The author in these editorial gives a brief overview of the Companies Amendment Act, 2017 and has classified the amendments in the most simplest and understandable manner.
The President assented the Companies Amendment Bill, 2017 on 3rd January, 2018 and has proposed the 93 amendments in the Companies Act, 2013 with the said act i.e, Companies (Amendment) Act, 2017.
Now to analyze the quantum of the said amendments in the simpler manner it can be understood easily through Section wise division which is as follows:
93 Amendments
Now let us further bifurcate these Amendments in three Categories which is according to sections which are Substituted, Omitted and Inserted.
Category 1: Section which are Substituted
Here we discuss about the few significant sections which are substituted:
| Section | Companies Amendment Act, 2017 | Companies Act, 2013 |
| Section 2(6)-Explanation to ‘associate company’ | The expression “significant influence” means control of at least twenty per cent. of total voting power, or control of or participation in business decisions under an agreement.
The term “Joint Venture” has been explained as a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement |
Earlier it was The expression “significant influence” means control of at least twenty per cent. of total share capital, or control of or participation in business decisions under an agreement. |
| Section 2(51)(v)-Definition of Key Managerial Personnel | such other officer, not more than one level below the directors who is in whole-time employment, designated as key managerial personnel by the Board | Earlier it was “such other officer as may be prescribed” which is now Section2(51)(vi) |
| Section 2(76)(viii)-Definition of Related Party | “(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;or (C) an investing company or the venturer of the company;” Explanation.—For the purpose of this clause, “the investing company or the venturer of a company” means a body corporate whose investment in the company would result in the company becoming an associate company of the body corporate. |
Earlier it was (viii) any company which is— (A)a holding, subsidiary or an associate company of such company; or (B)a subsidiary of a holding company to which it is also a subsidiary; |
| Section 2(85)-Definition of Small Company | “small company” means a company, other than a public company,— (i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than ten crore rupees; (ii)turnover of which as per its last profit and loss account does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than hundred crore rupeesFurther turnover should be checked as per profit and loss account for the immediately preceding financial year. |
“small company” means a company, other than a public company,—
(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than five crore rupees; (ii) turnover of which as per its last profit and loss account does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than twenty crore rupees |
| Section 2(87)(ii)-Definition of Subsidiary Company | “subsidiary company” or “subsidiary”, in relation to any other company (that is to say the holding company), means a company which exercises or controls more than one-half of the total voting power either at its own or together with one or more of its subsidiary companies | Earlier it was “subsidiary company” or “subsidiary”, in relation to any other company (that is to say the holding company), means a company which 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 |
| Section 4(5)(i)-Memorandum | Upon receipt of an application under sub-section (4), the Registrar may, on the basis of information and documents furnished along with the application, reserve the name for a period of twenty days from the date of approval or such other period as may be prescribed:
Provided that in case of an application for reservation of name or for change of its name by an existing company, the Registrar may reserve the name for a period of sixty days from the date of approval.” |
Earlier it was Upon receipt of an application under sub-section (4), the Registrar may, on the basis of information and documents furnished along with the application, reserve the name for a period of sixty days from the date of the application. |
| Section 7(1)(c)-Incorporation of Company | a declaration from each of the subscribers to the memorandum and from persons named as the first directors, if any, in the articles that he is not convicted of any offence in connection with the promotion, formation or management of any company, or that he has not been found guilty of any fraud or misfeasance or of any breach of duty to any company under this Act or any previous company law during the preceding five years and that all the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of his knowledge and belief | an affidavit from each of the subscribers to the memorandum and from persons named as the first directors, if any, in the articles that he is not convicted of any offence in connection with the promotion, formation or management of any company, or that he has not been found guilty of any fraud or misfeasance or of any breach of duty to any company under this Act or any previous company law during the preceding five years and that all the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of his knowledge and belief |
| Section 12(1) & (4)- Registered office of company | Section 12(1): A company shall, within thirty days of its incorporation of its incorporation and at all times thereafter, have a registered office capable of receiving and acknowledging all communications and notices as may be addressed to it
Section 12(4):Notice of every change of the situation of the registered office, verified in the manner prescribed, after the date of incorporation of the company, shall be given to the Registrar within thirty days of the change, who shall record the same. |
Section 12(1):A company shall, on and from the fifteenth day of its incorporation of its incorporation of its incorporation and at all times thereafter, have a registered office capable of receiving and acknowledging all communications and notices as may be addressed to it
