Select Your Location
Key Amendments in Companies Act 2013 in 2017. In this article, we will discuss section by an amendment in Companies Amendment Bill 2017.
As per Section 139(1), it is required that any matter which is relating to the appointment of the auditor should be placed in each Annual General Meeting (AGM) for ratification by the members, this requirement has been omitted.
It has been tried to simplify the procedure of private placement. As it has been provided that any private placement offer an application shall not be carrying any right of renunciation and the money received under the private placement shall not be utilized unless return of allotment is filed with the ROC, and the return is to be filed within 15 days of allotment earlier this time limit was 30 days.
Any person who whether singly or with any other person holds 25% shares in any company shall be regarded as an SBO i.e. “significant beneficial owner”. This SBO has to make a declaration regarding his nature of interest and influence. And according to Companies Amendment Bill 2017, every company shall be maintaining a register which shall contain details of SBO and shall also file periodic returns with the registrar.
The penal provisions are rationalized as well as liabilities are reduced for procedural and technical defaults. Now two new sections have been inserted relating to factors that will determine the level of punishment and the penalties for one-person companies and small companies.
An all totally new section has been introduced which provides for categorizing loans into different types like prohibited, conditional and eligible.
Loans to Director of Produces Company or its holding are prohibited.
Conditional category shall include any person in whom such director is interested and which involves passing of a special resolution by the company in its general meeting along with the condition that if the borrower is the company then that loan shall be utilized for the principal business activity of the company.
Additional filing fees of Rs.100 per day may be levied. Different amounts may be specified for a different form and different classes of companies. In case of default on two or more occasions in the submission of forms, higher fees of not less than Rs.200 per day may be levied.
Now Directors are allowed to participate in Board meetings through video conferencing or other audiovisual means certain items which were earlier restricted provided there should be quorum through the physical presence of directors.
The period for reservation of name is substituted from “60 days from the date of application” to “20 days from the date of approval”. In the case of an existing company, the Registrar may reserve the name for a period of 60 days from the date of approval.
Earlier it was required that a company shall, on and from the fifteenth day of its incorporation, have a Registered Office (RO). This implied that it could not have an RO from the date of incorporation. The Amendment Bill corrects this and provides for a company to have an RO within 30 days of incorporation, and the time period for intimating the Registrar on change of RO through Form INC-22 has been increased from 15 days to 30 days.
The new section provides that if at any time the number of members falls below the minimum number prescribed in S.3(1) and the company carries on business for more than 6 months, every person who is a member at that time shall be severally liable for payment of the whole debts of the company contracted during that time, and maybe severally sued.
Earlier the CEO was required to sign the financial statements only if he was a Director of the company. After the amendment, According to the Companies Amendment Bill 2017, the CEO shall sign the financial statement irrespective of the fact that he is the Director or not.
Form MGT-9 formed a part of the Board’s report. This form now does not have to be accompanied by the Board’s report and instead, a link to the annual return hosted on the website shall be provided in the Board’s report.
Various provisions pertaining to performance evaluation of directors have been aligned. Companies Amendment Bill 2017 and Amendment in Section 178(2) provides that the Nomination & Remuneration Committee shall specify the manner for effective evaluation of the performance of Board, its committees and individual directors which shall be carried out either by the Board, by the NRC or by an independent external agency.
The Central Government is empowered to prescribe an abridged Board’s Report for One Person Company and Small Company.
Earlier CSR provisions were applicable to only those companies that satisfied certain conditions related to net worth, turnover and net profit “in any financial year”. Now the words “any financial year” have been replaced by the words “immediately preceding financial year”.
Section 136 has been amended for providing that the copies of audited financial statements and other documents may be sent at shorter notice if 95% of members entitled to vote at the meeting agree to the same.
The earlier affidavit was required from each of the subscribers to the memorandum and from persons named as the first directors in the articles that they are not convicted of any offense etc. Now the word affidavit has been replaced with the declaration, thereby making the process of incorporation easier.
Now an extraordinary general meeting (EGM) can be held outside India of a wholly-owned subsidiary of a company incorporated outside India.
Earlier it was required that any person other than retiring director who is nominated as the director shall deposit Rs.1 Lakhs with the Company Registration which shall be refunded if the person nominated gets elected as a director or gets more than 25% of total valid votes cast. But now this requirement shall not be applicable in case of appointment of independent directors or directors nominated by nomination and remuneration committee.
All listed companies were required to file a return with the Registrar of Companies with respect to change in the number of shares held by promoters and the top ten shareholders of such company, within fifteen days of such change. Now, this information is also required to be submitted to SEBI/Stock Exchanges and hence this section has been omitted to avoid duplicity of reporting and reduce the compliance burden on companies.
Section26 has laid out a list of information which shall be included in the prospectus issued by public companies. This list has now been pruned to state that such information required by SEBI in consultation with the Central Government shall be specified.
Central Government (CG) approval was required for giving Managerial Remuneration above the prescribed limits this CG approval is now replaced by approval through a special resolution by shareholders in general meeting. Therefore, for public companies for payment of remuneration to MD even exceeding 11% of net profits now no CG approval is now required.
The definition of Net worth has been amended to include debit or credit balance of profit and loss account in the calculation of net worth. Further, definitions like Associate Company, Cost accountant, Debenture, Financial year, Holding company, Key Managerial Personnel, Small Company and Turnover have now also been amended.
Maintenance of Deposit Repayment Reserve for Public Deposits is proposed to be changed to 20% of the amounts maturing during the next year in place of 15%. The condition of deposit insurance for public deposits is removed permanently.
Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.
Black money has been the subject of heated political debate in India for a long time. Successiv...
The Apex Court pronounced a judgement in the case titled Tata Motors Vs The Brihan Mumbai Elect...
Since economies are moving towards digitalisation and making it feasible to conduct transaction...
The Alternative Investment Funds (AIFs) Pro-rata and Pari-Passu Rights Proposal Consultation Pa...
The Financial Action Task Force, i.e. FATF (the Force), is the global money laundering and terr...
Advance tax refers to the payment of the tax liability before the end of the relevant financia...
On 11.12.15, the Hon’ble Delhi High Court (HC) pronounced a landmark judgement in the case ti...
Money laundering can be defined as the process of illegal concealment of the origin of money ob...
Every assessee in India is obligated to file an income tax return and make the timely payment o...
In the recent past, India has seen burgeoning demand for internet and smartphones. The rapid ri...
Are you human?: 9 + 6 =
Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality
The Government amended the Essential Commodities Act in September 2020. This amendment replaces the Essential Commo...
03 Oct, 2020
A Startup is the most fashionable term in today’s world. Now a day people prefer to work with startups over conve...
11 Jan, 2019
Red Herring Top 100 Asia enlists outstanding entrepreneurs and promising companies. It selects the award winners from approximately 2000 privately financed companies each year in the Asia. Since 1996, Red Herring has kept tabs on these up-and-comers. Red Herring editors were among the first to recognize that companies such as Google, Facebook, Kakao, Alibaba, Twitter, Rakuten, Salesforce.com, Xiaomi and YouTube would change the way we live and work.
Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers.
Stay updated with all the latest legal updates. Just enter your email address and subscribe for free!
Chat on Whatsapp
Hey I'm Suman. Let's Talk!