Major Amendment- Companies Amendment Act, 2017
Companies Amendment Act, 2017
1.
“ASSOCIATE COMPANY” [Section
2(6)] {Not Notified}in relation to another company,
means a company in which that other company has a significant influence, but which
is not a subsidiary company of the company having such influence and includes a
joint venture company.
Explanation. — For the purposes of
this clause, “significant influence” means control of at least twenty per cent of total share capital,
or of business decisions under an agreement;
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Issue
in Definition
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Total share capital comprises the
aggregate of paid up equity share
capital and convertible preference share capital.
Hence a company may be treated as
associate company merely bases on ownership of Optionally convertible
redeemable preference shares.
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Amended
Provision
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Significant Influence’ under the definition of Associate Company:
Significant influence to mean control of at least 20% of voting power
or control or participation in business decision under an agreement.
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Implication
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After Amendment – To check whether a
Company is associate Company or not Only Equity share Capital with Voting
Right shall be considered.
This Amendment come in force to
remove the ambiguity of considering Convertible Preference share capital to
check status as Associate.
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Still
an Issue
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The definition should provide for participation in
business decision rather than control thereof. If an investor exercise
control over the business decisions, then the company on which the control is
exercised is a subsidiary company and not an associate Company.
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“Joint Venture”
Companies
Act, 2013 doesn’t define the term Joint Venture.
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Amendment
Act
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In the 2017 Amendment Act, an explanation to the
definition of the term ‘associate Company’ is added to explain joint venture. “The
expression “Joint Venture” means a joint arrangement whereby the parties that
have joint control of the arrangement have rights to the net assets of the
arrangement.”
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Ambiguity
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However,
the Amendment Act doesn’t define the term ‘joint venture’.
What
we understand that the objective of the change is to bring definition more in
line with accounting standards, particularly Ind AS.
However,
this change may not fully meet the desired objective
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2. SUBSIDIARY COMPANY….[Section 2(87)] {Still not Notified}
“Subsidiary company” or “subsidiary”, in relation to any
other company (that is to say the holding company), means a company in which
the holding company
(ii) Exercises or controls more than one-half of the total share capital either at its own
or together with one or more of its subsidiary companies
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Issue in Definition
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This definition also results in
issues/challenges similar to those for the definition of the term ‘Subsidiary
Company’.
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Amended
Provision
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Exercise
or control more than one half of the Total
Voting Power
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Implication
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To Check relationship of Holding
Subsidiary only Equity Share Capital with Voting Right shall be consider.
Preference Share Capital shall not consider.
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Alignment
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This will align ‘subsidiary’ definition under the 2013 Act
with AS 21 Consolidated Financial Statement. However, it will continue to be
different from definition under Ind As.
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Definition
in Ind AS
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Under Ind AS an option to convert to
equity shares would be considered for deciding if a company is a subsidiary, provided the
option is substantive and exercisable when the relevant decisions are to be
taken.
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3. HOLDING COMPANY: [Section 2(46)] {Notified}
Holding Company”, in relation to one or more other
companies, means a Company of
which such companies are subsidiary companies;
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Ambiguity
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Unlike the definition of the term
‘subsidiary company’, this definition does not contain any reference to a body
corporate.
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Amended Provision
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The definition of the term ‘Holding Company’, the
expression “Company” includes
any “Body Corporate”.
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Implication
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LLP/
Foreign Co. etc to be considered as ‘Holding Company” if holds more than 50%
of voting right in any Company.
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We believe
it is a minor amendment aimed at correcting an anomaly. It should not have
significant financial reporting implication.
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4.
DEBENTURE[Section
2(30)] {Notified} debenture’ includes debenture stock,
bonds or any other instrument of a company evidencing a debt, whether
constituting a charge on the assets of the company or not
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Ambiguity
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the phrase
‘any other instrument of a company evidencing a debt’ has made the definition
very broad and included instruments such as commercial papers and other money market instruments, which are
often used as an important short-term fund raising source by eligible
companies and are well regulated under the RBI regulations
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Amended Provision
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the term debenture will not include the following:
I.
Instruments
referred to in Chapter III-D of the Reserve Bank of India Act, 1934. Chapter
III-D of the RBI Act regulates transaction in derivatives, money market
instrument, securities etc. Money market instruments include call or notice
money, term money, repo, reverse repo, certificate of deposit, commercial
usance bill, commercial paper and such other debt instrument of original or
initial maturity up to one year as the RBI may specify from time to time.
II.
Such
other instrument, as may be prescribed by the Central Government in
consultation with the RBI.