Section 12(4):Notice of every change of the situation of the registered office, verified in the manner prescribed, after the date of incorporation of the company, shall be given to the Registrar within fifteen days of the change, who shall record the same. |
| Section 21-Authentication of Documents, Proceedings and Contracts | Save as otherwise provided in this Act,—
(a) a document or proceeding requiring authentication by a company; or (b) contracts made by or on behalf of a company, |
Save as otherwise provided in this Act,— (a) a document or proceeding requiring authentication by a company; or(b) contracts made by or on behalf of a company, may be signed by any key managerial personnel or an officer of the company of the company duly authorized by the Board in this behalf. |
| Section 47(1)-Voting Rights | (1) Subject to the provisions of section 43, sub-section (2) of section 50 and sub-section (1) of section 188,—
(a) every member of a company limited by shares and holding equity share capital therein, shall have a right to vote on every resolution placed before the company; and (b) his voting right on a poll shall be in proportion to his share in the paid-up equity share capital of the company. |
(1) Subject to the provisions of section 43 and sub-section (2) of section 50,—
(a) every member of a company limited by shares and holding equity share capital therein, shall have a right to vote on every resolution placed before the company; and (b) his voting right on a poll shall be in proportion to his share in the paid-up equity share capital of the company. |
| Section 62(1)(c)& Section 62(2)- Further issue of share capital | Section 62(1)(c): to any persons, if it is authorized by a special resolution, whether or not those persons include the persons referred to in clause (a) or clause (b), either for cash or for a consideration other than cash, if the price of such shares is determined by the valuation report of a registered valuer, subject to the compliance with the applicable provisions of Chapter III and any other conditions as may be prescribed. Section 62(2): The notice referred to in sub-clause (i) of clause (a) of sub-section (1) shall be dispatched through registered post or speed post or through electronic mode or courier or any other mode having proof of delivery to all the existing shareholders at least three days before the opening of the issue. |
Section 62(1)(c): to any persons, if it is authorized by a special resolution, whether or not those persons include the persons referred to in clause (a) or clause (b), either for cash or for a consideration other than cash, if the price of such shares is determined by the valuation report of a registered valuer subject to such conditions as may be prescribed.
Section 62(2) : The notice referred to in sub-clause (i) of clause (a) of sub-section (1) shall be dispatched through registered post or speed post or through electronic mode to all the existing shareholders at least three days before the opening of the issue. |
| Section 74(1)(b)-Repayment of Deposits, etc., Accepted Before Commencement of this Act | (1) Where in respect of any deposit accepted by a company before the commencement of this Act, the amount of such deposit or part thereof or any interest due thereon remains unpaid on such commencement or becomes due at any time thereafter, the company shall-
(b) repay within three years from such commencement or on or before expiry of the period for which the deposits were accepted, whichever is earlier: Provided that renewal of any such deposits shall be done in accordance with the provisions of Chapter V and the rules made there under.” |
(1) Where in respect of any deposit accepted by a company before the commencement of this Act, the amount of such deposit or part thereof or any interest due thereon remains unpaid on such commencement or becomes due at any time thereafter, the company shall-
(b) repay within one year from such commencement or from the date on which such payments are due, whichever is earlier. |
| Section 78-Application for Registration of Charge | Where a company fails to register the charge within the period of thirty days referred to in sub-section (1) of section 77, without prejudice to its liability in respect of any offence under this Chapter, the person in whose favor the charge is created may apply to the Registrar for registration of the charge along with the instrument created for the charge, within such time and in such form and manner as may be prescribed and the Registrar may, on such application, within a period of fourteen days after giving notice to the company, unless the company itself registers the charge or shows sufficient cause why such charge should not be registered, allow such registration on payment of such fees, as may be prescribed | Where a company fails to register the charge within the period specified in section 77, without prejudice to its liability in respect of any offence under this Chapter, the person in whose favor the charge is created may apply to the Registrar for registration of the charge along with the instrument created for the charge, within such time and in such form and manner as may be prescribed and the Registrar may, on such application, within a period of fourteen days after giving notice to the company, unless the company itself registers the charge or shows sufficient cause why such charge should not be registered, allow such registration on payment of such fees, as may be prescribed |
| Proviso to Section 96(2)-Annual General Meeting | Provided that annual general meeting of an 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: Provided further that“. | Provided that the Central Government may exempt any company from the provisions of this sub-section subject to such conditions as it may impose. |
Note: The Substitution has been shown with Bold and Italics above under the heading Companies Amendment Act, 2017 .
