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India now ranks 130 out of 189 countries in the ease of doing business, moving up four places from last year’s adjusted ranking of 134. India moved up nine spots in the criteria of starting a business to 155 in 2016 from 164 last year.

Government of India in order the achieve of “Ease Of Doing Business” and “boost to industrial sector and start ups decide to revisit the Companies Act, 2013 and set up a Company Law Committee in the month of June, 2015. The CLC was assigned a task to study and provide solutions to the issues arising out of implementation of Companies Act, 2013. MCA place CLC report for public comments on its portal for few days. Several suggestions received from stakeholders and professional bodies like ICSI were consider before giving a shape to the Companies Amendment Act, 2017.

“In the past year,

  • India eliminated the paid-in minimum capital requirement and streamlined the process for starting a business.
  • One major relaxation Starting business has become easier in India as the Ministry of Corporate Affairs (MCA) has introduced a new form SPICE through which a new company can now be incorporated. The newly introduced form SPICE will combine the procedure for getting Director Identification Number (DIN), Name Approval Application and Incorporation Application into a single step.

More reforms are ongoing—in starting a business and other areas measured by Doing Business—though the full effects are yet to be felt,”.

Carrying forward the spirit of enhancing ‘Ease Of Doing Business’ the Central Government has accepted mostly all the recommendation of the Company Law Committee and represent the Companies Amendment Act, 2017.

Highlights of some Major Relaxation under Companies Act, 2017 to make it- Business Friendly

  • Apart from KMP and any officer of the Company, an employee can also be authorised to authenticate documents on behalf of the Company.
  • It is allow issue of sweat equity shares at any time after registration of the Company.
  • Simplification of process of Private Placement of Shares.
  • Granting of loans to entities in which directors are interested after passing special resolution and adhering to disclosure requirement
  • Right issue offer letter can be sent through courier or by delivery through hand.
  • Requirement of deposit insurance omitted.
  • EGM of wholly owned subsidiary of a Company incorporated outside India can be held outside India.
  • The requirement related to annual ratification of appointment of auditor by members is omitted.
  • The requirement of consolidation the account of a Joint Venture is omitted.
  • Section 194 and 195 omitted.
  • The approval of the Central Government shall not be required at the time of payment of remuneration exceeding 11% of net profit of the Company.

Objects of the Companies Amendment Act, 2017

√ Ease of Doing Business

√ Simplification of Compliances

√ Encouragement for Startups

√ Strengthen Corporate Governance Standard

√ Strict Action against defaulting Companies

Let’s See How the Companies Amendment Act, 2017 is helpful in ‘ease of doing business’ and what are the relaxation under Companies Amendment Act, 2017.

A. Authentication of Documents:

Under CA, 2013 a document or proceeding requiring authentication by a company; or contracts made by or on behalf of a company, may be signed by any key managerial personnel or an officer of the company duly authorised by the Board in this behalf.

However as per Companies Amendment Act, 2017 Company by Board Resolution authorises any employee of the Company to sign documents and contract on behalf of the Company.

Effect: The amendment waters down ‘accountability’ enshrined in the existing provision that requires any officer authorized by the Board to authenticate documents. It could have been liberalised to employee. Allowing authentication of documents by ‘any employee’ is reflection of ‘overstretched’ liberalisation. The scope has been widened also to include the employees of the company.

B. Fast Track Incorporation:

Incorporation process is likely be on fast track mode to enable promoters to form Companies in 1 day. Major change is for MOA & AOA from physical to electronic mode. This will definitely reduce the paper work and hectic signature process.

C. Private Placement of Shares:

Section 42 Private Placement of Shares has been completely substituted by new Section 42.

Relaxation given in Section 42 of Companies Amendment Act, 2017:

  • The requirement of clumsy offer letter has been replaced by Private Placement Offer cum application form containing terms and conditions of Private Placement offer.
  • Requirement of filing of private placement of offer letter has been eliminated.
  • Return of allotment required to be filed within 15 days instead of 30 days
  • Money received under the private placement shall not be utilised unless the return of allotment is filed with the ROC

D. Issuance of Shares at discount:

As per section 53(1) A Company shall not issue shares at discount.

