AN OVERVIEW OF THE COMPANIES (AMENDMENT) ACT, 2017

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1 AN OVERVIEW OF THE COMPANIES (AMENDMENT) ACT, 2017

2 Information in the following slides is intended to provide only a general outline of the subjects covered. It should neither be regarded as comprehensive nor sufficient for making decisions, nor should it be used in place of professional advice. K Vijayaraghavan & Associates LLP accepts no responsibility for loss arising from any action taken or not taken by anyone using these slides.

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4 NAME RESERVATION In case of Incorporation, name reserved by the Registrar, CRC shall be valid for 20 days from the date of the approval instead of 60 days from the date of application, as previously provided. In case of change in name by an existing company, name reserved by the RoC shall be valid for 60 days from the date of approval.

5 CONVERSION OFA FIRM/ LLP INTO COMPANY Partnership firm, LLP etc. with 2 or more partners (previously 7) can convert into private company.

6 REGISTERED OFFICE OF THE COMPANY A company shall within 30 days (previously 15 days) of its incorporation have a registered office.

7 ISSUE OF SWEAT EQUITY SHARES Sweat Equity Shares can be issued at any time after registration of the company. Previously it can be issued after 1 year from the date of commencement of business.

8 EASE OF DOING BUSINESS

9 KMP AND EMPLOYEES Employee can also authenticate documents. Officers not more than one level below the directors who is in whole time employment, can be designated as KMP.

10 GENERAL MEETING Annual General Meeting (AGM) of unlisted company can be held anywhere in India. Wholly Owned Subsidiary (WOS) of foreign company can hold Extraordinary General Meeting (EGM) outside India.

11 MANAGERIAL REMUNERATION No Government approval for payment of remuneration in excess of 11%.

12 FUNDING

13 PRIVATE PLACEMENT Entire section is proposed to be substituted Return of allotment has to be filed within 15 days instead of 30 days Money received under the private placement shall not be utilized unless the return of allotment is filed with the ROC Private Placement offer letter shall not contain any right of renunciation

14 DEPOSIT An amount being not less than 20% of the amount of deposits, maturing during the following financial year be deposited on or before the 30 th day of April each year and kept in a separate bank account [i.e. deposit repayment reserve account]. Requirement of providing deposit insurance has been omitted. Companies which had defaulted in repayment of deposits, can also accept deposits after a period of 5 years from the date of making good the default.

15 Board of Directors

16 DIRECTORS Requirement related to resident director eased i.e. stay in India for a total period not less than 182 days during the financial year. Also for a newly incorporated company It applies proportionately at the end of the financial year in which it is incorporated. Before: Total period of not less than 182 Days in the previous calendar year with no such provision for newly incorporated companies. Government can provide any other number to be treated as DIN. Maximum number of directorship will not include dormant company. Requirement of filing form DIR-11 (filing of a copy of resignation to ROC by director itself) made optional.

17 DISQUALIFICATION OF DIRECTOR Provisions related to vacation of director eased i.e. a director incurs any of disqualifications under section 164(2) due to default of filing of financial statement or annual return or repayment of deposits or pay interest or redemption of debentures or payment of interest thereon or payment of dividend, Then he shall vacate office in all the companies other than the company which is in default. The act earlier was unclear if the disqualification applies to all the companies directorship, with the amendment it makes it clear that he shall remain the director only in one disqualified company. All other companies there will be a vacation and these companies can function actively with a active board.

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19 CORPORATE SOCIAL RESPONSIBILITY Eligibility for doing CSR to be determined based on preceding Financial Year instead of 3 preceding Financial Year. Where a company is not required to appoint an Independent Director, it shall have in its Corporate Social Responsibility, Committee, two or more directors.

20 Auditor

21 AUDITORS & THEIR LIABILITIES Annual ratification of appointment of auditors by members has been omitted. Criminal liability in case of fraud proposed to be limited to partner & will not include firm.

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23 ANNUAL RETURN Omit the requirement of MGT-9 i.e. extract of annual return to form part of the Board s Report. Instead, the copy of annual return shall be uploaded on the website of the company, if any, and its link shall be disclosed in the Board s report.

24 ANNUAL RETURN Abstract version of annual return form for OPC(One Person Company) & Small Company.

25 BOARD S REPORT Disclosures which have been provided in the financial statement shall not be required to be reproduced in the report again. Instead of exact text of policies, key feature of policies along with its web link shall be disclosed in Board report.

26 DISCLOSURE OF LISTED COMPANY Disclosure of promoters and top 10 shareholders with respect to 2% change in shareholding in a listed company has been omitted..

27 ADDITIONAL FEE Provision of higher additional fees in case of delay in filings i.e. document, fact or information required to be submitted under section 92 (Annual Return) or 137 (Copy of financial statement to be filed with registrar) may be submitted, after expiry of the period so provided in those sections. Where a company fails or commits any default to submit, file, register or record any document, fact or information before the expiry of the period specified, the company and the officers of the company who are in default, shall be liable for the payment of fee and additional fee and penalty or punishment.

28 Let s Talk For a deeper discussion on how this issue might effect your business, please contact Kannan (Ragu)nathan, Partner Mobile: raguk@sathguru.com Vikas Choudhary, Associate Manager Mobile: vikasc@sathguru.com Ketna Kanodia, Associate Manager Mobile: ketnak@sathguru.com K Vijayaraghavan & Associates LLP Chartered Accountants Plot No 54, Sagar Society, Road No 2, Banjara Hills, Hyderabad, Tel: +91 (0)