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Implication
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The term ‘debenture’ will not include
money market instruments, which are used for short- term fund raising by
eligible Companies and are regulated under the RBI regulations.
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5.
FINANCIAL YEAR [Section
2(41)]
Uniform Financial Year
Section 2 (41) of the 2013 Act required companies, except
specified International Financial Services Centre (IFSC) companies, to adopt a
uniform accounting year ending 31 March.
However, a proviso to the definition states that a company may
apply to the National Company Law Tribunal (Tribunal/NCLT) for adoption of a
different financial year if it satisfies the following two criteria:
§ It is a holding or
subsidiary of a company incorporated outside India.
§ It is required to follow a
different financial year for consolidation of its financial statement outside
India.
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Ambiguity
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Companies which are associates or
joint ventures of a company incorporated outside India did not have right to
approach the NCLT for adopting a different financial year-end, though their
financial statements were also taken into consideration in the preparation of
CFS outside India
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Amended Provision
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Associate company of a company incorporated outside India
can also apply to the NCLT for a different financial year. Hence, the relief
will apply to joint ventures also.
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6. KEY MANAGERIAL PERSONNEL….[Section 2(51)]
“key managerial personnel”, in relation to a company, means—
(i)
the Chief Executive Officer or the managing director or the manager;
(ii)
the Company Secretary;
(iii)
the whole-time director;
(iv)
the Chief Financial Officer; and
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Amended Provision
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To include (v) “such other officer not more than one level below the
directors who is in whole time employment and designated as KMP by the Board
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Implication
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Board of Directors can appoint a person one level below
Director also as KMP.
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7. NET
WORTH….[Section 2(57)]
“net worth” means the aggregate
value of the paid -up share capital and all reserves
created out of the profits and securities premium
account, after
deducting the aggregate value of the accumulated losses,
deferred expenditure and miscellaneous expenditure not written off, as per the
audited balance sheet, but does not include reserves created out of revaluation
of assets, write-back of depreciation and amalgamation
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Amended
Provision
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To include “the Debit or Credit
balance of Profit and Loss account in the calculation of Net Worth”.
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Implication
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Credit balance of P&L will increase the net worth and
Debit balance of P&L with decrease the net worth
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Net worth of Company reflects the
‘intrinsic value’. Hence this is a clarificatory change, one that was
important to make.
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8. TURNOVER….[Section 2(91)]
“Turnover” means the aggregate
value of the realization of amount made from the sale, supply or
distribution of goods or on account of services rendered, or both, by the
company during a financial year.
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Ambiguity
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From the
definition, it was not clear whether indirect taxes such as excise duty/Goods
and Services Tax (GST) will be included in or excluded from turnover
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Example: .
From a financial reporting perspective, a company collects GST on behalf of
the Government and therefore it is excluded from revenue. Consequently, it
was not clear whether the determination of turnover under the 2013 Act will
be in line with the financial statements or it will be the gross amount
received from customer.
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Amended
Provision
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Turnover to mean the gross amount of revenue recognized 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
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Implication
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Net of Taxes to be
Considered.
Hence, going forward, revenue recognized in the financial
statements will be turnover under the statute as well
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9. OTHER DEFINITIONS…
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Small Company
[Section 2(85)]
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To Check the status of Company as
Small or not “Turnover should be as per profit and loss account for the
immediately preceding financial year” and not as per its last financial year.
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Cost Accountant
[Section 2(28)]
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Cost Accountant means a person who is a member of the
Institute of Cost Accountants of India and who hold a Valid Certificate of
Practice.
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Amendment in Sections
A.
New Section 3A- Members Severally Liable certain Cases:
{Notified w.e.f. 9th February, 2018}
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.
B.
IMPACT ON INCORPORATION OF COMPANY:
I.
Alteration in Period
of reservation of Name - Section
4(5)(i) - Memorandum::
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.
II.
Affidavit by
Subscriber – 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.
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.
IV.
Authentication of
Documents [Section 21]:: {Notified w.e.f. 9th Feb, 2018}
The change permits Board to
authorise any employee of the company for authentication of documents,
proceedings and contracts of the company.
a)
Exemption List of
Charges [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.)
b) Time Period for Satisfaction of Charges [Section 82]::
Timeline for filing of
satisfaction of charge is to be increased to 300 days on payment of additional
fee. (same as creation of charge)
D.
IMPACT ON FUNDINGS:
a)
PRIVATE PLACEMENT OF
SHARES - SECTION 42::
The
entire Section 42 has been substituted by the Amendment Act, 2017. Please find
below the major changes:
1.
Right of Renunciation:
The Private Placement offer shall not
carry any renunciation right. Only the person in whose name offer letter issued
can apply for the subscription.
