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Major Impact of Companies Amendment Bill, 2017

Ashish M. Shaji

| Updated: Aug 01, 2017 | Category: Company Registration, MCA Notification

Amendment Bill 2017

The Companies Amendment Bill, 2017 was introduced in Lok Sabha on March 2016 and the same was referred to the Standing Committee. The Cabinet of the Lok Sabha approved the same bill after considering the suggestions given by Standing Committee. The bill was approved by Lok Sabha on 27th of July, 2017.

The bill shall be implemented from the day it is being approved by the Rajya Sabha and receives the assent of the President of India.

The Major Amendment Proposed in the Companies Amendment Bill, 2017

Companies Amendment Bill, 2017

1. Alteration in the period of reservation of name:

  • In the case of incorporation of the new company, the name approved by the Ministry of Corporate Affairs[1] shall be available only for 20 days from the date of its approval and after the expiration of the same, the name shall lapse and will be available to some other person.
  • In case the company already exists and there is a change in its name for some reason that name shall be available for 60 days from the date of its approval by the Ministry of Corporate Affairs.

2. Punishment for contravention of Section 73-76:

By alteration in Amendment Bill, every officer of the company who has committed default shall be liable to imprisonment which may be extended to seven (7) years AND fine which may not be less than Rs. 25 lakhs and which may be extended to Rs. 2 Crore.

According to the existing law, it is fine OR imprisonment so the word or has been substituted by the word and.

3. Definition of the related party:

There is an addition to the definition of Related Party section 2(76) it has been proposed to include the following company in the definition of the related party:

Investing Company or the Venture Company-

It means a body corporate whose investment in the company would result in the company to become the associate of the Body Corporate.

4. Annual Return:

As per the Amendment Bill 2017, the company has to file its Annual Return with the Ministry within 60 days of its Annual General Meeting and if the same is not filed within 60 days it shall be considered as default from the 61st day itself. And every officer who is in default shall be liable for the fine.

Earlier it was specified that the time limit may be extended by the Registrar as specified in section 403 and in section 403 it is specified that extension of the period of 270 days can be given which now have been proposed to be omitted.

5. Financial Statement:

As per the Amendment Bill 2017, the company has to file its Financial Statement with the Ministry within 30 days of its Annual General Meeting and if the same is not filed within 30 days it shall be considered as default from the 31st day itself. And every officer who is in default shall be liable for the fine.

Earlier it was specified that the time limit may be extended by the Registrar as specified in section 403 and in section 403 it is specified that extension of the period of 270 days can be given which now have been proposed to be omitted.

6. Appointment of Manager/whole-time Director/Managing Director:

A new provision has been proposed to be inserted under Section 196(3) (a). As per the proposal it has been proposed that if no special resolution is passed for appointing MD/Manager/WTD who has attained the age of 75 years but an ordinary resolution is passed and the Board has taken approval of the Central Government that the appointment of such person is important for the company such person can be appointed.

As per the proposal, it will not be necessary to pass special resolution only ordinary resolution + central government approval will be sufficient.

7. Section 374- Obligation of Companies Registered under this Act:

Any Limited Liability Company registration under the Limited Liability Act 2008, registers itself under the Companies Act shall be deemed to dissolved and there is no further requirement of any deed or act under the Limited Liability Act 2008.

According to the existing law under section 374 it is compulsory to intimate Registrar (LLP) and the same shall be advertised in the newspaper to receive any objection regarding the conversion.

8. Filing Fees:

As per the section 403 if any person failed to file Annual Return U/s 92 and financial statement U/s 137 of the time prescribed it shall only be submitted only after the payment of additional fees which will not be less than Rs. 100/- per day. Different additional fees can be prescribed for different classes of Companies.

Higher Additional fees as per the proviso:

The additional fees shall not be less than the twice of additional fees provided under the first and second proviso. Higher additional fees shall be charged if there is default in submitting, filing, recording documents two or more than two times.

9. Removal of reference to section 403:

In many of the sections, there is a reference to section 403 for the time limit for filing forms with the Registrar of the companies. It is proposed to remove these references from various sections.

The sections from which references are proposed to be removed are:

  1. Section 92(4) –   Annual Return
  2. Section 117(1) – Resolution & agreement to be filed.
  3. Section 121(2) (3) – Report of Annual General Meeting.
  4. Section 137(1), (2) – Copy of financial statement to be filed with the Registrar.
  5. Section 157(1) – Company to inform DIN to Registrar.

Conclusion

The amendments in the definitions and changes in the important provisions of the Companies Act should be noted by all professionals. For more information on Companies Amendment Bill, Companies Act or any other information on Company Registration, contact Enterslice.

Read our article: Companies Amendment Act, 2020 – Key Features

Ashish M. Shaji

Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.

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