AMENDMENT COMPANIES ACT, 2013 – JUNE – JULY, 2017


AMENDMENT COMPANIES ACT, 2013 –            JUNE – JULY, 2017

SHORT SUMMARY:

In this Flash editorial, the author referring amendment (i.e. in Rules, Sections, Circulars, Notifications) issued by Ministry of Corporate Affairs in the Month of June – July, 2017.

This is article no. 246 of the series of editorials written by the author on corporate laws
{Including Companies Act, 2013, SEBI, RBI Regulations, IBC, LLP Act, 2008 etc.}.

AMENDMENT DATED 13th JULY, 2017

AMENDMENT - I

Ministry of Corporate Affairs (MCA) vide Notification dated 13th July, 2017 hereby amends its Notification No. G.S.R. 583(E) dated 13th June, 2017.


Section
Earlier (13.06.2017 Notification)
After Amendment
143(3)(i)
Clause (i) shall not be applicable to private Companies which is:

·         One Person Company; or
·         Small Company; or
·         has turnover less than Rs. 50 Crores as per latest audited financial statement; or
·         has aggregate borrowings from banks or financial institutions or anybody corporate at any point of time during the financial year less then Rs. 25 Crore
Clause (i) shall not be applicable to private Companies which is:

·         One Person Company; or
·         Small Company; or
·         has turnover less than Rs. 50 Crores as per latest audited financial statement; and
·         has aggregate borrowings from banks or financial institutions or anybody corporate at any point of time during the financial year less then Rs. 25 Crore




AMENDMENT – II

Ministry of Corporate Affairs (MCA) vide Notification dated 13th July, 2017 hereby amended Companies (Meetings of Board and its Powers) Rules, 2014. The amended rules may be called as Companies (Meetings and Board and its powers) Second Amendment Rules, 2017:-

Rule
Earlier
After Amendment
3(3)(e)
The notice of the meeting shall be sent to all the directors in accordance with the provisions of sub-section (3) of section 173 of the Act;

(e) The director, who desire, to participate may intimate his intention of participation through the electronic mode at the beginning of the calendar year and such declaration shall be valid for one calendar year
(e) The director, who desire, to participate may intimate his intention of participation through the electronic mode at the beginning of the calendar year and such declaration shall be valid for one year.

Provided that such declaration shall not debar him from participation in the meeting in person in which case he shall intimate the Company sufficiently in advance of his intention to participate in person.
3(11)(e)
(a) At the end of discussion on each agenda item, the Chairperson of the meeting shall announce the summary of the decision taken on such item along with names of the directors, if any, who dissented from the decision taken by majority.
(a) At the end of discussion on each agenda item, the Chairperson of the meeting shall announce the summary of the decision taken on such item along with names of the directors, if any, who dissented from the decision taken by majority and the draft minutes by the Company till the confirmation of the draft minutes in accordance with sub-rule(12)
6
The Board of directors of every listed companies and the following classes of companies shall constitute an Audit Committee and a Nomination and Remuneration Committee of the Board-
(i) all public companies with a paid up capital of ten crore rupees or more;
(ii) all public companies having turnover of one hundred crore rupees or more;
(iii) all public companies, having in aggregate, outstanding loans or borrowings or debentures or deposits exceeding fifty crore rupees or more.
Rule 6 and the provisos has been substituted by the following:

The Board of directors of every listed Company and a Company covered under Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014 shall constitute an ‘Audit Committee’ and a “Nomination and Remuneration Committee of the Board”.



Limits given in Rule 4 are as follow:

The following class or classes of companies:
(i) the Public Companies having paid up share capital of ten crore rupees or more; or
(ii) the Public Companies having turnover of one hundred crore rupees or more; or
(iii) the Public Companies which have, in aggregate, outstanding loans, debentures and deposits, exceeding fifty crore rupees:

AMENDMENT DATED 5th JULY, 2017


AMENDMENT - III
Ministry of Corporate Affairs (MCA) vide Notification dated 5th July, 2017 hereby amended SCHEDULE IV of The Companies Act, 2013.