2.
Modes for Payment of Subscription Money:
Subscription
money shall be paid either by cheque or demand draft or other banking channel
or not by cash. Shares under Private Placement can’t be subscribed by payment
in cash.
3.
Use of Allotment Money:
A
company shall not utilize monies raised through private placement unless
allotment is made and the return of allotment (i.e. e-form PAS-3) is filed with
the Registrar in accordance with sub-section (8).
This is major change by Amendment Act,
2017. After amendment without filing of e-form PAS-3 for allotment of Shares
Company can’t use the funds received from subscription.
Food
for Thought::
What shall be the implication if Company use money, before
filing of e-form PAS-3?
4.
No further offer till completion of earlier offer:
No
offer or invitation of security shall be made unless allotments with respect to
offer or invitation made earlier in respect of any other kind of security in
completed.
5.
Separate Bank Account:
The money so received shall be kept in a separate bank
account of the
company and utilized only for allotment (or repayment).
6.
If not allotted within 60 days:
If allotment is not
made within 60 days then till 75th day the monies have to be repaid. Failure to
repay has a liability of interest at 12% pa.
b) 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.
c) Issue of Sweat Equity Shares- Section 54::
It is
allowed issue of sweat equity shares at any time after registration of the
Company.
d) 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.
E.
ANNUAL RETURN
i.
The
requirement of extract of annual return
to the board‘s report in Form MGT-9 has been omitted
ii.
Sufficient
that the web-link of the annual return
be disclosed in the board‘s report.
iii.
Requirement
related to disclosing indebtedness
omit from the Annual Return.
iv.
Changed in the particular
of Annual Return
v.
The
Central Government may prescribe abridged
form of annual return for One Person Company (‘OPC’), Small Company and
such other class or classes of companies as may be prescribe.
·
Whether
shares are listed on stock exchange
·
Particular
of Holding Or Subsidiary Companies
·
Remuneration
to Directors or Key managerial Personnel
·
Net
worth
·
Turnover
vi.
Removal of reference
of Section 403: Due to
this amendment Companies shall be required to file the Annual Return within 60
day of AGM from 61st day it shall be considered as default. Now the
additional time period of 270 days removed from this sub section.
Impact of this Amendment:
In
case of company fails to file Annual return within 60 days of AGM
i.
Company and the officer shall be liable to
fine from the 61st day itself.
ii.
Additional fees shall be Rs. 100/- per day
from 61st Day in case of one time default.
iii.
Additional fees shall be double from 61st
Day in case of continue default more than once.
iv.
Exemption of Private Limited Company shall be
withdrawn from the 61st Day.
F.
General Meeting:
Annual
General Meeting- Section 96::
Annual General Meeting (‘AGM’) of unlisted
company may be held at any place in India if consent is given in writing or by
electronic mode by all the members
in advance.
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.
Convening
of general meetings at a shorter notice i.e. - Section 101::
§ In
case of an annual general meeting with the consent of at least 95% of the
members entitled to vote thereat and
§ In
case any other general meeting with the consent of at least majority in number
(i.e. more than 50%) and 95% (ninety five percent) of such part of the paid up
share capital of the company giving a right to vote at such a meeting.
G.
Statutory Auditor:
The auditor of a company is
appointed by the shareholders at the AGM, for a consecutive period of five
years. However, the appointment needs to be ratified each year at the AGM. The
2013 Act was silent on the implications of non-ratification of the auditor
appointment at the AGM. In the absence of clarity, the following two views were
possible:
§ If
shareholders do not ratify the appointment of the auditor at the AGM, it would
tantamount to removal of the auditor from the office.
§ Section
140(1) of the 2013 Act requires that the auditor appointed under section 139
can be removed from its office before the expiry of term only by passing a
special resolution of the company at the AGM and after obtaining previous
approval from the Central Government
However, The Committee was
of the view that a company should not be allowed to remove the auditor merely
by non-ratification at the AGM. Rather, it should be required to follow
procedures for removal of the auditor before the completion of the five-year
term, viz., special resolution at the general meeting and approval from the
Central Government
§
Ratification of
Auditor- Section 139::
The requirement related to annual ratification of appointment of
auditor by members is omitted. This change will avoid potential conflict
between two requirements and is supportive of auditor independence
This
provision is supportive to auditor independence.
§
Access of Accounts of
Associate Company::
Earlier Holding Company
could have the right to access records of associate companies. Auditors of
holding company can have access records of associate companies also along with
subsidiaries Companies
§
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
There
will be no restrictions in rendering these services to another companies.
§ 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.
H.
