The Companies (Amendment) Act, 2017

Transcription

1 The Companies (Amendment) Act, Strengthening Corporate Governance - Action against Defaulting Companies AND - Helps Improve Ease of Doing Business

2 JOURNEY The Companies (Amendment) Bill 2016, introduced in Lok Sabha on 16 th March, 2016 was referred to the Standing Committee on 12 th April, 2016 for examination and report thereon. B A The Standing Committee considered and adopted the report on 30 th November, The Companies (Amendment) Bill, 2016 was passed by the Lok Sabha on 27 th July, 2017 as Companies (Amendment) Bill, C D The Companies (Amendment) Bill, 2017 was passed by the Rajya Sabha on 19 th December, 2017.

3 MAJOR HIGHLIGHTS Stringent Penalties in case of non-filing of Financial Statements and Annual Return Making offence for contravention of provisions relating to Deposits as non-compoundable Simplification of Private Placement Process Replacing the requirement of approval of Central Government for Managerial Remuneration above prescribed limits by approval through Special Resolution Investing Company or the Venture of a Company will also be treated as a Related Party Allows companies to extend Loan to their Directors or Related Persons after passing a special resolution Providing for maintenance of Register of Significant Beneficial Owners MOA of a company could state that the company could engage in any lawful act or activity or business without giving any specific objects Aligning Disclosure requirements in the prospectus with SEBI regulations Introduction of Abridged form of Annual Return for One Person Company and small company

4 1 Directors Key Managerial Personnel Section 2(51) Any person, not more than one level below the Directors, who is in full time employment may also designated as Key Managerial Personnel by the Board of Directors of the Company as per Companies Act, 2013 (Earlier no such authority was given)) Resident Director Section 149 (3) Independent Director Section 149 (6) Every company to have at least 1 director who stays in India for a total period of atleast 180 days during the financial year (instead of Calender Year) In case of newly incorporated company, this requirement will apply proportionately at the end of the financial year. Following shall not disqualify any person to become Independent Director of the Company : Pecuniary Relationship w.r.t remuneration paid to such director OR having transaction < 10% of his total income. Relative is holding Security or Interest in company or its holding or its subsidiary or its associate company < Rs. 50 Lacs Face Value or 2% Paid-up Share Capital during the 2 immediately preceding FY s or during the current FY. Relative is indebted to the Company or its holding or its subsidiary or its associate company or their Promoters or Directors in excess of amount as may be prescribed during the 2 immediately preceding FY s or during the current FY. Relative has given a guarantee or provided any security in connection with the indebtness of any third person to the Company or its holding or its subsidiary or its associate company or their Promoters or Directors in excess of amount as may be prescribed during the 2 immediately preceding FY s or during the current FY. Relative has any other pecuniary transaction with the Company or its holding or its subsidiary or its associate company< 2% of its gross Turnover or Total Income.

5 1 Directors Director Identification Number Section 153 Security Deposit Section 160 Appointment of Director Section 161 Disqualifications for appointment of director Section 164 In addition to Director Identification Number (DIN), a director may hold any other number as may be prescribed by Central Government (CG may notify either PAN or Aadhar or some other legal identity proof as DIN) In Case of Appointment of an Independent Director or a Director nominated by Nomination and Remuneration Committee is not required to deposit Rs. 1 lac w.r.t. nomination of such Director (Earlier it was required for all the Directors of the Company) A person cannot appointed as an Alternate Director of the Company if he is holding Directorship in the same Company (Earlier no specific restriction was provided) Appointment of Director in case of Casual Vacancy shall be applicable to all the Companies (instead of only Public Companies) AND such appointment shall be subsequently approved by Members in the immediate next General Meeting (New provision) Director shall not be Disqualified u/s 164(2) for a period of 6 months from the date of his appointment (Earlier Director shall be disqualified immediately) Also, Disqualification arising due to conviction by court or order passed by court or tribunal or conviction related to section 188, shall continue to exist even if appeal or petition has been filed against the order of conviction or disqualification.

