Analysis of the Companies (Amendment) Act, 2017 [Notified Sections] By Sonu Ghosh


Team Mamta Binani & Associates

AN OVERVIEW OF NOTIFIED SECTIONS OF COMPANIES (AMENDMENT) ACT, 2017

The Companies (Amendment) Bill, 2017 (‘the Bill’) had been passed by the Lok Sabha on 27th July 2017 and by Rajya Sabha on 19th December 2017 and received the assent of the President of India on 3rd January 2018 and the Bill become the Companies (Amendment) Act, 2017[1](hereinafter referred to as “the Act”).

The Ministry of Corporate affairs has notified most of the sections in two tranches via notifications dated 09th February 2018[2] and 07th May 2018[3].

A summary of the notified sections is represented in a tabular form given below:-

Sections which have been notified as on the date 09.02.2018

S. No

Section No.

(As per Companies Act, 2013)

Section No.

[As per Companies (Amendment) Act, 2017]

Particulars

Date of enforcement

Remarks

1

2 (28)

2 (28)

“Cost Accountant” means a cost accountant who is a member of “The Institute of Cost and works Accountants of India” and who holds a valid certificate of practice under section 6(1) of the Cost and works accountant Act, 1959.

9th February, 2018

A new provision of holding a valid Certificate of Practice has been inserted in the definition of Cost Accountant.

2

2(30)

2(30)

“Debenture” excludes the instruments referred to in chapter III-D of the Reserve Bank of India Act,1934

9th February, 2018

Instruments referred to in chapter III-D of the Reserve Bank of India Act, 1934 shall not be included in the definition of Debenture .

3

2(41)

2(41)

A holding, subsidiary and associate company of a company incorporated outside India can also file an application to Tribunal for a different financial year to follow for consolidation of its accounts outside India.

9th February, 2018

Now an associate company of a company incorporated outside India can also file an application to the Tribunal for a different financial year.

4

2(46)

2(46)

The definition of the term “holding company” includes “Body Corporate also.

9th February, 2018

“Body corporate” has been inserted in the definition of a holding company.

5

2(49)

2(49)

The definition of “Interested director” has been omitted.

9th February, 2018

           --                

6

2(51)

2(51)

For the purpose of the definition of “KMP” it also includes such other officer, not more than one level below the directors who is in whole time employment of the Company.

9th February, 2018

Now such other officer, not more than one level below the directors who is in whole time employment of the Company, shall also be treated as KMP of the Company.

7

2(57)

2(57)

In the definition of “net worth” for the words “and securities premium” the words “Securities Premium Account and debit or credit balance of profit and loss account” has been substituted.

 

9th February, 2018

Now the debit and credit balance of profit and loss account shall also be taken into account while calculating net worth.

8

2(71)

2(71)

In the definition of public company the word “and” has been inserted between the two sub clause i.e.

 

“Public company” means a company which –

 

(a) is not a private company and;

(b) has a minimum paid up share capital as may be prescribed.

 

9th February, 2018

Now the definition of a Public Company seems to be clearer.

9

2(76)

2(76)

In the definition of “Related Party” with reference to sub clause (viii) the following sub clause shall be substituted, namely:

(viii) any body corporate which is-

 

(A) a holding, subsidiary or an associate company of such company:

(B) a subsidiary of a holding company to which it is also a subsidiary company: or

(C) an investing company or the venture of the company.

 

9th February, 2018

Now an investing company or the venture of the company will be covered in ambit of Related Party in relation to a company.

10

2(85)

2(85)

For the purpose of the definition of “Small Company” maximum paid up share capital which may be prescribed, has been increased from 5 crore to 10 crore

 

and turnover of which as per its profit and loss account immediately preceding financial year does not exceeds two crore rupees or such higher amount as may be prescribed shall not be more than 100 crore rupees.

 

9th February, 2018

Now the maximum amount which may be prescribed for paid up share capital and turnover has been increased for the purpose of the definition of Small Company.

11

2(91)

2(91)

“Turnover” means the gross amount of revenue recognised in the profit and loss account from the sale, supply, or distribution of goods or on 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.

 

9th February, 2018

Now the gross amount of revenue recognised in the profit and loss account shall be considered for calculating turnover of the company.

