Important Notified provisions of- – Companies Amendment Bill, 2017


Important Notified provisions of
 – Companies Amendment Bill, 2017


This is article no. 326 of the series of editorials written by the author on corporate laws {Including Companies Act,
2013, SEBI, RBI Regulations, IBC, LLP Act, 2008 etc.}.

As of now (on 31.03.2018) out of 93 Amendments in Companies Act, 2013 43 amendments has been notified w.e.f. 9th February, 2018. In this editorial author shall discuss the major notified amendments as used in day to day life of Corporate.

I.      DEFINITIONS:

As per Companies Amendment Act, 2017 there are amendments in 14 definitions. Out of those 14, 12 amendments has been notified. Only 2 definitions has not been notified i.e. (Associate Company and Subsidiary Company).

S. No
Notified Amended Definitions

1.    
Cost Accountant
The Term “total Share Capital” has been substituted by “Total Voting Power”.

Further the term ‘Joint Venture’ has also been defined to mean a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement

2.   
Debenture
In definition of debenture to exclude instruments referred to in Chapter III-D of the Reserve Bank of India Act 1934 and such other instruments prescribed by the Central Government in consultation with the RBI
3.   
Financial Year
Associate company of a company incorporated outside India can also apply to the Tribunal for a different financial year.

4.   
Holding Company
Now Body Corporate shall be considered as Holding Company.
The word ‘Company’ in the definition of holding company has been substituted by ‘Body Corporate’.
5.   
Interested Director
Deletion of Definition
6.   
Key Managerial Personnel
Board of Director can Designated a person as KMP who is one level below the directors who is in whole time employment.
7.   
Net Worth
Debit or Credit balance of profit and loss account to be included in Net Worth.
8.   
Public Company
Clarificatory Change
9.   
Public Financial Institution
The Central Government may notify other institution which has been established or constituted by or under any Central or State Act other than the Companies Act, 2013 or previous Company Law after consultation with the RBI as “public financial institution”.

10.  
Related Party
Instead of only a company, anybody corporate which is holding, subsidiary or an associate company of such company or a subsidiary of a holding company to which it is also a subsidiary or an investing company or venture of the Company, shall be considered as a related party.
11.  
Small Company
Turnover should be as per profit and loss account for the immediately preceding financial year and not as per its last financial year.

12.  
Turnover
Definition of turnover to mean the gross amount of revenue Recognised in the profit and loss account from the sale, supply, or distribution of goods or on account of services rendered, or both, by a company during a financial year.



II.      New Section 3A- Members Severally Liable certain Cases:

In case Number of Members reduced from Statutory Minimum i.e. 2 in case of Private Limited Company or 7 in case of Public Limited Company, Company carry business for more than 6 month.

Then the member shall be liable for the payment of the whole debts of the Company contracted during that time.

This Section was there in the Companies Act, 1956 Section 45 but was missing from the Companies Act, 2013.

III.      Memorandum [Section 4]::

As per CAA-2017, the name shall be preserved for the following period:
·         In case of Incorporation of New Company: Name shall be reserved for the 20 days from the date of approval. (earlier it was available for 60 days)

·         In case of Change of Name: Name shall be reserved for the 60 days from the date of approval.

IV.      Authentication of Documents [Section 21]::

The change permits Board to authorize any employee of the company for authentication of documents, proceedings and contracts of the company.

V.      Allotment of Share at Discount- Section 53::

Issuance of shares at discount allowed, subject to the same is issued to creditors when debt is converted into shares in pursuance of any statutory resolution plan or debt restructuring scheme in accordance with any guidelines or directions or regulations specified by Reserve Bank of India under the Banking Regulation Act, 1949 or the Reserve Bank of India Act 1934.


VI.            Right Issue of Shares- Section 62::

The change in the provision relates to the mode of sending the notice for rights offer. Section 62(2) has been relaxed to include courier or other modes of delivery capable of providing proof of delivery.

Right issue of offer letter can be sent through courier also.

VII.       Section 76A- Punishment for Contravention of Section 73 or Section 76

The penalty from a fine not less than rupees one crore to rupees one crore or twice the amount of deposits accepted by the company, whichever is lower.

An officer of the company who is in default shall be punishable with imprisonment and fine. Earlier it was imprisonment or fine. In the process, the offence has been made non-compoundable.

