be inserted,
namely:—
Provisions relating to filing of applications, documents inspection etc. through
electronic form
"610 B. (1) Notwithstanding anything contained in this Act, and without prejudice
to the provisions contained in section 6 of the Information Technology Act, 2000, the
Central Government may, by notification in the Official Gazette, make rules so as to
require from such date as may be specified in the rules, that—
(a) such applications, balance-sheet, prospectus, return, declaration,
memorandum of association, articles of association, particulars of charges, or
any other particulars or document as may be required to be filed or delivered
under this Act or rules made there under, shall be filed, through the electronic
form and authenticated in such manner as may be specified in the rules;
(b) such document, notice, any communication or intimation, required to
be served or delivered under this Act, shall be served or delivered under this
Act through the electronic form and authenticated in such manner as may be
specified in the rules;
(c) such applications, balance-sheet, prospectus, return, register,
memorandum of association, articles of association, particulars of charges, or any
other document and return filed under this Act or rules made there under shall be
maintained by the Registrar in the electronic form and registered or authenticated,
as the case may be, in such manner as may be specified in the rules;
(d)such inspections of the memorandum of association, articles of
association, register, index, balance-sheet, return or any other document
maintained in the electronic form, which is otherwise available for such
inspection
under this Act or rules made there under, may be made by any person through
the electronic form as may be specified in the rules;
(e)such fees, charges or other sums payable under this Act or
rules made
there under shall be paid through the electronic form and in such manner as may
be specified in the rules;
(f) the Registrar shall, register change of registered office, alteration of
memorandum of association or articles of association, prospectus, issue certificate of
incorporation or certificate of commencement of business, register such
document, issue such certificate, record notice, receive such communication as may
be required to be registered or issued or recorded or received, as the case may be,
under this Act or rules made there under or perform duties or discharge functions or
exercise powers under this Act or rules made there under or do any act which is by
this Act directed to be performed or discharged or exercised or done by the
Registrar, by the electronic form, in such manner as may be specified in the rules.
(2) The Central Government may, by notification in the Official Gazette, frame a
scheme to carry out the provisions specified under sub-section ( 1 ) through the
electronic form:
Provided that the Central Government may appoint different dates in respect of
different Registrar of Companies or Regional Directors from which such scheme shall
come into force.
Power to modify act in relation to electronic records (including the manner and
form in which electronic records shall be filed)
610C. (1) The Central Government may, by notification in the Official Gazette,
direct that any of the provisions of this Act, so far as it is required for the purpose of
electronic record specified under section 610B in the electronic form,—
(a) shall not apply, in relation to the matters specified under clauses (a) to (f)
of sub- section (1) of section 610B, as may be specified in the notification; or
(b) shall apply, in relation to the matters specified under clauses (a) to (f)
of sub section ( 1 ) of section 610B only with such consequential exceptions,
modifications or adoptions as may be specified in the notification:
Provided that no such notification which relates to imposition of fines or other
pecuniary penalties or demand or payment of fees or contravention of any of the
provisions of this Act or offence shall be issued under this sub-section.
(2) A copy of every notification proposed to be issued under sub-section (1), shall
be laid in draft before each House of Parliament, while it is in session, for a total period
of thirty days which may be comprised in one session or in two or more successive
sessions, and if, before the expiry of the session immediately following the session or
the successive sessions aforesaid, both Houses agree in disapproving the issue of the
notification or both Houses agree in making any modification in the notification, the
notification shall not be issued or, as the case may be, shall be issued only in such
modified form as may be agreed upon by both the Houses.
Providing of services through electronic form
610D. The Central Government may provide such value added services through the
electronic form and levy such fees as may be prescribed.
Application of provision of Act 21 of 2000
610E. All the provisions of the Information Technology Act, 2000 relating to the
electronic records (including the manner and format in which the electronic records shall
be filed), in so far as they are not inconsistent with this Act, shall apply, or in relation, to
the records in electronic form under section 610B.”.
STATEMENT OF OBJECTS AND REASONS
In context of the rapid developments witnessed in technology, the Ministry of Company
Affairs decided to enable the operations carried out by the Ministry and its field offices to be
performed more efficiently and effectively through the use of contemporary information
technology and computers. It was felt that the earlier efforts at computerisation had not
yielded the desired efficiency in operation of the system and an operating system that took
into account contemporary technology was necessary. Therefore, it was decided to implement
a comprehensive e-Governance system and programme to achieve the above objective.
2. The Ministry of Company Affairs on the recommendations of Department of Information
Technology is implementing an e-Governance initiative through a project named as
"MCA-21". This project will provide the public, corporate entities and others an easy and
secure online access to the corporate information, including filing of documents and public
access to the information required to be in the public domain under the statute, at any time and
from anywhere. This would also result in efficiency in statutory supervision of corporate
processes and efficient professional services under the Companies Act, 1956 (the Act).
3.The filing and registration of documents is a statutory requirement under the Act.
At present, the Act lays down the procedures for filing of various documents in
physical
form and the processes associated therewith. While, the broad enabling framework for
such an initiative is available under the Information Technology Act, 2000 read with
Companies Act, 1956, enabling provisions would still be required to support certain
online electronic processes which have since become available due to technological
advancement for various detailed procedural requirements under the Companies Act,
1956.
4.It is, therefore, proposed to insert new sections 610B, 610C, 610D and 610E in the
Companies Act, 1956 so as to make provision for electronic filing system and for payment
of fees through electronic form under the said Act which are essential for the successful
implementation of the MCA-21 Project. After the proposed amendments to the
Companies Act, 1956 have been enacted, the documents in electronic form duly
authenticated with digital signatures shall be accepted under the provisions of that
Act. The proposed electronic system also provides for multiple modes of payment of
statutory fees.
5.The provisions of the Companies Act, 1956 allow an individual to be a director of up
to fifteen companies and such companies can be located in the jurisdiction in any of
the Registrars of Companies. There is a need for individual identity of person(s) intending
to be directors of companies to be established. This would also facilitate effective legal
action against the directors of such companies under the law, keeping in view the
possibility of fraud by companies and the phenomenon of companies that raise funds
from the public and vanish thereafter. It is, therefore, proposed to insert new sections
266A, 266B, 266C, 266D, 266E, 266F and 266G in the Companies Act, 1956 so as to,
inter alia, provide for allotment of a unique Director Identification Number to any
individual, intending to be appointed as a director in a company or to any existing
director of a company, for the purpose of his identification as such, through electronic
or other form and to provide for penalty for any violation in this regard.
6.This Bill seeks to achieve the above objectives.
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