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25 Key Changes in Companies (Amendment) Act, 2017

Articles Provides 25 Key Highlights On Companies (Amendments) Act, 2017 which includes  Provision related to Registration / Conversion of LLP  of Company/LLP, Issuance of Sweat Equity Share, Section 3A Number of members falling below the minimum requirement, Section 12 Changes of Registered Office of the Company, Private Placement, Financial Statements, Corporate Social Responsibility, Audit and Auditors, Residential Status, DIN and and other Director related Provisions and Fee for filling etc.

Following are the useful and remembreable 25 Key changes of Companies Amendment Act, 2017:

1. Registration of Company/LLP · For registration of a Company “Declarations” will be required instead of Affidavits.

· In case of Incorporation, Name shall be reserved for 20 days from the date of Approval instead of 60 days from the date from the date of application.

2. Conversion of Partnership/ LLP into Company Partnership or LLP with 2 members (currently 7)may convert into a company.
3. No specific Objects required Objects of the Company can state that the company will do any lawful activity or business without giving any specific object.
4. Issuance of Sweat Equity Share Sweat Equity Shares can now be issued at anytime, hence no need to wait for one year from commencement of business
5. Easy of doing business · Annual General meeting of unlisted company can be held anywhere in India.

· Officers not more than one level below the Directors who are in full time employment of the Company can also be designated as KMP.

· In addition to Directors and KMP, any employee can also authenticate documents.

· No Central Government approval for payment of remuneration in excess of 11% of net profits.

6. Section 2(6) Associate Company It is proposed that Significant influence means control of at least twenty percent of total voting power (rather than 20% of share capital), or control of or participation in business decision under an agreement.
7. Section 3A-Number of members falling below the minimum requirement If at any point of time the number of the members of the company is reduced below the minimum prescribed and the company carries on business for more than six months, then every person who is the member of the company during such time, shall be severally liable for the payment of whole debts of the company contracted during that time, and may be severally sued.
8. Section 12-Changes of Registered Office of the Company Notice of every change of shifting of Registered Office (E-Form INC-22) is now required to file with ROC within 30 days instead of 15 days.
9. Section 42- Private Placement · Money received under private placement shall not be utilized unless the return of allotment is filled with ROC.

· Private Placement offer shall not contain any right of renunciation.

Period filling of Return of allotment ((PAS-3) is proposed to be reduced to 15 days.

10. Section 129-Financial Statements If a company has one or more subsidiaries or associates companies, It shall, it addition to its financial statement, prepare consolidated financial statements of the company and all subsidiaries and associates companies in same form and manner as that its own.
11. Section 135-Corporate Social Responsibility · CSR is proposed to be calculated based on immediately Preceding financial year instead of three preceding financial years.

· Further that a company is not required to appoint Independent Director, it shall have in its CSR Committee two or more directors.

· It’s also propose to empower the Central Govt. to prescribed sum which shall not be included for calculating ‘net profit’ of a company under section 135.

·CSR from now on wards shall also apply to Foreign Companies with such exceptions as may be prescribed.

12. Section 136- Copies of Audited Financial Statement at shorter notice It’s proposed that Copies of financial statements and other documents can be sent at shorter notice if it is so agreed by members,

(a) if company having share capital, the consent of the members holding at least ninety-five percent of the voting power to be obtained to call general meeting at a notice shorter than twenty-one days.

13. Section 139-Rectification of Auditors It is proposed to omit requirement related to rectification of appointment of auditors by members at every general meeting.
14. Section 140-Reduction in penalty for resignation of Auditor It is proposed to reduce the fine on failure of file resignation of auditor of ADT-3 to fifty thousand rupees or auditors remuneration of auditor whichever is less.
15.  Section 149-Residential Status of director  It is proposed that 182 days for determining whether a director is resident in India shall be computed on the based of financial year. Currently it is calculated on the basis of previous calendar year.

But in case of new companies, 182 days shall be calculate proportionately at the end of financial year in which it is incorporated.

In the definition of Independent director, the words ‘pecuniary interest’ is proposed to be substituted by’ 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.

16. Section 153- Director Identification Number It is proposed that in addition to DIN, a director may hold any other identification as DIN as may be prescribed by Central Government. It may be Aadhar or PAN.
17. Section 164 Disqualification for appointment of director It is proposed that when a director is appointed in company which is in default of filling of financial statements or annual return or repayment of deposits or pay interest or redemption of debentures or payment of interest thereon or payment of dividend then such director shall not incur the disqualification for a period of six months from the date of his appointment.
18. Section 167- Vacation of office of director It’s proposed that if director incur any disqualification under section 164(2) then he shall vacate office in all companies other than the company which is in default.
19. Section 165-Number of directorship It is proposed that directorship in dormant company shall not include limit of directorship in 20 companies.
20. Section 168 Resignation of director It is proposed that filling of Form-DIR-11 is optional.
21. Section 180 Restriction on power of board It is proposed to include securities premium along with paid up share capital and free reserves for calculation of maximum limits on borrowing power of the board .
22. Section 184- Disclosure of director interest In any Body Corporate where any director or two or more of them holds not more than 2% of the paid up share capital shall not come under the purview section 184.
23.

 

Section 185- Loan to directors

 

A complete restriction on providing loan, guarantee or security in connection with loan to director, director of holding company or any partner or relative of any such director or any firm in which any such director or relative in any partner.

It is proposed that Companies are permitted to give loans to the following entities in which directors are interested after passing special resolution.

(a) any private company of which any such director is a director or member;

(b) anybody corporate at a general meeting of which not less than twenty-five of the toting voting power may be exercised or controlled by any such director, or by two or more such directors together or;

(c) Anybody corporate, the board of directors, managing director or manager, whereof is accustomed to act in accordance with the direction or instruction of board or any director or directors of the lending company.

Currently transactions with aforesaid categories are prohibited.

Current Exemption provided under section185(1) continues to remain except that when company which in the ordinary course of its business provides loan or gives guarantees or securities for the repayment of loans an interest is charged not less than the rate of prevailing yield in market.

24. Section 196-Appointment of Managing Director, WTD or Manager It’s proposed that a person can be appointed as managing director or whole time director or manager beyond the age of seventy by passing of special resolution.
25. Section 403- Fee for filling etc. If the Financial Statements and Annual Return of the Company filled after the expiry of due date the its shall be liable of additional fees which shall be not less than Rs. 100 per day.

But if Company fails for filling of any document for two or more times, it may be filled on the payment of higher additional fee, as may be prescribed and which shall not be less than twice the additional fee.

DISCLAIMER: The information given in this document has been made on the basis of the provision stated in the Companies (Amendment) Bill, 2017 and Companies Act, 2013. It is based on the analysis and interpretation of applicable laws as on date. We expressly disclaim any financial or other responsibility arising due to any action taken by any person on the basis of this note.

(Author can be reached on sonamjaon6.2012@gmail.com)

Categories: Company Law

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