Impact of Companies Amendment Act, 2017 on Annual Filing F.Y. ended 31.03.2018



Impact of Companies Amendment Act, 2017 on Annual Filing
F.Y. ended 31.03.2018


MCA vide notified approximately 84 sections of Companies Amendment Act, 2017 out of 93 sections. Link for list of notified section available on below mentioned link:


In this editorial author shall endeavor to states about impact of such amended sections on Annual Filings of Company for the f.y. ended 31st March, 2018. As many sections has been notified by Amendment Act which shall impact the Annual Filing of Company like: preparation of Directors Report, Annual Return, Filing of Forms etc.
Below given are list of Sections which may impact the Annual Filing for 31.03.2018.
S. No.
Section
Particular of Section
Notified w.e.f.
A.      
2(6)
Associate Company
07.05.2018
B.      
2(87)
Subsidiary Company
07.05.2018
C.      
2(46)
Holding Company
09.02.2018
D.     
2(41)
Financial Year
09.02.2018
E.       
2(91)
Turnover
09.02.2018
F.       
2(57)
Networth
09.02.2018
G.      
92
Annual Return
07.05.2018
H.     
96
Annual General Meeting
13.06.2018
I.         
101
Notice of Meeting
09.02.2018
J.        
117
Resolution and agreement to be filed
07.05.2018
K.      
129
Financial Statement
07.05.2018
L.       
134
Board Report
31.07.2018
M.    
136
Right of members to copies of audited financial statement
07.05.2018
N.     
137
Copy of financial statement to be filed with ROC
07.05.2018
O.     
139
Ratification of Auditor
07.05.2018
P.      
403
Fee for filing
07.05.2018

A.    Associate Company:
“ASSOCIATE COMPANY” [Section 2(6)] {Notified w.e.f. 07th May, 2018} 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;

Amended Provision: 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.

Impact: As this section has been notified w.e.f. 07.05.2018. Therefore, for the purpose to check whether a company is associate or not for the purpose of consolidation, preparation of financials statement ‘status of relation as on 31st March’ shall be considered.

Therefore one can opine that this amendment in this section shall not affect the Annual filing for the f.y. ended 31.03.2018

B.   Subsidiary Company:
“SUBSIDIARY COMPANY” [Section 2(87)] {Notified w.e.f. 07th May, 2018} “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

Amended Provision: Exercises or controls more than one-half of Total Voting Power either at its own or together with one or more of its subsidiary companies.

Impact: As this section has been notified w.e.f. 07.05.2018. Therefore, for the purpose to check whether a company is subsidiary or not for the purpose of consolidation, preparation of financials statement ‘status of relation as on 31st March’ shall be considered.

Therefore one can opine that this amendment in this section shall not affect the Annual filing for the f. y. ended 31.03.2018

C.   Holding Company:
“HOLDING COMPANY” [Section 2(46)] {Notified w.e.f. 09th Feb, 2018} “Holding Company”, in relation to one or more other companies, means a Company of which such companies are subsidiary companies
Amended Provision: Explanation: the expression “Company” includes any “Body Corporate”.
Impact: As this section has been notified w.e.f. 09.02.2018. Therefore, for the purpose to check whether a body corporate is holding or not for the purpose of consolidation, preparation of financials statement ‘status of relation as on 31st March’ shall be considered.
Therefore one can opine that this amendment in this section shall affect the Annual filing for the f. y. ended 31.03.2018

D.   Financial Year:
“FINANCIAL” [Section 2(41)] {Notified w.e.f. 09th Feb, 2018}

Amended Provision: Associate Company incorporated outside India can apply for change in financial year of Indian Company

Impact: As this section has been notified w.e.f. 09.02.2018. Therefore, associate of Indian company incorporate outside India can file application with NCLT for change in financial year of Indian company.

E.    Net Worth:
“NET WORTH” [Section 2(57)] {Notified w.e.f. 09th Feb, 2018} 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 …………………
Amended Provision: net worth” means the aggregate value of the paid -up share capital and all reserves created out of  the profits and securities premium account and Debit or Credit balance of Profit and Loss account

Impact: As this section has been notified w.e.f. 09.02.2018. Therefore calculation of Net Worth for the financial year ended 31.03.2018 shall be as per above mentioned definition.

F.    Turnover:
“TURNOVER” [Section 2(91)] {Notified w.e.f. 09th Feb, 2018} “Turnover” means the aggregate value of the realization of amount made from the sale …………………
Amended Provision: Turnover to mean the gross amount of revenue recognized in the profit and loss account from the sale, supply
Impact: As this section has been notified w.e.f. 09.02.2018. Therefore calculation of Turnover for the financial year ended 31.03.2018 shall be as per above mentioned definition

G.   Annual Return (Section 92):
Amended Provision:

§  The requirement of extract of annual return to the board‘s report in Form MGT-9 has been omitted
§  Sufficient that the web-link of the annual return be disclosed in the board‘s report.
§  Requirement related to disclosing indebtedness omit from the Annual Return.
§  Abridged forms of Annual Return (Format still not prescribed)
§  Company have to file within 60 days of AGM after 60 days additional fee shall be Rs. 100 per day plus benefit of section 403 removed.