However, Companies Amendment Act, 2017 provide exception situation in which shares can be issue at discount.  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 by the RBI under the RBI Act, 1934 or the Banking (Regulation) Act, 1949.

E. Sweat Equity Shares:

As per CA, 2013 newly incorporated company eligible to issue sweat equity shares only after 1 year of its incorporation.

However, Companies Amendment Act, 2017 this clause has been removed. Now allows the newly incorporated Companies to issue sweat equity shares of a class of shares already issued, which is a welcome change. This would facilitate startups structuring and building up promoter’s contribution.

F. Dispatch of Notice of Right issue of Shares:

As per CA, 2013 Section 62(2) notice for right issue of shares can be circulated only through registered post or speed post or through electronic mode.

However, Companies Amendment Act, 2017 Section 62(2) has been relaxed to include courier or other modes of delivery capable of providing proof of delivery. It can be interpreted that notice may be hand delivered subject to obtaining an acknowledgement from the receiving shareholder.

G. Deposit Related Provisions:

  • Requirement of deposit insurance is eliminated.
  • Life time ban on a Company that defaulted in repayment of deposit accepted or interested thereon under the CA, 2013 or under any previous Act is relaxed by amending conditions of section 73(2)(d). Instead a five year cooling period has been provided from the date the default is made good.

H. Registration of Charge:

Earlier there was list of transaction on which charge was required to create. With the enactment of the Companies Act, 2013, tire list of charges requiring registration done away with. Thus, in the absence of a specific list of charges to be registered, and the wide definition of the word “charge”, ‘pledges’ and ‘liens’ were also required to be registered.

However, Companies Amendment Act, 2017 insert the proviso in section 77(1) “provided also that this section shall not apply to such charges as may be prescribed in consultation with the Reserve Bank of India”.

With the insertion of the 4th proviso to section 77(1), a negative list is expected to be provided in consultation with the Reserve Bank of India, on which creation of charge need not be required. This might exclude registration of charges once again for pledges etc. as was there in the erstwhile Act, 1956.

I. Satisfaction of Charge:

In CA, 2013 A Company shall give intimation to the Registrar in the prescribed form, of the payment or satisfaction in full of any charge registered under this Chapter within a period of thirty days from the date of such payment or satisfaction.

However, Companies Amendment Act, 2017 insert the proviso in section 82(1). As per proviso the Registrar may, on an application by the company or the charge holder, allow such intimation of payment or satisfaction to be made within a period of three hundred days of such payment or satisfaction on payment of such additional fees as may be prescribed.

The provisions pertaining to registration of modification and satisfaction of charges erroneously omitted the power of the Registrar to grant extension of time upto 300 days.

J. Annual Return

However, Companies Amendment Act, 2017 insert the proviso in section 92(1). As per proviso Central Government may prescribe abridge form of Annual Return for One Person Company and small Company.

K. Return to be filed with ROC for change in Stake:

The return of changes in promoter’s stake & submission of advance copy of special resolution for place of keeping register etc is omitted.

L. Annual General Meeting:

Companies Amendment Act, 2017, has allowed unlisted companies to hold their AGMs in any place in India provided that all the members of such company should give their consent in advance either in electronic mode or in writing.

This will save the time and energy of many Companies in completing the formalities of holding meeting at the registered office by travelling from various places.

M. Extra Ordinary General Meeting:

Allowed wholly owned subsidiaries of a company which are incorporated outside India to hold its EGM anywhere in the world.

This is a welcome change since the present provision of holding an EGM in India was never a Law, neither present in the erstwhile Act nor in the Act, 2013. Rather the same had been mistakenly/ advertently mentioned in the Rules by way of an Explanation to Rule 8(3)(ix) of Companies (Management and Administration) Rules, 2014. Also the same was reiterated in the Secretarial Standard 2.