Director:
§ For
the purpose of Resident Director 182 days to be computed with reference to Financial Year. However, 182 days stay
in India in the current financial year and not the previous financial year.
§ In
case of New Companies requirement of
182 days shall apply proportionately
at the end of the financial year.
Suggestion: Companies
will need to plan in advance so that they are compliant with this requirement
at the end of the financial year. In some cases, they may even need to enter
into an arrangement with one or more directors so that they stay in India for a
minimum 182 days in the financial year.
§ 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)
§ Directorship in
the Dormant Company shall not be including in the limit of 20 Companies.
§ Filing
of e-form DIR-11 by retiring
Director is Optional. (Section 168)
§ A
person holding directorship in the Company can’t appoint as alternate Director. (Section 161)
§ Companies
may fill casual vacancy by the Board
and casual vacancy filed by the Board shall be subsequently approved in the
immediate next general meeting. (Section 161)
§
Disqualification for
appointment of Director Section 164.
When a Director is appointed in Company which
is in default of filling of Financial statement or annual return or repayment
of deposits or pay interest or redemption or debentures or payment of interest
or redemption of debentures payment of interest thereon or payment of dividend
such director shall not incur the disqualification
for a period of 6 month from the date of his appointment.
§
Vacancy of Office of
Director Section 167.
If the
Director incurs disqualification mentioned in section 164(2), then he shall
vacant office in all the Companies other
than the Company which is in default.
I.
Board Meeting:
a) Presence through video Conferencing: (Section 173)
Where there is quorum in a meeting through
physical presence of directors, any other director may participate through
video conferencing or other audio visual means in such meeting on any matter
specified under the first proviso (i.e. restricted matters).
Restricted
Matters:
(i) the approval of the annual financial
statements;
(ii) the approval of the Board’s report;
(iii) the approval of the prospectus;
(iv) the Audit Committee Meetings for
consideration of financial statement
(v) the approval of the matter relating to
amalgamation, merger, demerger, acquisition and takeover
b) Audit Committee: (Section 177) Only
Every Listed Public Company shall constitute Audit Committee. Companies listed
due to debenture listing not required Audit Committee.
c)
Nomination &
Remuneration Committee: (Section 178) Only Every Listed Public Company shall
constitute Nomination & Remuneration Committee. Companies listed due to
debenture listing not required Nomination & Remuneration Committee.
J.
Director Report
§ The
requirement of the extract of the annual return in Form MGT-9 to be included in
the board‘s report has been omitted, instead web address or link of the annual
return to be provided in Board Report.
§ Disclosures which have been provided
in the financial statement shall not
be required to be reproduced in the report again (like: Section 186, 188)
§ Instead
of exact text of the policies, key
feature of policies along with its web link shall be disclosed in Board report.
§ Abridge Board Report for Small
Companies and OPC
K.
Financial Statement:
§
Sign of Financial Statement:
CEO whether appointed as
director or not will sign the financial statement. Therefore, now onwards CS,
CFO and CEO all three are required to sign the financial statement mandatory.
§ Allowed
the filing of unaudited financial statements of foreign subsidiary which is not
required to get its accounts audited along with a declaration to that effect.
§ Only
listed Companies having a subsidiary or subsidiaries will be required to place
separate audited accounts in respect of each of subsidiary on their website, if
any. This requirement will not apply to non-listed Companies.
§ Both
listed and non-listed companies will be required to provide subsidiary
financial statements to a member of the Company who asks for it.
§ Removal
of reference of Section 403: Due to this amendment Companies shall be
required to file the Financial Statement within 30 day of AGM from 31st
day it shall be considered as default. Now the additional time period of 270
days removed from this sub section.
In case of company fails to
file Financial Statement within 30 days of AGM Company and the officer shall be
liable to fine from the 31st day itself.
L.
DEPOSIT (Section 73-76)
§ A Company
accepting deposit will be required to deposit and keep in a schedule bank the
amount which is not less than 20% of the amount of deposits maturing during the current financial year.
There will be no need to deposit any amount in respect of deposits maturing in
the next financial year.
§ Deposit Insurance: Requirement of providing Deposit Insurance Omit.
§ Impact on Past Defaults:
To invite, accept or renew
any deposits, section 73(2)(e) of the 2013 Act requires a certification from
the company that no default has been committed either in the repayment of deposits
or interest thereon, accepted either before or after the commencement of the
2013 Act. This requirement apparently covers all past defaults, without any
time limit.
§ The
Companies Law Committee observed that this requirement was too harsh on
companies which may have defaulted due to reasons beyond their control, such as
industry conditions at some point of time in the past but have repaid such
deposits with earnest efforts thereafter. Imposing a lifelong ban for a default
anytime in the past would be inappropriate.
