The Ministry of Corporate Affairs has issued a notification dated June 5, 2020 notifying the Companies (Share Capital and Debentures) Amendment Rules, 2020 prescribed under the Companies Act, 2013. 

The following are the salient features of the amendment: 

1. Rule 8(4) Second Proviso 

A start-up company, as defined in notification number G.S.R. 127(E), dated the 19th February, 2019 issued by the Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, Government of India, may issue sweat equity shares not exceeding fifty percent of its paid up capital up to ten years from the date of its incorporation or registration. Earlier the period was limited to five years from the date of incorporation; and 

2. Rule 18(7)(b)(v) 

The requirement of investing or depositing, as the case may be, a sum which is not less than fifteen percent of the amount of debentures maturing during the year, ending on the 31st day of March of the next year in any one or more methods of investments or deposits as provided in sub-clause (vi) has been omitted for privately placed debentures for: (a) NBFCs registered with Reserve Bank of India under section 45- IA of the RBI Act, 1934 and for Housing Finance Companies registered with National Housing Bank; and (b) listed companies other than those who are already exempted from maintaining any debenture redemption reserve. 

Provided that the amount remaining invested or deposited, as the case may be, shall not any time fall below fifteen percent of the amount of the debentures maturing during the year ending on 31st day of March of that year. 

This update has been contributed by Arka Majumdar (Partner), Juhi Wadhwani and Kiran Sharma (Associates).