VIII.      Extra- Ordinary General Meeting- Section 100::
Extraordinary General Meeting (‘EGM’) of wholly owned subsidiary of a company incorporated outside India can be held outside India.

IX.      Postal Ballot: Section 110::

Companies which are mandatorily required to provide electronic voting facility, to to transact item in general meeting, can transact business of postal ballot also through electronic voting.


X.      Qualification & Disqualification of Auditor- Section 141::

A person who, directly or indirectly, renders any service referred to in section 144 to the company or its holding company or its subsidiary company will not be eligible for appointment as Auditor.

Services u/s 144(1)
(a) accounting and book keeping services;
(b) internal audit;
(c) design and implementation of any financial information system;
(d) actuarial services;
(e) investment advisory services;
(f) investment banking services;
(g) rendering of outsourced financial services;
(h) management services; and
(i) any other kind of services as may be prescribed


XI.      Punishment for Contravention: Section 147::

Fine in case of failure to file resignation by Auditor in ADT-3 reduced to 50,000/- or the remuneration of auditor whichever is less.

XII.      Appointment of Director : Section 152::

For the purpose of Resident Director 182 days to be computed with reference to Financial Year.

In case of New Companies requirement of 182 days shall apply proportionately at the end of the financial year.

XIII.      Right of persons other than retiring directors to stand for directorship: Section 160::

The requirement of deposit of rupees one lakh with respect to nomination of directors shall not be applicable in case of appointment of independent directors or directors nominated by nomination and remuneration committee or a director recommended by the Board of Directors of the Company, in the case of a company not required to constitute Nomination and Remuneration Committee. (Section 160)


XIV.      Appointment of additional director, alternate director and nominee director: Section 161::

A person holding directorship in the Company can’t appoint as alternate Director.

XV.      Number of Directorship: Section 161::

Directorship in the Dormant Company shall not be including in the limit of 20 Companies.

XVI.      Insertion of new section 446A and 446B::

A.      Section 446A – Factor for determining level of punishment”
According the this Section the Court or Special Court while deciding the amount of fine or imprisonment under this Act, shall have due regard to the following factors, namely
(a) Size of the company;
(b) Nature of business carried on by the company;
(c) Injury to public interest;
(d) Nature of the default; and
(e) Repetition of the default

Note: After the amendments court shall consider the factors for penalize the Company. It is a good move to consider the different-2 factors for penalty in case of non –compliance.

B.        “Section 446B – Lesser penalties for One Person Companies or Small Companies”
In this section relief to OPC and Small Companies i.e. in case of failure to comply with provisions of

§  Section 117(2)(c) – Resolution and Agreement to be filed
§  Section 137(3) – Copy of Financial statement to be filed
§  Section 92(5) – Annual Return

In case of default, such company and officer in default of such company shall be punishable with fine or imprisonment or fine and imprisonment, as the case may be, which shall not be more than one-half of the fine or imprisonment or fine and imprisonment, as the case may be, of the minimum or maximum fine or imprisonment or fine and imprisonment, as the case may be, specified in such sections.



IMPORTANT AMENDED PROVISIONS NOT NOTIFIED:

I.      Resignation of Director – Section 168::
Filing of Form DIR-11 regarding forwarding of copy of resignation by director to the Registrar of Companies, optional

II.      Incorporation of Company – Section 7::
At the time of incorporation of the company, declaration by each subscriber will be required to be attached instead of an affidavit, as currently provided.

III.      Duty to Register Charge– Section 77::
This section shall not apply to certain charges, as may be prescribed by the Central Government in consultation with the Reserve Bank of India.
(Like: Hypothecations, Pledge etc.)

IV.      Company to report satisfaction of charge – Section82::
Timeline for filing of satisfaction of charge is to be increased to 300 days on payment of additional fee. (same as creation of charge)

V.      Fee for Filing– Section 403::

A.    in sub-section (1), for the first and second provisos, the following provisos shall be substituted:

Effect of new proviso:
·         If Company fails to file Annual Return u/s 92 and Financial statement u/s 137 within time prescribed under their specific sections “without prejudice to any other legal action or liability under this act,” it may be submitted by payment of additional fees which shall not be less than INR 100/- (Rupees Hundred) per day” and different amount may be prescribed for different classes of Companies.

·         If company fails to file any other documents, facts, information etc other than section 92 and 137 “without prejudice to any other legal action or liability under this act,” it may be submitted by payment of additional fees as may be prescribed.

