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CS Vinita Nair
MCA vide notification S.O. 1833(E) dated May 7, 2018 has notified 28 Sections in Phase III. The same has been notification has been published in official gazette and is effective from May 7, 2018. This article discusses immediate actionables to be ensured by companies.
- Amendment in Section 2 (6): Companies to re-visit list of associate entities to evaluate any change on account of aligning the definition with accounting standards;
- Amendment in Section 2 (87): Companies to re-visit list of subsidiary companies to evaluate any change on account of aligning the definition with accounting standards. Those getting classified as subsidiary on account of holding of CCPS will now stand de-classified;
- Amendment relating to deletion of reference of Section 403 in Section 89, 92, 117, 121, 137 and 157: Companies filing e-Form beyond the timeline prescribed in respective sections to ensure condoning the delay under Section 460;
- Non-enforcement of remaining amendments proposed in Section 92: Companies to continue to prepare extract of annual return and annex to the Board’s report;
- Amendment in Section 117: Banking companies need not file MGT-14 for matter resolved under Section 179 (3);
- Amendment in Section 129: Companies having no subsidiaries but associate companies will also be required to prepare consolidated financial statements;
- Amendment in Section 139: Companies who are yet to finalise AGM Notice may do away with the resolution for ratification of appointment of auditors;
- Amendment in Section 149: Declaration to be obtained from Independent Directors to be amended in line with amendment. Monetary limits of relatives’ indebtedness, provision of guarantee/ security w.r.t loan has been prescribed as Rs. 50 lakhs vide revision in Rule 5 of Appointment of Directors Rules;
- Amendment in Section 164: New directors appointed in defaulting companies will be regarded as disqualified after a period of 6 months from date of appointment. Accordingly, such companies shall file eForm DIR-9 with the Registrar;
- Amendment in Section 167: The office of director shall not become vacant in the defaulting company;
- Amendment in Section 168: eForm DIR 11 need not be mandatorily filed by resigning directors;
- Amendment in Section 173: Subject to presence of physical quorum, VC facility shall be allowed to directors for restricted items mentioned in the Rule 4 of MBP Rules.
- Amendment in Section 177: Transactions not taken for approval of Audit Committee may be taken for ratification. Transaction with WOS, other than transactions covered in Section 188, need not be taken for Audit Committee for approval;
- Amendment in Section 185: Companies intending to provide 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 following, may seek approval of shareholders by special resolution in the ensuing annual general meeting:
- any private company of which any such director is a director or member;
- any body corporate at a general meeting of which not less than twenty five per cent. of the total voting power may be exercised or controlled by any such director, or by two or more such directors, together; or
- any body corporate, the Board of directors, managing director or manager, whereof is accustomed to act in accordance with the directions o instructions of the Board, or of any director or directors, of the lending company
The explanatory statement to the notice for the relevant general meeting shall disclose the full particulars of the loans given, or guarantee given or security provided and the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient of the loan or guarantee or security and any other relevant fact;
- Amendment in Section 186: Loans to employees not subject to limit prescribed under sub-section (2). Exempting provisions i.e. sub-section (11) has been substituted. Meaning of term ‘engaged in the business of financing industrial enterprises’ has not been explained in the amended rules notified on May 7, 2018. No immediate actionable for this amendment.
- Amendment in Section 403: With doing away of the requirement of additional timeline for filing e-Forms, companies to be strive for timely filing. Otherwise, post filing the forms with delay, condone the delay as per Section 460.
(Author can be reached at corplaw@vinodkothari.com)
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Good insight about the issue