6 1 Directors Number of directorships Section 165 Vacation of office of director Section 167 Directorship in a dormant company shall not be included in the limit of directorships of 20 companies (Earlier no such exclusion was provided) A director who incurs any disqualifications under section 164(2) of Companies Act, 2013 shall have to vacate office in ALL companies except than the company which is in default (Earlier Director has to vacate office from the all the Companies including the Company which is in default) Office of Director shall not be vacated by the director: - for 30 days from the date of conviction or order of disqualification - Where appeal is made within 30 days against the order, until expiry of 7 days from the date on which such appeal is disposed of; - Where further appeal is made order within 7 days, until such appeal is finally disposed of. Resignation of Director Section 168 Filling of Form DIR - 11 by the director for his / her resignation has been made optional (Earlier filling of such Form was mandatory)

7 2 Auditors Ratification of Auditor Section 139 Ratification of Appointment of Auditor by members at every Annual General Meeting is not compulsory (Earlier ratification of appointment of Auditor was compulsory at every AGM) Resignation of Auditor Section 140 Penalty on Auditor for non compliance with Section 140 (2) shall be Rs. 50,000/- subject to maximum of Remuneration of the Auditor (instead of Rs. 50,000/- which may extend to Rs. 5,00,000/-) Eligibility of Auditor Section 141 Punishment for Contravention Section 143 Relative for the purpose of Section 141(3)(d) includes Spouse, parent, sibling or child of such person / spouse, financially dependent on such person or who consults such person in taking investment decisions (Earlier no such definition was defined for this clause) Penalty on Auditors for contravention of Section 139, 143, 144 & 145 shall be maximum of 4 times the remuneration of the Auditor (instead of Rs. 5,00,000/-) Penalty for willful default of Section 139, 143, 144 & 145 shall be Rs. 50,000/- subject to maximum of 8 times the remuneration of the Auditor (instead of Rs. 1 lacs subject to maximum of Rs. 25 Lacs)

8 3 Board & its Committees Resolutions and Agreements to be filed Section 117 Interim Dividend Section 123 Corporate Social Responsibility Section 135 Board Resolution w.r.t. Section 180(1)(a) and (c) need not to be filed with ROC in Form MGT-14. Minimum fine on Company shall be Rs. 1 Lac (instead of Rs. 5 Lacs) and on officer in default shall be Rs. 50,000/- (instead of Rs. 1 Lac) The Board of Directors can declare Interim Dividend during any Financial Year or during the period from closure of Financial Year till holding of the Annual General Meeting: (i) out of the surplus in the profit and loss account; or (ii) out of profits of the financial year; or (iii) out of profits generated in the financial year till the quarter preceding the date of declaration of the interim dividend (Earlier Act does not specifically allow to declare dividend during the period from closure of Financial Year till holding of the Annual General Meeting) The criteria w.r.t. Net worth / Turnover / Net Profit shall be considered only for immediately preceeding Financial Year (instead of preceeding 3 F/Y) The companies which are not required to appoint independent director shall have 2 or more directors in its CSR Committee (instead of 3 or more directors) Meeting of Board Section 173 Any director can participate through video conferencing or other audio visual means in a Board Meeting on restricted items also provided physical quorum is present in the particular Board Meeting (Earlier no such participation was allowed)

9 1. 3 Board DIRECTORS & its Committees Board Report Section 134 Chief Executive Officer of the Company shall sign the Financial Statements of the Company (earlier CEO was suppose to sign Financial Statements only if he is the Director of the Company) Extract of Annual Return, Form MGT-9, may be placed on the website of the Company and web address of the same shall be disclosed in the Board Report (instead of Extract of Annual Return to be included in Board Report) Disclosures included in Financial Statements shall not be repeated in Board report, only referral of the same shall be made (earlier no such relief was provided) Referral of Remuneration and CSR Policy placed on the website of the Company AND Salient features and any change therein is sufficient (instead of disclosure of Remuneration and CSR Policy in the Board Report) Format of Abridged Board Report may be prescribed for OPC and Small Companies (New Provision) Related Party and RPT s Section 2(76) & 188 Investing Company & Venturer of a Company shall also be considered as Related Party (New Provision) In case >= 90% members are relatives to Promoter / related Parties in the Company, then such member is allowed to vote on resolution to approve such Contract / arrangement (Earlier no such exemption was provided)