12

 

3

After section 3, a new section 3A has been inserted, which provides that if at any time number of members of a company is reduced below than its statutory requirement i.e.(seven for public company, two for private company and one for OPC), every person who is a member of the company, carries on business for more than six months from the date of reduction so, shall be liable for the payment of whole debts of the company contracted during that time, and may be severally sued there for.

 

9th February, 2018

Self explanatory

 

13

21

7

Any key managerial personnel or an officer or employee of the company duly authorised by the board, may authenticate any document of the company.

 

9th February, 2018

Now an employee can also be a signing authority duly authorised by the Board.

14

35

9

Section 35 has been amended and clause (c) has been added with sub section (2), which provides relaxation to the Directors, Promoters etc from any civil liability if such person(s) has relied on misleading statement made by an expert and he had reasonable ground to believe and did up to the time of the issue of the prospectus believe, that the person making the statement was competent to make it and that the said person had given the consent required and had not withdrawn it.

 

9th February, 2018

This amended section relieves Directors, Promoters etc from some civil liability in case of misstatement in prospectus subject to certain prescribed conditions.

15

47

11

It has been cleared that voting rights of an equity shareholder can be entertained by the equity shareholder   subject to subsection 1 of section 188, which provides that any member(s) who is a related party is prohibited from voting under section 188 of the Act.

 

9th February, 2018

Self explanatory  

16

53

12

Companies are now allowed to issue shares at discount to its creditors at the time of conversion of debt into shares pursuance to any statutory resolution plan or debt restructuring scheme in accordance with RBI guidelines.

9th February, 2018

This amendment has given an opportunity to creditors to buy shares of the company at discount against their debts in some cases.

17

62

14

In case shares are issued on preferential basis as per section 62(1)(c), the price of such shares shall be determined by the valuation report of a registered valuer, subject to the compliance with the applicable provision of chapter III and any other condition as may be prescribed.

  

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

9th February, 2018

Now the requirement of compliance of chapter III (prospectus and allotment of securities), in respect of preferential offer has been provided in the section itself.

 

18

76A

17

The penalty for contravention of section 73 and 76 (acceptance of deposits), which shall not be less than one crore rupees or twice the amount of deposit accepted by the company, whichever is lower but which may extend to ten crore rupees.

 

9th February, 2018

Self explanatory

19

100

27

An extraordinary general meeting of the company, other than a wholly owned subsidiary of a company incorporated outside India, shall be placed within India.

 

9th February, 2018

EGM of wholly owned subsidiary of a company incorporated outside India can be held outside

India.

20

101

28

A general meeting may be called at shorter notice, in case of AGM, consent in writing or by electronic mode is required by not less than 95% of the members entitled to vote and in case of other general meeting, consent is required by majority in numbers of members entitled to vote and who represent not less than 95% of paid up share capital or voting rights as the case may be.

9th February, 2018

Now for calling a general meeting at shorter notice

other than AGM, company has to fulfil two

conditions simultaneously.

21

110

29

A new proviso has been inserted to section 110(1) which provides that any item of business required to be transacted by means of postal ballot, may be transacted at a general meeting by a company which is required to provide the facility of voting by electronic means to its members as per section 108. .

 

9th February, 2018

Now the companies which are required to provide electronic voting facility (sec 108), have been allowed to transact items at the general meeting, which are required to be transacted through postal ballot (section 110) .

22

123

32

For calculating profits for the purpose of declaring dividend, unrealised gains, notional gains or revaluation of assets or any change in carrying of an assets or of a liability on measurement of the assets or the liability at a fair value shall be excluded.

 

Now a company can declare interim dividend even during the period from closing of financial year till holding of the annual general meeting.

In case of inadequacy of profit, dividend can be declared out of free reserve only.

 

In case of loss during the period, such interim dividend shall not be declared at a rate higher than the average dividends declared by the company during immediately preceding three financial years.

9th February, 2018

In case of inadequacy of profit dividend can be declared out of free reserve only instead of reserve.

 

Notional profits are not to be included while calculating profits for the purpose of declaring dividend.

23

130

34

Any other person concerned along with the authorities already specified, shall be given notice before passing an order for re-opening of accounts and the court or the tribunal shall also consider the representation of other person.

 

Tribunal may pass an order for re-opening of books of accounts for eight financial years immediately preceding the current financial year unless there is a specific direction under section 128(5) by the central government.

