Collective all- Amended Rules – Companies Act, 2013 w.e.f. 07.05.2018

Collective all- Amended Rules – Companies Act, 2013
w.e.f. 07.05.2018

MCA vide notification dated: 07th May, 2018 has amended many rules of Companies Act, 2013 to support notified 70 sections of Companies Amendment Act, 2017. In this editorial author shall endeavor to briefly discuss such amended rules.

A.   The Companies (Prospectus and Allotment of Securities) Amendment Rules, 2018.
Rules, 2014, the rule 3, rule 4, rule 5 and rule 6 shall be OMITTED.
      I.        Rule 3: Information to be stated in the prospectus
    II.        Rule 4: Reports to be set out in the Prospectus
   III.        Rule 5: Other matters and reports to be stated in the prospectus
  IV.            Rule 6: Period for which information to be provided in certain cases

B.   The Companies (Appointment and Qualification of Directors) Second Amendment Rules, 2018.
Rule 5 ‘Qualification of Independent Director’ shall be numbered as Rule 5 sub rule 1 and following sub- rule 2 following shall be INSERTED:

(2) None of the relatives of an independent director, for the purposes of sub-clauses (ii) and (iii) of clause (d) of sub-section (6) of section 149,-

(i)   is indebted to the company, its holding, subsidiary or associate company or their promoters, or directors; or

(ii)  has given a guarantee or provided any security in connection with the indebtedness of any third person to the company, its holding, subsidiary or associate company or their promoters, or directors of such holding company,

for an amount of fifty lakhs rupees, at any time during the two immediately preceding financial years or during the current financial year."

C.   The Companies (Meetings of Board and its powers) Amendment Rules, 2018.

i.      In Rule 4, ‘Matters not to be dealt with in a meeting through video conferencing or other audio visual means’ the following Proviso shall be INSERTED.

"Provided that where there is quorum presence in a meeting through physical presence of directors, any other director may participate through video conferencing or other audio visual means”.

ii.      In Rule 6, ‘Committees of the Board:

For the words “every listed company”, the words “every listed public company’ shall be substitute

iii.      In Rule 13, ‘Special Resolution’ shall be SUBSTITUED.
A resolution passed at a general meeting in terms of sub-section (3) of Section 186 to give any loan or guarantee or investment or providing any security or the acquisition under sub-section (2) of section 186 shall specify the total amount up to which the Board of directors are authorized to give such loan or guarantee, to provide such security or make such acquisition:

Provided that the company shall disclose to the members in the financial statement the full particulars in accordance with the provisions of sub-section (4) of section 186.

D.  The Companies (Audit and Auditors)) Amendment Rules, 2018.

I.        In Rule 3 ‘Manner and procedure of selection and appointment of auditors’
·         [1]explanation shall be OMITTED
·         [2]Proviso to sub rule 7 shall be OMITTED

II.        Rule 9 ‘Liability to devolve on concerned partners only’ shall be OMITTED

III.   In Rule 10A ‘for the words "adequate internal financial controls system", the words "internal financial controls with reference to financial statements" shall be SUBSTITUTED.

IV.     In Rule 14 ‘Remuneration of the Cost Auditor’

(a) in clause (a), in sub-clause (i), for the words, "who is a cost accountant in practice", the words "who is a cost accountant" shall be substituted;
(b) in clause (b) for the words "who is a cost accountant in practice", the words "who is a cost accountant' shall be substituted..

E.   The Companies (Share Capital and Debentures) Amendment Rules, 2018.

In Rule 5 sub rule 3 ‘Certificate of shares (where shares are not in demat form)’ shall be SUBSTITUTED as Follow:

"(3) Every certificate shall specify the shares to which it relates and the amount paid-up thereon and shall be signed by two directors or by a director and the company secretary, wherever the company has appointed company secretary.

Provided that in case the company has a common seal it shall be affixed in the presence of persons required to sign the certificate.

Explanation. - For the purposes of this sub-rule, it is hereby clarified that,-

(a) in case of an One Person Company, it shall be sufficient ifthe certificate is signed by a director and the company secretary or any other person authorised by the Board for the purpose.

(b) a director shall be deemed to have signed the share certificate ifhis signature is printed thereon as facsimile signature by means of any machine, equipment or other mechanical means such as engraving in metal or lithography or digitally signed, but not by means of rubber stamp, provided that the director shall be personally responsible for permitting the affixation of his signature thus and the safe custody of any machine, equipment or other material used for the purpose.

  The Companies (Registration offices and Fees) Second Amendment Rules, 2018.

In Proviso of Rule 10 sub rule 3 ‘Procedure on receipt of any application or form or document electronically’ shall be SUBSTITUTED as Follow:

"Provided that Registrar shall allow fifteen days, time for re-submission in case of reservation of a name through web service -"RUN for rectifications of defects, if any."

(Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at 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

[1] Explanation.- For the purposes of this rule, it is hereby clarified that, if the appointment is not ratified by the members of the company, the Board of Directors shall appoint another individual or firm as its auditor or auditors after following the procedure laid down in this behalf under the Act
[2] Provided that such appointment shall be subject to ratification in every annual general meeting till the sixth such meeting by way of passing of an ordinary resolution


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