Paragraph
Earlier
After Amendment
III,
in sub-Para (12)
The independent directors shall-

(12) acting within his authority, assist in protecting the legitimate interests of the company, shareholders and its employees

The independent directors shall-

(12) acting within their authority, assist in protecting the legitimate interests of the company, shareholders and its employees

VI,
in sub-Para (2)
VI. Resignation or removal:

(2) An independent director who resigns or is removed from the Board of the company shall be replaced by a new independent director within a period of not more than one hundred and eighty days from the date of such resignation or removal, as the case may be.
VI. Resignation or removal:

(2) An independent director who resigns or is removed from the Board of the company shall be replaced by a new independent director within THREE MONTH from the date of such resignation or removal, as the case may be.
III,
in sub-Para (1)
VII. Separate meetings:

(1) The independent directors of the company shall hold at least one meeting in a year, without the attendance of non-independent directors and members of management
VII. Separate meetings:

(1) The independent directors of the company shall hold at least one meeting in a financial year, without the attendance of non-independent directors and members of management
VIII
VIII. Evaluation mechanism:
After Para VIII new Note is added i.e.:


“Note: The provisions of sub-paragraph (2) and (7) of paragraph II, paragraph IV, paragraph V, clauses (a) and (b) of sub-paragraph (3) of paragraph VII and paragraph VIII shall not apply in the case of a Government company as defined under clause (45) of section 2 of the Companies Act, 2013 (18 of 2013), if the requirements in respect of matters specified in these paragraphs are specified by the concerned Ministries or Departments of the Central Government or as the case may be, the State Governments and such requirements are complied with by the Government companies




AMENDMENT - IV

Ministry of Corporate Affairs (MCA) vides Notification dated 5th July, 2017 hereby amended Companies (Appointment and Qualification of Directors) Rules, 2014.  The amended rules may be called as Companies (Appointment and Qualification of Directors) Amendment Rules, 2017:-


Rule
Earlier
After Amendment
4
Rule 4 shall be numbered as sub-rule (1) and after sub-rule (1) as so renumbered, Sub Rule 2 shall be inserted in the:

4 Sub Rule (1): The following class or classes of companies shall have at least two directors as independent directors -
(i) the Public Companies having paid up share capital of ten crore rupees or more; or
(ii) the Public Companies having turnover of one hundred crore rupees or more; or
(iii) the Public Companies which have, in aggregate, outstanding loans, debentures and deposits, exceeding fifty crore rupees: ………….
Sub Rule (2) added after Sub Rule (1)

(2) The following classes of unlisted public company shall not be covered under sub-rule (1), namely:-
(a) a joint venture;
(b) a wholly owned subsidiary; and
(c) a dormant company as defined under section 455 of the Act.”





AMENDMENT - V

Ministry of Corporate Affairs (MCA) vides Notification dated 5th July, 2017 hereby amended National Company Law Tribunal Rules, 2014.  The amended rules may be called as National Company Law Tribunal Amendment Rules, 2017:-



The Ministry has Issued Rules on 5th July, 2017 in relation to filing of application u/s 252(3) for Restoration of Name of Company in the records of the MCA.

Full fledge article on the same has been published separately on the below given link: http://www.csdiveshgoyal.info/2017/07/process-revival-of-struck-companies.html


AMENDMENT - VI

Ministry of Corporate Affairs (MCA) vides Notification dated 22nd June, 2017 hereby amended Companies (Audit and Auditors) Rules, 2017.  The amended rules may be called as Companies (Audit and Auditors) Rules, 2017:-


Rule
Earlier
After Amendment
5 Clause (b)
 5. Class of Companies.-

For the purposes of sub-section (2) of section 139, the class of companies shall mean the following classes of companies excluding one person companies and small companies:-

(b) all private limited companies having paid up share capital of rupees Twenty crore or more;
5. Class of Companies.-

For the purposes of sub-section (2) of section 139, the class of companies shall mean the following classes of companies excluding one person companies and small companies:-

(b) all private limited companies having paid up share capital of rupees Fifty crore or more;



AMENDMENT - VII

Previously, Ministry of Corporate Affairs by notification No. G.S.R. 464(E), G.S.R. 463(E) and G.S.R. 466(E) dated 5th June, 2017 have give several exemptions to Government, Private, Section-8 Companies. Via Notification dated 13th June, 2017 MCA has added more exemptions by amending the notification dated 5th June, 2015:-

Full fledge article on the same has been published separately on the below given link:




(Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com)
Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION. 

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