 

9th February, 2018

The books of account may be ordered to be re-opened up to 8 financial years preceding the current financial year unless directed by central government otherwise.

24

132

35

An appeal against any order of National Financial Reporting Authority shall lie before NCLAT.

 

The amount of penalty with regards to professional or other misconduct has been reduced from ten lakh rupees to five lakh rupees.

 

9th February, 2018

Self-explanatory

25

136

38

Only listed companies are required to place on its website if any, the separate audited accounts of its subsidiary(s).

 

If the foreign subsidiary is required to prepare its consolidated financial statement, the requirement of posting audited accounts of subsidiary shall be fulfilled if CFS of such foreign subsidiary is placed on the website of the listed company.

9th February, 2018

Now unlisted companies are not required to place separate audited accounts of its subsidiary(s) companies on its website.

26

140

41

If an auditor has failed to file resignation in form ADT-3, he shall be punishable with fine which shall not less than fifty thousand rupees or the remuneration of the auditor, whichever is less but which may extend to 5 lakh rupees.

 

9th February, 2018

Self explanatory

27

141

42

A person who directly or indirectly, renders any service referred to in section 144 (certain services not to be rendered by auditor), to the company or its holding company or its subsidiary company shall not be eligible for appointment as an auditor.

.

9th February, 2018

Self explanatory

28

143

43

The auditor of a company which is a holding company has the right of access to the records and accounts of all its subsidiaries and associates companies.

 

The auditor’s report is to include whether internal financial control with reference to financial statement are in place and not in respect of internal financial control system.

 

9th February, 2018

Now the rights of the auditor of holding company, to access the documents of a subsidiary companies has been extended to its associates companies also.

29

147

44

The maximum fine which can be imposed on an auditor for contravention of provisions under sections 143, 144 and 145 has been increased to minimum 5 lakh rupees or four times the remuneration of the auditor whichever is less.

If an auditor contravenes the provisions intentionally, he has to pay fine which shall not be less than fifty thousand rupees and not more than twenty five lakhs or eight times the remuneration of auditors whichever is less.

 

9th February, 2018

Fine for an auditor under section (147) subsection (2), in contravention of sections 143 (power and duties of an auditor), 144 (auditor not to render certain services), 145 (auditor to sign audit reports), has been increased.

30

148

45

In section 148(3), for the words “Cost Accountant in practice” the words “cost accountant” has been substituted.

In the explanation, for the words “Institute of Cost and works Accountant of India”, the words “Institute of Cost Accountants of India has been substituted.

 

 

9th February, 2018

Self-explanatory

31

152

47

No person shall be appointed as a director of a company unless he has been allotted the DIN number or any other number as may be prescribed under section 153.

9th February, 2018

This subsection (3) of section 152 has been modified due to modification of section 153.

32

153

48

The Central Government may notify any other identification number as director identification number.

9th February, 2018

Any other identification number may be pan card or aadhar card or any other identification number which shall be accepted as DIN number.

 

33

160

50

A new proviso has been inserted with section 160(1) i.e. “ requirement of deposit of amount shall not apply in case of appointment of an independent director or a director recommended by the Nomination and Remuneration Committee, if any, constituted under subsection (1) section 178”.

 

9th February, 2018

Now an independent director or any other director nominated by NRC or a director recommended by BOD, is not required to deposit any amount for proposing his candidature as a director.

34

161

51

In section 161(2), a person can’t be appointed as an alternate director if he is holding any alternate directorship for any other director in the company or holding directorship in the same company

 

In section 161(4), any casual vacancy filled by the board shall be subsequently approved in the immediate next general meeting.

 

9th February, 2018

A person can’t be appointed as an alternate director if he is already a director of that company.

 

Casual vacancy has to be approved in the immediate next general meeting.

 

35

165

53

A new explanation has been inserted in section 165 i.e. for reckoning the limit of directorship of twenty companies; the directorship in dormant company shall not be included.

 

9th February, 2018

Now directorship in dormant company shall not be included in the limit of directorship.

36

180

59

The securities premium account shall also be included along with paid up share capital and free reserve for calculation of maximum borrowing power of the board

.

9th February, 2018

Now the borrowing limit by the board without approval by shareholders has been increased up to the amount of securities premium.