Impact: As this section has been notified w.e.f. 07.05.2018.
ü  Therefor, If AGM of Company held on or before 07th May, 2018 in such case above mentioned amendments shall not applicable on the Company.

ü  However, If AGM of Company held on or after 07th May, 2018 in such case above mentioned amendments shall  applicable on the Company.

H.  Notice of Meeting (Section 101): {Notified w.e.f. 09th Feb, 2018}
Amended Provision: AGM can be held on shorter notice if consent is given by at least 95% of members entitled to vote thereat.

. Impact: As this section has been notified w.e.f. 09.02.2018. Therefore for convening of AGM on shorter notice this section shall be applicable.

I.     Resolution and agreement to be filed (Section 117): {Notified w.e.f. 07th May, 2018}
Amended Provision: For the purpose of resolution mentioned u/s 179(3) (like: adoption of financial statement, adoption of Directors report etc), Special resolution MGT-14 shall be filed within 30 days of passing of resolution time limit of 270 additional days has been removed

Impact: As this section has been notified w.e.f. 07.05.2018. However, if above mentioned transaction held after 07.05.2018 then amendment shall be applicable. For and example if a public Company adopt finical statement or/and director report after 07.05.2018 in such case MGT-14 shall be filed within 30 days of passing of resolution otherwise condonation shall be applicable.

J.     Right of members to copies of audited financial statement (Section 136): {Notified w.e.f. 09th Feb, 2018}

Amended Provision:
               I. Sending Financial Statement on shorter Notice: "Provided that if the copies of the documents are sent less than twenty-one days before the date of the meeting, they shall, notwithstanding that fact, be deemed to have been duly sent if it is so agreed by members—
(a) holding, majority in number entitled to vote and who represent not less than ninety-five per cent. of such part of the paid-up share capital of the company as gives a right to vote at the meeting; or
                 II.            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.
          III.            Both listed and non-listed companies will be required to provide subsidiary financial statements to a member of the Company who asks for it

Impact: As this section has been notified w.e.f. 09.02.2018. Therefore, all the above mentioned amendments shall be applicable for the financial year ending 31.03.2018

K.   Copy of financial statement to be filed with ROC (Section 137): {Notified w.e.f. 09th Feb, 2018}

Amended Provision:
               I.            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
                    II.            Company have to file financial statement within 30 days of AGM after 30 days additional fee shall be Rs. 100 per day plus benefit of section 403 removed

Impact: As this section has been notified w.e.f. 07.05.2018. However, if above mentioned transaction effected after 07.05.2018 then amended provisions shall be applicable.

L.    Board Report (Section 134): {Notified w.e.f. 31st July, 2018}

Amended Provision: 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

Impact: As this section has been notified w.e.f. 31.07.2018. However, if Directors Report adopted in Board Meeting held after 31.07.2018 then new Format and new provisiosn shall be considered.



M.  Appointment of Auditor (Section 139): {Notified w.e.f. 07th May, 2018}

Amended Provision: 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

Impact: As this section has been notified w.e.f. 07.05.2018. However, if AGM of Company held after 07.05.2018 there is no need to pass resolution for Ratification of Auditor.

FOOD FOR THOUGHT:

If Company has issued notice of AGM on or before 07.05.2018 then whether Company have to pass resolution for ratification of auditor in AGM or not?

N.  Fee for Filing (Section 403): {Notified w.e.f. 07th May, 2018}

Amended Provision: 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”

Impact: 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.

(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


Comments

  1. Very well written Articl Diveshji..... Appreciable contribution to the Profession.

    Regards,

    CS. Premnarayan Tripathi

    ReplyDelete
  2. Very well drafted and so easy to understand the article. Salute to you and your research team Divesh Ji. Keep doing the excellent work for betterment of our profession

    ReplyDelete
  3. Really appreciate for putting all ur efforts in analysing various provisions of Law and more importantly putting it in public domain for all..it's really very useful..Thanks

    ReplyDelete
  4. Great time devotion for prefession

    ReplyDelete
  5. Very much useful ... Thank you verv much ..

    ReplyDelete
  6. This comment has been removed by the author.

    ReplyDelete
  7. My query for Extract to be attached to Directors Report ??
    Section 92 has deleted subsection (3) regarding Extract whereas
    Rule 12 of Companies (Management & administration)Rules, says to attach extract to Directors Report.

    ReplyDelete

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