HIGHER ADDITIONAL FEES: New concept of higher additional fees has been introduced. As per this proviso
     -          Where there is default on Two or More occasions in submitting, filling, registering,         recorded of documents,
     -          without prejudice to any other legal action or liability under this act,
     -           may be file with “Higher Addition Fees”
     -          as may be prescribed and
    -          which shall not be lesser than twice the additional fee provided under first and           second proviso”

Due to above mention proviso if company fails to file any form with in time prescribed under its specific section and company made the default TWO or “MORE OCCASION” then additional fees for filing of from shall be “TWICE of ADDITIONAL FEES

VI.      Registered Office – Section 12::

The company shall within 30 days of its incorporation have registered office instead of current requirement to have registered office on and from the 15 day of its incorporation

Notice of Every Change of the situation of the registered office shall be given to the Registrar within 30 days instead of 15 days.

VII.      Ratification of Auditor- Section 139::

The requirement related to annual ratification of appointment of auditor by members is omitted.

VIII.      Private Placement of Shares– Section 42::
This section shall not be notified.

IX.      Deposit– Section 43::
Requirement of providing Deposit Insurance Omit.

Company which had defaulted in repayment of deposits can also accept deposit after a period of 5 years from the date of making good the default.

X.      Other important section still not notified::

Section 92
Annual Return
Section 96
Annual General Meeting
Section 101
Notice of Meeting
Section 117
Resolution & Agreement to be filed
Section 129
Financial Statement
Section 134
Financial Statement & Board Report
Section 135
Corporate Social Responsibility
Section 197
Overall Managerial Remuneration





(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
                                                                                                                                           
Notification 43 Sections of Companies Amendment Act, 2017
MCA has notified below mentioned 43 sections of Companies Amendment Act, 2017 w.e.f. 9th February, 2018.

Section No.

Name of Section
Section 2
Section 2
Definitions (except definition of Associate & Subsidiary)
Section 3
New Section 3A
Member severally liable in certain cases
Section 7
Section 21
Authentication of Documents, Proceeding & Contracts
Section 9
Section 35
Civil Liability for mis-statement in prospectus
Section 11
Section 47
Voting Right
Section 12
Section 53
Prohibition on issue of shares at discount
Section 14
Section 62
Further issue of share capital
Section 17
Section 76A
Penalty on Deposit
Section 27
Section 100
Calling of extra ordinary general meeting
Section 29
Section 110
Postal Ballot
Section 32
Section 123
Declaration of Dividend
Section 34
Section 130
Re opening of accounts of courts or tribunals order
Section 35
Section 132
Constitution of National financial reporting authority
Section 38
Section 136
Right of members to copies of audited financial statement
Section 41
Section 140
Removal, resignation of auditor
Section 42
Section 141
Eligibility, qualifications and disqualification of auditors
Section 43
Section 143
Power and duties of auditors and auditing standards
Section 44
Section 147
Punishment for contravention
Section 45
Section 148
Central govt. to specify audit of items of cost in respect of certain companies
Section 47
Section 152
Appointment of Directors
Section 48
Section 153
Application of allotment of DIN
Section 50
Section 160
Right of persons other than retiring directors to stand for directorship
Section 51
Section 161
appointment of additional director, alternate director and nominee director
Section 53
Section 165
Number of directorship
Section 59
Section 180
Restrictions of power of board
Section 60
Section 184
Disclosure of interest by Director
Section 63
Section 188
Related party transaction
Section 65
Section 195
Prohibition on insider trading of securities
Section 72
Section 223
Inspector's Report
Section 73
Section 236
Purchase of minority shareholding
Section 74
Section 247
valuation by registered valuer
Section 77
Section 379
Application of act to foreign companies
Section 78
Section 384
Debentures, annual return, registered of charge, books of account
Section 79
Section 391
Application of section 34 to 36 and chapter XX
Section 82
Section 409
Qualification of president and member of tribunal
Section 84
Section 411
Qualification of chair person and member of appellate tribunal
Section 85
Section 412
Selection of members of Tribunal and appellate tribunal
Section 90
Section 441
Compounding of certain offences
Section 91
Section 446
Insertion of new section 446A and 446B
Section 92
Section 447
Punishment for fraud
Section 93
Section 458
Delegation by central government of its powers and functions



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