37

184

60

In section 184 subsection (4), the words “shall not be less than fifty thousand rupees but which” has been omitted.

 

In subsection (5), where any director or two or more of them holds or hold not more than 2% of paid up share capital in other company or the body corporate , he shall not be covered under section 184.

 

9th February, 2018

In section 184 subsection (4), penalty for non-disclosure of interest shall be imprisonment for a term which may extend to one year or with fine which may extend to one lakh rupees, or with both.

38

188

63

In section 188 (1), after the second proviso, a new proviso has been inserted namely “provided also that nothing contained in the second proviso shall apply to a company in which ninety percent or more members, in number, are relative of promoter or are related parties”.

 

In sub-section (3), for the words “shall be voidable at the option of the board” the words “shall be voidable at the option of the board or, as the case may be, of the shareholders” has been substituted.

9th February, 2018

Now the relatives of a promoter or related party can also vote on the resolution, to approve any contract or arrangement which may be entered into by the company, if ninety per cent or more members, in number, are relatives of promoters or are related parties of the company.

 

Now non-ratification of transaction shall be voidable at the option of the shareholders also.

 

39

194

64

Section 194 of the principal Act has been omitted.

 

9th February, 2018

 

40

195

65

Section 195 of the principal Act has been omitted.

 

9th February, 2018

 

41

223

72

A copy of Inspector’s report shall be made available only to members, creditors or any other person whose interest is likely to be affected by making an application in this regard to the Central Government.

 

9th February, 2018

Earlier any person could apply for the copy but now rights have been restricted.

42

236

73

In section 236 of the Principal Act, in sub-sections (4), (5) and (6), for the words “transferor company” wherever they occur, the words “company whose shares are being transferred” has been substituted.

 

9th February, 2018

The word “company whose shares are being transferred” provides more clarity instead of the word “transferor company”.

43

247

74

In section 247(2)(d), for the words “during or after the valuation of assets”, the words “during a period of three years prior to his appointment as valuer or three years after the valuation of assets was conducted by him” has been substituted.

9th February, 2018

The restriction on appointment of registered valuer in respect of the assets, in which he has direct or indirect interest or becomes so interested during a period of three years prior to appointment as a valuer or three years after valuation of assets.

44

379

77

Sections 380 (certain documents to be delivered by foreign companies to RoC), 381 (Accounts of the Company), 382(Display of name), 383(service on foreign company), 384(Debentures, annual return, registration of charges, books of accounts), 385(fee for registration of documents), 386(interpretation), 392(Punishment of contravention) and 393 shall apply to all foreign companies

Provided that CG may, by order published in the official gazette, exempt any class of foreign companies from the abovementioned sections.

 

9th February, 2018

Now foreign companies also have to make compliance in respect to sections 380 to 386 and 392 to 393.

45

384

78

In section 384(2), the words and figures “and section 135” shall be inserted.

 

9th February, 2018

Now section 135 shall be applicable to foreign companies.

46

391

79

Section 391(2), subject to the provision of section 376, the provision of chapter XX shall apply mutatis mutandis for closure of the place of business of a foreign company in India as if it were a company Incorporated in India in case such foreign company has raised money through offer or issue of securities under this chapter which has not been repaid or redeemed.

9th February, 2018

If a foreign company has raised money through issue of securities or offer which have not been repaid or redeemed, the provisions relating to winding up contained in chapter XX (winding up) shall apply to the company mutatis mutandis for closure of business.

47

409

82

The eligibility of technical members of NCLT has been changed.

A Person, who holds the rank of secretary or additional secretary to government of India, shall be eligible to be a technical member.

A person of proven ability, integrity and standing having special knowledge and professional experience of not less than fifteen years in industrial finance, industrial management, industrial reconstruction, investment and accountancy shall be eligible.

 

9th February, 2018

Self-explanatory

48

411

84

Section 411(3), a technical member of NCLAT, shall be a person of proven ability, integrity and standing having special knowledge and professional experience of not less than twenty five-years in industrial finance, industrial management, industrial reconstruction, investment and accountancy.