As per the above clarification EGM of wholly own foreign subsidiary can be held outside India.

N. Relaxation in the items restricted to be transact through only Postal Ballot:

It is allowed such items of business to be passed at a general meeting of a company which are otherwise mandatorily required to be passed by postal ballot provided the company is required to provide e-voting facility.

Clarity is provide that if any business is required to be transacted by Postal Ballot, then it could also be transacted at a general meeting having a facility of electronic voting. This move will enable maximum shareholders to participate in the meeting and discussions and then vote electronically and will also save the cost of conducting postal ballot and general meeting.

O. Resolution and agreement requires to be file with ROC:

There is exemption granted to banking Companies from submitting Board resolution passed by it for granting loans or giving guarantee or providing securities in its ordinary course of business.

P. Interim Dividend:

Companies Amendment Act, 2017 amend section 123(3) of Act, 2013 by adding clarification that the provision of declaration of Interim Dividend by specifying that it can be declared even after closure of financial year till holding of AGM and could not be out of surplus in profit & Loss account or out of profit of that financial year or out of profit generated till last quarter before declaration.

Q. Statutory Auditor:

As per first proviso of section 139 the company shall place the matter relating to appointment of statutory auditor for Ratification by members at every annual general meeting.

Companies Amendment Act, 2017. Ratification of appointment of auditors in every General Meeting during his tenure is removed. As it defeats the objective of giving five year term to the auditors. But this may lead to depriving of shareholders right to appoint or reject the appointment of auditor in every annual general meeting.

R. Resident Director:

As per CA, 2013 section 149(3) every company shall have at least one director who has stayed in India for a total period of not less than one hundred and eighty-two days in the previous calendar year.

Companies Amendment Act, 2017 provides that in case of newly incorporate Company the requirement under this sub-section shall apply proportionately at the end of the financial year in which it is incorporated.

S. Deposit of amount on appointment of Director:

Companies Amendment Act, 2017 In case of appointment of ID and Directors recommended by the NRC the requirements of Section 160 shall be dispensed off. Therefore, ID and director recommended by NRC are exempted from the requirement of making a directorship election deposit.

T. Disqualification of Directorship:

The disqualification of a director on account of non filing of returns and repayment of deposits to be operated after a gap of 6 months from the date of appointment. This will provide a required window to directors to take step to recover from the non compliances in the Company. The disqualification occurring due to court or tribunal order for disqualification or conviction will continue to apply even if appeal or petition is preferred.

U. No. of Directorship:

As per 165(1) No person, after the commencement of this Act, shall hold office as a director,

including any alternate directorship, in more than twenty companies at the same time.

Companies Amendment Act, 2017 for reckoning the limit of directorship of 20 Companies the directorship in a ‘Dormant Company’ shall not be included.

V. Filing requirement of DIR-11:

As per 168(1) a director shall also forward a copy of his resignation along with detailed reasons for the resignation to the Registrar within thirty days of resignation in DIR-11.

Companies Amendment Act, 2017 The requirement for forwarding of copy of resignation by the resigning director in e-form DIR 11 to the Registrar shall be optional.

This is a welcome change for those companies where the resignation is with mutual consent unlike where there are management disputes. In such companies, the directors still have an option to file DIR 11.

W. Participation of Director through video conferencing:

As per first proviso of section 173(1) presence of director through video conferencing was restricted in the Board Meeting in which restricted items was agenda to discuss.

Companies Amendment Act, 2017 As per Amendment Act if in a Board Meeting physical quorum of director is present, any other director may participate through video conferencing or other audio visual means in such meeting on any matter specified under the first proviso.

This also gives a relief to non-resident directors to participate in the discussion and voting on important matters like approval of financial statements etc without travelling to the place of meeting.

X. Audit and Nomination Committee:

The Board of Directors of every listed company and such other class or classes of companies, as may be prescribed, shall constitute an Audit Committee.

