Key changes through Company Amendment Bill 2017

Key changes through Company Amendment Bill 2017

Hi Reader, in this article we read the key changes through company amendment Bill 2017 and section wise comparison with the exiting provisions of company act 2013. Company Amendment Bill had been passed by Lok Sabha on 27th July 2017 after that passed by Rajya Sabha on 19th December 2017. Company Amendment bill also received assent of president of India on the 3rd January 2018 and published in the “Official Gazette of India” on the same date.

The main aim of this bill is strengthening corporate governance standard, improving ease of doing business and providing strict action against defaulting companies.

Key Changes through Company Amendment Bill 2017 is as below: –

S.NoPre – AmendmentPost – Amendment
1.Section 3A – Members Liability in Certain cases
 New SectionSection 3A has been inserted, according to which if at any time number of members reduced from the minimum statutory limit and company carries on business for more than six months then members shall be liable for the payment of the whole debts of the company contracted during that time.
2.Section 4 – Memorandum         
 In case new company, name reservation is valid upto 60 days from the date of application.After amendment, Name reservation in case of new company shall be valid for 20 days from the date of approval.
3.Section 7 – Incorporation of Company
For Company registration affidavits will be required.After amendment, For incorporation of company declaration will be required instead of affidavits.
4.Section – 12 Registered office of the Company
A new company shall have registered office within 15 days of incorporationAfter amendment, a new company shall have registered office within 30 days of incorporation.
Notice of every changes of situation of the registered office shall be given to ROC within 15 days.After amendment, Notice of every changes of situation of the registered office shall be given to ROC within 30 days.
5.Section 21 – Authenticate of document on Company behalf
Only Director and Key management can authenticate company documents as authorized.After amendment, In addition to Directors & KMP, any employee and officer of the company can also authenticate company documents on behalf of the company.
6.Section 42 – Private Placement
Return of Allotment has to be filed within 15 days.Return of Allotment has to be filed within 30 days.
There is no restriction in respect of utilization of money received under the private placement.After amendment, Money received under the private placement shall be kept in a separate Bank account and shall not be utilized unless the return of allotment is filled with the ROC.
7.Section 53 – Issue of Share at Discount
Section 53 of the Companies Act, 2013 prohibited issuance of shares at a discount.The Amendment, companies are allow to issue shares at a discount to its creditors when its debt is converted into shares in pursuance of any statutory resolution plan such as resolution plan under the Code or debt restructuring scheme.
8.Section 54 – Issue of Sweat Equity Share
Sweat Equity Share can be issue only after one year from the date of commencement of business.After amendment, Sweat equity shares can be issued at any time after registration of company.
9.Section 73 – Deposit Repayment reserve Account
Currently, an amount being not less than 15% of the amount of deposits, maturing during the financial year and next financial year to be deposited on or before the 30th day of April.After Amendment, an amount being not less than 20% of the amount of deposits, maturing during the following financial year to be deposited on or before the 30th day of April each year and kept in a scheduled bank in a separate bank account to be called deposit repayment reserve account.
New Proviso.Companies which had defaulted in repayment of deposits can also accept deposits after a period of 5 years from the date of making the default good.
10.Section 92 – Annual Return
Filling of MGT 9 (Extract of annual return to form part of Board’s Report) is mandatory.Omit the requirement of MGT-9 instead of MGT 9 now copy of annual return shall be uploaded on the website of the company, if any and it’s link shall be disclosed in the board’s report.
There is time limit of filing annual return is 270 days on payment of additional fees.Time limit of 270 days for filing annual return with additional fees has been omitted. Now a company can file the annual return with ROC at any time on payment of prescribed additional Fee.
11.Section 96 – Annual General Meeting
Annual General Meeting to be held at registered office of the company or at some other place within the city, town or village in which the registered office of the company is situated.After amendment, Annual General Meeting of an unlisted company may be held at anyplace in India if consent is given by all the members in advance.
12.Section 100 – Extraordinary General Meeting
New ProvisionAfter amendment, Wholly owned subsidiary of a company incorporated outside of India is now allowed to hold EGM outside India.
13.Section 132 – Constitution of National Financial Reporting Authority
Minimum fee in respect of Professional Misconduct or other Misconduct is Ten Lakh Rupees.After Amendment, Minimum fee in respect of Professional Misconduct or other Misconduct is Five Lakh Rupees.
14.Section 135 – Corporate Social Responsibility
Eligibility for doing CSR activity to be determined on preceding three financial years.Now after amendment, eligibility for doing CSR to be determined based on preceding Financial year.
New ProvisionWhere a Company is not required to appoint an independent director, it shall have in its corporate Social Responsibility Committee of Two or More Directors.
15.Section 139 – Appointment of Auditors
Annual rectification of appointment of auditors by members.After amendment, Annual rectification of appointment of auditors by members is omitted;
16.Section 140 – Removal, Resignation of Auditors and Giving of Special Notice
Fine in case of failure to file resignation by Auditor in Form ADT-3 is Rupees fifty thousand Rupees.After amendment, fine in case of failure to file resignation reduce to fifty thousand rupees or the Auditor Remuneration whichever is less.
17.Section 149 – Company to Have Board of Directors
For determining the resident status of a director 182 days shall be calculated with reference to the Calendar year.After Amendment, for determining the resident status of a director 182 days shall be calculated with reference to the Financial year.
18.Section 153 – Application for allotment of DIN
For directorship only DIN is required.Central Government may recognize any other number to be treated as director identification number. Other documents may be Aadhar Card or Pan Card.
19.Section 164 – Disqualifications for appointment of Director
New Explanation  InsertedWhere a person is appointed as a director in a company which is in default of filling of financial statement or annual return or repayment of deposits or redemption of debentures or interest thereon then such director shall not incur the disqualification up to a period of six months from the date of his appointment.
20.Section 165 – Number of Directorship
NAMaximum number of directorship for any person will not include dormant company;
21.Section 167 – Vacation of Office of Director
New Proviso insertedWhere a director incurs disqualification under section 164(2) then the office of director shall become vacant in all other companies in which he is director.
22.Section 168 – Resignation of Director
Requirement of filling form DIR 11 (filling of a copy of resignation by director) is mandatory.Requirement of filling form DIR 11 (filling of a copy of resignation by director) is now optional.
23.Section 197 – Overall Maximum managerial remuneration
Central Government approval  required for payment of remuneration in excess of 11% of net profitsAfter amendment, Central Government approval not required for payment of remuneration in excess of 11% of net profits
24.Section 366 – Companies capable of being registered
Only Partnership or LLP with 7 or more members can be converted into a company.Partnership or LLP with 2 or more members can be converted into a company.
25.Section 403 – Fee for Filings etc
In case delay in filing documents, fact or information required to be submitted under section 92 (Annual Return) or 137 (copy of financial statement), after expiry of prescribed period, slab wise additional fee shall be paid.After amendment, In case delay in filing documents, fact or information required to be submitted under section 92 (Annual Return) or 137 (copy of financial statement), after expiry of prescribed period, a flat additional fee of Rs.100 per day shall be paid instead of slab wise additional fee.

 

For any query you can write at taxhouseindia@gmail.com. Before making any decisions do consult with your professional or tax advisor.

If you enjoyed this post, we will be very grateful if you’d help to share it by emailing it to a friend, or sharing it on twitter or facebook. Thank You!

Don’t forget to subscribe us for Tax Updates through mail.

 

Leave a Reply

Tax House India is Stephen Fry proof thanks to caching by WP Super Cache