9th February, 2018

Self-explanatory

49

412

85

Section 412(2), The members of the Tribunal and Technical members of Appellate tribunal shall be appointed on the recommendation of a selection committee consisting of –

·      Chief Justice of India or his nominee- Chairperson;

·      A senior Judge of the Supreme Court or Chief Justice of High Court – Member;

·      Secretary in the Ministry of Corporate Affairs- Member; and

·      Secretary in the Ministry of Law and Justice- Member.

9th February, 2018

Self-explanatory

50

441

90

In section 411(1), for the words “with fine only”, the words “not being an offence punishable with imprisonment only, or punishable with imprisonment and also with fine” shall be substituted.

 

9th February, 2018

Now, the offences punishable with “fine” or “fine or imprisonment” may be compounded by the tribunal.

51

446

91

After section 446, new section 446A and 446B have been inserted namely;- 446A- the Court or the Special court, while deciding the amount of fine or imprisonment under this Act, shall have due regard to the following factors, namely:-

·      size of company;

·      nature of business carried on by the company;

·      injury to public interest;

·      nature of the default; and

·      repetition of default.

 

Section 446B-

If OPC or a small company fails to comply with the provisions of section 92(5) or section 117(2) or section 137(3) , 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, specified in such section.

9th February, 2018

Self-explanatory

52

447

92

Without prejudice to any liability including repayment of any debt under this Act or any other law for the time being in force, any person who is found to be guilty of fraud involving an amount of at least ten lakh rupees or one percent of the turnover of the company, whichever is lower, shall be punishable with imprisonment for a term which shall not be less than six months but which may extend to ten years and shall also be liable with fine, which shall not be less than the amount involved in fraud, but which may extend to three times the amount involved in the fraud:

Provided that where the fraud in question involves public interest, the term of imprisonment shall not be less than 3 years.

Provided further that where the fraud involves an amount less than ten lakh rupees or one percent of the turnover of the company, whichever is lower, and does not involve public interest, any person guilty of such fraud shall be punishable with imprisonment for a term which may extend to twenty lakh rupees or with both.

9th February, 2018

Self-explanatory

53

458

93

In consequence of deletion of section 194(forward dealing) and 195(insider trading), the provision of section 458(1) has also been deleted.

 

9th February, 2018

Self-explanatory

Sections which have been notified as on the date 07.05.2018

 

 

S.no

Section no.

(As per Companies Act, 2013)

Section no.

[As per Companies (Amendment) Act, 2017]

Particulars

Date of enforcement

Remarks

 

1

2(6)

2(6)

In the definition of “associate company” following explanation has been taken place of old –

(a) The expression “significant influence” means control of at least twenty percent of total voting power, or control of or participation in business decision under an agreement;

 

(b) The expression “joint venture” means a joint arrangement whereby the parties have joint control of the arrangement have rights to the net assets of the arrangement.

 

7th May, 2018

Now significant influence means control of at least twenty percent of total “voting power” instead of “share capital”.

 

2

2(87)

2(87)

2(87)(ii), In the definition of “subsidiary company”, for the words “ total share capital” the words total voting power has been substituted.

 

7th May, 2018

Now for relationship of a holding and subsidiary company, exercise or control more than one half of the total voting power shall be considered instead of total share capital

 

 

3

26

8

In section 26(1) after the words signed and shall the following has been inserted namely:-

“state such information and set out such reports on financial information as may be specified by SEBI in consultation with CG:

Provided that until the SEBI specifies the information and reports on financial information under this sub section, the regulation made by SEBI under SEBI Act, 1992, in respect of such financial information or reports on financial information shall apply”.

(ii) Clauses (a),(b) and (d) has been omitted.

 

7th May, 2018

Now SEBI shall specify the matters to be stated in the prospectus in respect of the information and reports on financial information.

Until and unless SEBI specifies the matters, the related regulation regarding this, made by SEBI under SEBI Act, 1992 shall apply.

 

4

54

13

In section 54 (Issue of sweat equity shares), in sub section (1), clause (c) i.e. “not less than one year has, at the date of such issue, elapsed since the date on which the company had commenced business” has been omitted.

 

7th May, 2018

Now the condition for issue of sweat equity shares, to maintain a gap of one year from the date of commencement of business has been deleted.