Companies Amendment Act, 2017 The Board of Directors of Every Public Listed company and such other class or classes of companies, as may be prescribed, shall constitute an Audit Committee.

This brings ease and relief to such private companies having their debt securities listed as the companies were surely falling within the meaning of listed but were not public. The requirement of the committee has now been restricted to only public companies which are listed. Therefore, lot of debt listed companies will be out of the preveiw of this section. This is also in line with the SEBI (LODR) Regulations, 2015.

Y. Loan to Director:

Companies Amendment Act, 2017, therefore, allowed companies to advance a loan to any other person in whom director is interested subject to prior approval of the company by a special resolution. Further, loans extended to persons, including subsidiaries, falling within the restrictive purview of Section 185 should be used by the subsidiary for its principal business activity only, and not for further investment or grant of loan.

After 01st April, 2014 Corporate are facing many issues because of restriction under section 185. In Companies Amendment Act, 2017, section 185 completely substituted to relax norm to make this Act Business Friendly. New section is beautifully worded.

Z. Loan and Investment by the Company:

Restriction on subsidiary investment layers is removed. Loan and Investment by the Company, clarity is given by exempting employees from applicability. Exemption to be provided for loan, guarantee or security to its WOS or joint venture Company or for acquisition of share in WOS.

AA. Related Party Transactions:

As per CA, 2013 no member of the company shall vote on such resolution, to approve any contract or arrangement which may be entered into by the company, if such member is a related party.

Addition of new provision under section 188(1) by Companies Amendment Act, 2017 provided also that nothing contained in the second proviso (mentioned above) shall apply to a company in which ninety percent or more members, in number, are relatives of promoters or are related parties.

Company are also allowed to enter into contract or arrangement with related party if 90% or more members, in number, are relatives of promoters or are related parties. It is a welcome step to smooth the relative party transactions.

BB. Insider Trading: Provisions relating to forward dealing and Insider Trading are omitted. A rightful move by the government to grant relief to Companies in which public money is not involved.

CC. Remuneration to Managerial Personnel:

In CA, 2013

The company in general meeting may, with the approval of the Central Government, authorise the payment of remuneration exceeding eleven per cent. of the net profits of the company, subject to the provisions of Schedule V.

Remuneration in case of no profit or adequate profit requires approval of Central Government.

The company shall not waive the recovery of any sum refundable to it under sub-section (9) unless permitted by the Central Government

Companies Amendment Act, 2017 The word “with the approval of Central Government” removed from every place under this section.

Benefits of this, No need approval of CG for payment of remuneration more than 11% of net profit, ne need of CG approval for remuneration in situation of no profit or inadequate profit and not need of CG approval of recovery of any sum refundable from director.

This is also a welcome step and business friendly for the business mans to get remuneration form Company without Central Government Approval.

DD. Fee for Filing:

Necessary changes made in the Companies Act to bring clarity that the requirement of filing with additional fee for 270 days under first proviso to Section 403 is applicable only to the six sections.


The Companies Act, 2013 its rules, notifications and clarifications issued there under are too fresh to have a sequel. However it appears that government under the garb of ease of doing business is keen to produce it.

(Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at 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

Author Bio

CS Divesh Goyal is Fellow Member of the Institute of Companies Secretaries and Practicing Company Secretary in Delhi and Steering Voice in the Corporate World. He is a competent professional having enrich post qualification experience of a decade with expertise in Corporate Law, FEMA, IBC, SEBI, View Full Profile

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  1. K.Balasubramanian says:

    Does it mean, as per the relaxation under Companies Amendment Act 2017, the provisions of section 197 relating to approval of Central Government are applicable/mandatory, only in the case of Public Limited companies which are making inadequate profit or incurring loss during the year in which the remuneration is being paid. Pl Clarify.


    Additional fees of Rs.100/- per day as per amendment bill, will be too high and small companies could not offer such huge additional fees, relaxation may be considered

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April 2024