§ 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.
§ Repayment
of Deposit:
Where any amount of deposit
or part thereof or interest thereof remains unpaid on the commencement of the
Companies Act, 2013. Such amount shall be repaid within 3 year from the date of
commencement or before the expiry of the period for which the deposit was
accepted, whichever is earlier.
M.
Loan to Director:
Section
185 has been completely re-written under the Companies Amendment Act, 2017.
This Section limits the prohibition on loans, advances, guarantee, Security etc.,
to any person in which any of the directors are interested.
Issue: Term ‘person in whom
director is interested’ was that a company could not give a loan even to its
subsidiary, associate or joint venture companies.
New amended
Section 185 (1)
No Company shall give loan/ guarantee/ security /investment, directly or indirectly:
·
Any director of Company, or of a
Company which is its Holding Company or
·
any partner or relative of any such director;
or
·
Any firm in which any such director or
relative is partner.
However,
following loan can be given by company to any person in whom directors are
interested after fulfilling the conditions mentioned below:
·
Advance any loan, including loan
represented by a book debt
·
Give any guarantee
·
Provide any security in connection with
any loan taken
Conditions:
a)
Special Resolution passed by the
Company in General Meeting
b) The
loans are utilized by the borrowing company for its principal business
activities.
Sub-section 3: Nothing contained in
sub-section (1) and (2) shall apply to-
Clause (a):
Loan to Managing Director & Whole
Time Director:
There are
two ways to give Loan to Managing and Whole Time Director. The exception is
extended to a particular class of directors, i.e. to the managing or whole-time
directors only.
i.
Loan can be given to a Managing or Whole-Time
Director as a part of the condition of their service.
Condition: Conditions should be available for all the
employees of the Company.
ii.
Loan can be given to a Managing or Whole-Time
Director pursuant to any Scheme.
Condition: Scheme should be approved by Shareholders by
passing of Special Resolution.
Example: The Companies pass a resolution for appointment of
Managing Director and it approves the terms and conditions of its appointment
and if as a part of its terms, there is a loan which can be given to that
director, then it falls under the exception given in section 185 of the Act.
Clause (b):
Loan in Ordinary Course of Business:
A company which in the Ordinary Course
of its business provides:
-
Loans or
-
Gives guarantees or
-
Securities for the due repayment of any loan and
-
In respect of such loans an interest is charged at a rate not less than
the rate of prevailing yield of one year, three year, five year or ten year
government security closest to the tenor of the loan; or.
Clause (c):
Loan by holding Company to its wholly own subsidiary Company:
Any loan made by a Holding Company to
its Wholly own Subsidiary Company or any guarantee given or security provided
by a Holding Company in respect of any loan made to its wholly own subsidiary
Company.
Clause (d):
Guarantee and Security by holding Company to its subsidiary Company:
Any guarantee given or security provided by a Holding Company in respect
of Loan made by any Bank or financial institution to its subsidiary Company.
Condition: loan made
under this clause utilized by the subsidiary company for its principal business activity only.
Section 186:
For the purpose of this section excludes
employees so that loan given to them part of condition of service are not
covered under this section.
Wholly own Subsidiary:
No need to pass Special
Resolution in case of Loan/ Guarantee/ Security provides by a Company to its
Wholly Own Subsidiary Company.
N.
Change in Filing Fees:
A. Additional
Late Filing Fees: 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
O.
Remuneration to Managerial Personnel: (Section 197)

Currently, the laws in countries such
as the US, the UK and Switzerland do not require a company to approach government authorities for
approving remuneration payable to their managerial personnel, even in a
scenario where the company has losses or inadequate profits.
Companies Amendment Act, 2017 The word “with the approval of Central
Government” removed from every place under this section.
§ No
need approval of CG
for payment of remuneration more than 11% of net profit,
§ No
need of CG approval
of recovery of any sum refundable from director.
Condition: Subject to condition that where the
company has defaulted in payment of dues to any bank or public financial
institution the prior approval shall be
obtained by the company before obtaining the approval in the general meeting
Inadequate Profit:
No need of CG approval for remuneration
in situation of no profit or inadequate profit. In such case remuneration shall
be paid according to Schedule V.
P.
OTHERS
A.
Conversion of Partnership firm or LLP into Company:
(Section 366)
Now it is allow converting the
partnership firm, LLP etc with 2 or more partners into private company.
B. “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.
C. “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.
D.
Postal Ballot:
Companies
which are mandatorily required to provide electronic voting facility, to
transact item in general meeting, can transact business of postal ballot also
through electronic voting.
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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