 

5

77

18

In section 77(1), a new proviso has been inserted, namely:-

provided also that this section shall not apply to such charges as may be prescribed in consultation with the RBI”

7th May, 2018

The requirement to register the particulars of charge within 30 days of its creation shall not apply to such charges as may be prescribed by CG in consultation with RBI

 

6

78

19

In section 78 for the words and figures “register the charge within the period of thirty days referred to in subsection (1) of section 77” has been substituted.

7th May, 2018

This modification has given more clarification with regards to the period specified for registration of charges.

 

7

89

21

 

 

In section 89(6), the words and figures, “within the time specified under section 403” has been omitted;

In sub-section (7) for the words and figures, “under the first proviso to sub-section (1) of section 403”, the word “therein” has been substituted.

 

7th May, 2018

A company shall make a note of declaration in respect of beneficial interest in any share, in the register concerned and shall file, within thirty days from the date of receipt of declaration by it, a return with the registrar in respect of such declaration with such fees or additional fees as may be prescribed.

 

8

92

23

In section 92(4), the words and figures, “within the time as specified, under section 403” has been substituted.

In subsection (5), for the words and figures, “under section 403 with additional fees” the word “therein” has been substituted.

 

7th May, 2018

Every company shall file with Roc a copy of the annual return, within 60 days from the date of AGM is held or where no AGM is held in any year within 60 days from the date on which AGM should have been held together with the statement specifying the reasons, with such fees or additional fees as may be prescribed [Rule 12 of Companies (Registration offices & fees) Rules, 2014.

 

9

117

30

If a company fails to file the resolution or the agreement under section 117(1), the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty lakh rupees and every officer of the company who is in default, including liquidator of the company, if any shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to fie lakh rupees.

 

Clause (e) of sub-section 3 of section 117 has been omitted.

 

 

7th May, 2018

Now the minimum amount of fine under section 117(2) has been reduced whereas the maximum amount of fine remained as it is.

Now the resolution passed under clause (a) and (c) of sub section (1) of section 180 does not come in purview of section 117.

 

10

121

31

In section 121(2), the words and figures “within the time as specified, under section 403” has been omitted.

In subsection (3), for the words and figures “under section 403 with additional fees”, the word “therein” has been substituted.

7th May, 2018

The company shall file with the ROC a copy of the report referred to subsection 1 of section 121, within 30days of conclusion of annual general meeting with such fees as may be prescribed, or such additional fess as may be prescribed.

 

 

11

129

33

As per section 129(3), where a company has one or more subsidiaries or associates companies, it shall prepare a consolidated financial statement of the company and of all its subsidiaries and associate companies.

7th May, 2018

Earlier the compliance of CFS in respect of associate companies was given in the explanation, now it has given in section itself to provide more clarity.

 

12

137

39

A company shall, along with its financial statements to be filed with ROC, attach the accounts of its subsidiaries which have been incorporated outside India and which have not established their place of business India (foreign subsidiary):

In case of a foreign subsidiary, which is not required to get its financial statements audited under any law of its home country and which does not get its financial statement audited, the holding Indian company shall file such unaudited financial statement along with a declaration to this effect and where such financial statement is in a language other than English, along with a translated copy of the financial statement in English.

7th May, 2018

Any Indian holding company has to attach the accounts (audited or unaudited) of its foreign subsidiary companies along with its financial statements to be filed with ROC.

 

13

139

40

In section 139 sub-section (1), the first proviso has been omitted.

7th May, 2018

Now a company does not require to place the matter relating to appointment of auditors for ratification by members at every AGM.

 

14

149

46

Section 149(3), Every company shall have at least one director who stays in India for a total period of not less than 182 days during the financial year:

Provided that in case of a newly incorporated company the requirement of this subsection shall apply proportionately at the end of the financial year in which it is incorporated.

 

In clause (C) of subsection (6), for the words “pecuniary relationship”, the words “pecuniary relationship, other than remuneration as such director or having transaction not exceeding ten percent of his total income or such amount as may be prescribed” has been substituted.

 

Clause (d) and clause (e) have also been modified with respect to qualification of independent director.

 

7th May, 2018

In respect to Section 149(3) Resident director, for the words “previous calendar year”, words “the financial year” has been substituted.

 

Clause (C), (D) and (E) have also modified regarding qualification of independent directors.