Category 2: Sections which are Omitted
Here we discuss about the few significant sections which are Omitted:
| Section as per Companies Act, 2013 | Section Title under which Omission has been taken place |
| Section 2(49) | Interested Director |
| Section 26(1)(a),(b) & (d) | Matters to be Stated in Prospectus |
| Section 54(1)(c ) | Issue of Sweat Equity Shares |
| Section 73(2)(d) | Prohibition on Acceptance of Deposits from Public |
| Section 92(1)(c ) | Annual Return |
| Section 93 | Return to be Filed with Registrar in Case Promoters’ Stake Changes |
| Section 117(3)(e) | Resolutions and Agreements to be Filed |
| Section 132(6),(7),(8) & (9) | Constitution of National Financial Reporting Authority |
| First Proviso to Section 139(1) | Appointment of Auditors |
| Section 194 | Prohibition on Forward Dealings in Securities of Company by Director or key Managerial Personnel |
| Section 195 | Prohibition on Insider Trading of Securities |
| Proviso to Section 458(1) | Delegation by Central Government of its Powers and Functions |
Category 3: Sections which are Inserted
Here we discuss about the few significant sections & provisions which are Inserted
| Section which are newly inserted | Descriptive |
| Section 3A-Members severally liable in certain cases | In case number of members reduced from statutory limit, i.e. seven in the case of public company or two in case of a private company and the company carries on business for more than six months while the number of members is so reduced, every person who is a member of the company during the time that it so carries on business after those six months and is cognisant of the fact that it is carrying on business with less than seven members or two members, as the case may be, shall be severally liable for the payment of the whole debts of the company contracted during that time, and may be severally sued therefor. |
| Section 35(2)(c )-Civil Liability for Mis- statements in Prospectus | It is amended to relieve the Director, promoter etc. from any civil liability if such person(s) has relied on a 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 has not withdrawn it. |
| Section 53(2A)-Prohibition on Issue of Shares at Discount | Notwithstanding anything contained in sub-sections (1) and (2), a company may issue shares at a discount to its creditors when its 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 the Reserve Bank of India under the Reserve Bank of India Act, 1934 or the Banking (Regulation) Act, 1949. |
| Section 89(10)-Declaration in Respect of Beneficial Interest in any Share | For the purposes of this section and section 90, beneficial interest in a share includes, directly or indirectly, through any contract, arrangement or otherwise, the right or entitlement of a person alone or together with any other person to—
(i) exercise or cause to be exercised any or all of the rights attached to such share; or (ii) receive or participate in any dividend or other distribution in respect of such share. |
| Proviso to Section 100(1)-Calling of Extraordinary General Meeting | “Provided that an extraordinary general meeting of the company, other than of the wholly owned subsidiary of a company incorporated outside India, shall be held at a place within India.” |
| Proviso to Section 110(1)-Postal Ballot | “Provided that any item of business required to be transacted by means of postal ballot under clause (a), may be transacted at a general meeting by a company which is required to provide the facility to members to vote by electronic means under section 108, in the manner provided in that section.” |
| Proviso to Section 123(1)(a)-Declaration of Dividend | “Provided that in computing profits any amount representing unrealized gains, notional gains or revaluation of assets and any change in carrying amount of an asset or of a liability on measurement of the asset or the liability at fair value shall be excluded; or” |
| Proviso to Section 160(1)-Right of Persons Other than Retiring Directors to Stand for Directorship | ‘‘Provided that requirements 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 sub-section (1) of section 178 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.” |
| Proviso to Section 164(2)-Disqualifications for Appointment of Director | “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.” |
| Proviso to Section 167(1)(a)-Vacation of Office of Director | “Provided that where he incurs disqualification under sub-section (2) of section 164, the office of the director shall become vacant in all the companies, other than the company which is in default under that sub-section.” |
| Second Proviso to Section 173(2)-Meetings of Board | “Provided further that 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.”. |
| Third Proviso to Section 188(1)-Related Party Transactions | “Provided also that nothing contained in the second proviso shall apply to a company in which ninety per cent. or more members, in number, are relatives of promoters or are related parties:”; |
| Proviso to Section 374(d)- Obligations of Companies Registering Under this Part |
“Provided that upon registration as a company under this Part a limited liability partnership incorporated under the Limited Liability Partnership Act, 2008 shall be deemed to have been dissolved under that Act without any further act or deed.” |
| Second Proviso to Section 447-Punishment for Fraud | “Provided further that where the fraud involves an amount less than ten lakh rupees or one per cent. 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 five years or with fine which may extend to twenty lakh rupees or with both.” |
The above lists shares the few glimpses of the amendments as are proposed by the Companies (Amendment) Act, 2017 in the principle act i.e, Companies Act, 2013. To read the Complete Act get it download from the link: Click Here
Author– AMEETA KOHLI, is a Semi Qualified CS from Delhi and can be contacted at ameeta912@gmail.com.
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what about section 42 in respect of private placement which is not mentioned in the above articles but the whole section is substituted by the Companies Amendment Act, 2017