The amendments under the Companies (Amendment) Act, 2017, are broadly aimed at:
Changes in Important definitions of Companies Act, 2013
1. Section 2 (6) – Associate Company
In the Definition of Associate company ―”significant influence” means control of at least 20 % of total share capital, or of business decisions under an agreement.‘
Now, the expression “significant influence” means control of at least 20 % of TOTAL VOTING POWER, or control of or participation in business decisions under an agreement;
Why explanation required?
Total share capital includes both equity and preference share capital. While preference shareholders does not have any voting rights, its not logical to include them for the purpose of ascertaining associate company. So, now associate company will be decided based on total voting power in stead of total share capital.
2. Section 2 (46) – Holding Company:
Holding company”, in relation to one or more other companies, means a company of which such companies are subsidiary companies.
Now, After Amendment , an explanation was inserted that “For the purposes of this clause, the expression “company” includes any body corporate”.
Why explanation required?
The word “Company” in the definition refers to a company incorporated under the 2013 Act or any previous company law and does not refer to an entity incorporated outside India. Many foreign companies, LLPs and LLCs are holding interest in Indian company but due to the word “Company” in the definition of Holding Company, there is confusion amongst them whether they are holding company and consolidation of accounts required or not. So, Now any other entity like FC/LLP/LLC are included in the definition of holding company.
3. Section 2(51)
Under the definition of the term ―Key Managerial Personnel, the following has been included: ―such other officer not more than one level below the directors who is in whole time employment and designated as KMP by the Board.
4. Section 2 (85)
Small company means a company other than public company having paid-up share capital between 50 Lakhs to 10 Crore and turnover between 2 crore to 100 crore.
A new section 3A has been inserted which prescribes that if at any time the number of members of a company is reduced below the minimum prescribed and the company carries on business for more than six months while the number of members is so reduced, then every person who is a member of the company during that time, shall be severally liable for the payment of the whole debts of the company contracted during that time, and may be severally sued.
The period for reservation of name is substituted from 60 days from the date of the application to 20 days from the date of approval or such other period as may be prescribed.
With reference to incorporation of a company, Affidavit has been replaced by “self declaration” from the first subscribers to memorandum and first directors. This will ease the additional documentary burden and avoid delay in the incorporation process.
Section 12 (1)
The time period for giving notice of change of situation of registered office is increased from 15 days to 30 days.
With a view to facilitate ease of doing business and for reducing the burden of OPC and Small Company, the Central Government is empowered to prescribe an abridged form of Annual Return.
Now Indebtedness not required to be mentioned.
The requirement to attach an extract of Annual Return (MGT-9) with the Board‘s Report is omitted. (Due to duplication of information)
Mandatory to place the entire annual return on website and by providing its link in Board‘s Report.
Omitted which requires every listed company to file a return in form MGT-10 with the Registrar with respect to change in number of shares held by promoters and top ten shareholders of such company.
The unlisted company to hold its AGM anywhere in India if consented by all members in writing or in electronic mode obtained in advance.
Section 100 (1)
The wholly owned subsidiary of a company incorporated outside India has been allowed to hold its extra ordinary general meeting outside India. Such wholly owned subsidiary can hold EGM at any place in the world. So, now directors and officers of WOS need not to visit India for conducting EGM.
The Central Government is now empowered to recognise any other universally accepted identification number as an identification document similar to director identification number. Once this implemented, AADHAR and PAN will be substituted for DIN.
The requirement of deposit of Rs. 1 Lakh with respect to nomination of directors shall not be applicable in case of appointment of independent directors or directors nominated by nomination and remuneration committee.
The exemptions/modifications have already been notified for wholly owned Government companies, Section 8 companies and Nidhis.
Do you think CBDT should extend Tax Audit Report and relevant ITR Due Date? Please Comment, Vote, Retweet and Like.— Tax Guru (@taxguru_in) September 18, 2018