 

15

157

49

In section 157(1), the words and figures, “within the time specified under section 403” has been omitted;

In sub-section (2), the words and figures “before the expiry of the period specified under section 403with additional fee” has been omitted.

7th May, 2018

Every company shall , within fifteen days of receipt of intimation under section 156(prohibition to obtain more than one DIN), furnish the DIN number of all directors to ROC or any other authority as ,may be specified by CG with such fees as may be prescribed with such fees as may be prescribed.

 

 

 

16

164

52

In section 164(2), the following proviso has been inserted, namely:-

“provided that where a person is appointed as a director of a company which is in default of clause (a) or clause (b), he shall not incur the disqualification for a period of six months from the date of his appointment”;

 

Sub-section (3), a private company may by its articles provide for any disqualifications for appointment as an auditor in addition to those specified in sub-section (1) and (2):

Provided that the disqualifications referred to in clause (d), (e) and (g) of sub-section (1) shall continue to apply even if the appeal or petition has been filed against the order of conviction or disqualification.

7th May, 2018

If a person is appointed as a director in a company, which is already in default of not filing financial statements or annual returns for a continuous period of 3 years;

Or has failed to repay the deposits accepted by it or pay interest there on or to redeem any debentures on the due date or pay interest thereon or pay any dividend declared and such failure continuous for one year or more, he shall not be disqualified under section 164 for a period of six months from the date of his appointment.

 

17

167

54

Section 167(1)(a),   the office of a director shall become vacant in case, he incurs any of the disqualification under section 164;

Provided that where he incurs disqualification under section 164(2), the office of the director shall become vacant in all the companies, other than the company which is in default under that sub-section;

for clause (f) of sub-section (1) of section 167, a new proviso has been substituted the old proviso.

7th May, 2018

Now if a director becomes disqualified by an order of a court or the tribunal, the office shall not be vacated by the director for thirty days from the date of conviction or order of disqualification.

 

18

168

55

In section 168(1), in the proviso, for the words, “director shall also forward” the words “director may also forward has been substituted”.

7th May, 2018

Now form DIR-11 is optional for director to be filed for his resignation.

 

19

173

56

In section 173(2), after the first proviso, the following proviso has been inserted, namely:-

“Provided further that where there is a 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.

7th May, 2018

Directors may participate in the meeting through video conferencing or other audio visual mans but he shall not counted as quorum for the purpose of meeting.

 

20

177

57

In section 177(1), for the words “every listed company” the words “every public listed company” has been substituted;

 

In case of a transaction, other than transactions, referred to in section 188 and audit committee does not approve the transaction, it shall make its recommendation to board.

 

In case of any transaction involving an amount not exceeding one crore rupees is entered into by a director or officer of the company without obtaining approval of audit committee and it is not ratified by audit committee by three months from the date of transaction, such transaction shall be voidable at the option of audit committee and if the transaction is with the related party to any director or is authorised by any other director, the director concerned shall indemnify the company against any loss incurred by it:

 

The above provision shall not apply between a holding company and its wholly owned subsidiary company.

 

7th May, 2018

Any private listed company need not required to constitute an audit committee.

 

Any transaction involving any amount not exceeding one crore rupees is entered into by a director or officer of the company, has to take approval of audit committee or should be ratified within three months from the date of transaction, if prior approval has not taken.

 

 

 

21

178

58

In section 178(1), for the words “every listed company”, the words “every listed public company” has been substituted.

 

The company shall place the policy formulated by NRC under sub-section (3), on the website of the company, if any, and the silent features of the policy and changes therein, if any, along with the web address of the policy, if any shall be disclosed in the board’s report.

 

7th May, 2018

A private listed company shall not require to constitute Nomination and Remuneration Committee and Stakeholders Relationship committee under section 178.

 

The company shall place at its website the policy formulated by NRC in respect to criteria for determining qualifications, positive attributes and independence of a director and remuneration for the directors, KMP and other employees.

 

22

185

61

185(1), No company shall, directly or indirectly, advance any loan, including any loan represented by a book debt to, or give any guarantee or provide any security in connection with any loan taken by,-

(a)   any director of company, or of a company which is its holding company or any partner or relative of any such director; or

(b)  any firm in which any such director or relative is a partner.

(2) a company any advance any loan or give any guarantee or provide any security in connection with any loan taken by any person in whom any of the director of the company is interested, subject to the condition that-

(a) a special resolution shall be passed by the company in GM.

(b) the loans are utilized by the borrowing company for its principal business activities.

 

Nothing contained in sub-section (1) and (2) shall apply to-

(a)   the giving of any loan to a managing or whole time director-

(i)             as a part of the condition of service extended by the company to all its employees; or

(ii)           pursuant to any scheme approved by the members by a special resolution.

 

 

7th May, 2018

Self explanatory

 

23

186

62

In sub-section (2) of section 186, following explanation has been inserted, namely:-

Explanation- for the purpose of this sub-section, the word “person” does not include any individual who is in the employment of the company”

 

For subsection (3), the following subsection has been substituted, namely:-

Where the aggregate of the loans and investment so far made, the amount for which guarantee or security so far provided to or in all other bodies corporate along with the investment, loan, guarantee or security proposed to be made or given by the board, exceed the limits specified under sub –section (2), no investment or loan shall be made or guarantee shall be given or security hall be provided unless previously authorised by a special resolution passed in general meeting.

Provided that the above provision shall not apply between a holding and its wholly owned subsidiary company or joint venture company;

Provided further that the company shall disclose the details of such loans or guarantee or security or acquisition in its financial statement.

7th May, 2018

No company shall directly

Or indirectly give any loan or any guarantee or provide security in connection with a loan, to any individual who is in the employment of the company.

 

The requirement of sub-section (3) .i.e special resolution is required in case of exceeding the prescribed limit (sixty percent of paid up share capital, free reserve and securities premium account or one hundred percent of its free reserve and securities premium account, whichever is more), shall not apply between a holding company and its wholly owned subsidiary company or joint venture company.

 

 

24

403

80

In section 403(1), where any document, fact or information required to be submitted, filed, registered or recorded, as the case may be, under section 92 or 137 is not submitted, filed registered or recorded, as the case may be, within the period provided in those sections, without prejudice to any legal action or liability under this Act, it may be submitted, filed, recorded or registered as the case may be, after expiry of the period so provided in those sections, on payment of such fees as may be prescribed, which shall not be less than one hundred rupees per day and different amounts may be prescribed for different class of companies.

7th May, 2018

Self explanatory

 

25

410

83

In section 410 for the words “orders of the tribunal” the words order of the tribunal or of the National Financial Reporting Authority” has been substituted.

7th May, 2018

Now NCLAT has been authorised for hearing appeal against National Financial Reporting Authority also.

 

26

435

86

The Central Government may, for the propose of providing speedy trial of offences under this Act, by notification, establish or designate as many special court as may be necessary, consist of-

(a)   a single judge holding office as Session Judge or Additional Session judge, in case of offences punishable under this Act with imprisonment of two years or more; and

(b)  a Metropolitan Magistrate or a Judicial Magistrate of the first class, in the class of other offences.

7th May, 2018

Self explanatory

 

27

438

87

In section 438, for the words “deemed to be a court of session” the words “deemed to be a court of session or the court of Metropolitan Magistrate or a judicial Magistrate of the first class, as the case may be” has been substituted.

7th May, 2018

For the purpose of section 438, the special court shall be deemed to be a court of session or the court of Metropolitan Magistrate or a judicial Magistrate of the first class, as the case may be.

 

28

439

88

In section 439(2), after the words “ a shareholder” the words “or a member” has been inserted.

7th May, 2018

No court shall take cognizance of any offence which is alleged to have been committed by any company or any officer thereof except on a complaint in writing of the registrar, a shareholder of the company or a member of the company or a person authorised by CG in that behalf.

 

29

440

89

Any offence committed under this Act, which is triable by a Special Court shall, until a special Court is established, be tried by a court of session or Court of Metropolitan Magistrate or a Judicial Magistrate of the first class, as the case may be, exercising jurisdiction over the area, notwithstanding anything contained in the code of Criminal Procedure, 1973.

7th May, 2018

Self explanatory

 

                       


[1]
http://www.mca.gov.in/Ministry/pdf/CAAct2017_05012018.pdf

[2] http://www.mca.gov.in/Ministry/pdf/Commencementnotification_12022018.pdf

[3] http://www.mca.gov.in/Ministry/pdf/CompaniesAmendmentNoti_07052018.pdf

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