10 3 Board & its Committees Every Listed Public Company shall constitute an Audit Committee (instead of every Listed Company) Audit Committee Section 177 If Committee does not approve any related party transaction (except Section 188 transaction), it shall make its recommendation to the Board (New Provision) In case of any transaction < Rs. 1 crore is entered by Director or Officer without obtaining Committee approval AND is not ratified by Committee within 3 months from date of transaction, then such transaction is voidable at the option of the Committee AND the director concerned shall indemnify the Company against any loss incurred (New Provision) Transactions (except Section 188 transaction) between Holding Company and its WOS shall not be required to be approved by Audit Committee (New Provision) Nomination & Remuneration Committee Section 178 Every Listed Public Company shall constitute an Nomination & Remuneration Committee (instead of every Listed Company) Committee shall specify the manner for effective evaluation of performance of Board, Its committees and Directors Remuneration Policy shall be placed on the website of the company and the salient features of the policy & changes therein, if any, along with the web address of the policy shall be disclosed in the Board s report (instead of disclosure of such policy in Board Report)

11 3 Board & its Committees No minimum penalty for contravention of Section 184 (instead of minimum of Rs. 50,000/-) Disclosure of interest by directors Section 184 Loan to Directors Section 185 Exemption u/s 184 for contract b/w Company and Body Corporate, where any director of the Company / Body Corporate hold or holds <= 2% of the paid-up share capital (Earlier exemption was provided between two or more Companies only) Company cannot provide any loan / guarantee / security to (i) any director; (ii) any Director of the Holding Company; (iii) any partner or relative of such director; and (iv) any firm in which such director is a partner or relative (instead of Directors or any other person in whom director is interested, defined in explanation to Section 185(1)) Company can give loan / guarantee / security to any person in whom any of the Director of the Company is interested subject to following conditions: Special Resolution is passed (explanatory statement shall include full particulars and purpose of the said resolution) Loans are utilized only for its principal Business Activities. Person in whom any of the Director of the Company is interested means: Private Company of which such person in Director / Member; or Body Corporate of which > 25% of voting power is controlled by such person(s); or Body Corporate / Board / MD / Manager is accustomed to act in accordance with directions of the Board / any of the director(s) of the Lending Company

12 3 Board & its Committees Calculation of Profits Section 198 Remuneration Section 197 Credit shall be allowed for profit arising by way of premium on shares or debentures of the company which are issued or sold by an investment company (Earlier Credit was not allowed to Investment Company) The sums related to excess of expenditure over income, which had arisen in any year, is allowed to be deducted (earlier deduction was allowed for years after Commencement of this Act) Company may by Ordinary Resolution make payment of Remuneration > 11% of the net profits of the Company (instead of approval of Central Government) Company may by Special Resolution pay remuneration in excess of limits provided under section 197(1) either taken individually or jointly for MD, WTD or Manager or directors (other than those MD, WTD or Manager) (instead of Ordinary Resolution) Prior approval of Bank concerned / PFI concerned / NCD holder / Secured Creditor shall be required before passing Shareholder Resolution. Excess remuneration drawn by Director without approval of Shareholders shall be refunded within the period specified by the Company subject to maximum of 2 years (earlier no maximum period was defined) Company may waive the recovery of Excess remuneration if Special Resolution is passed within 2 years of such sum becomes refundable (instead of approval of Central Government) Auditor report shall contain Statement as to whether the remuneration paid by the Company is in accordance with the provisions of the Section.

13 4 General Meeting Place of keeping register, returns Section 94 Annual General Meeting Section 96 Advance Notice of Special Resolution is not required to be filed with ROC for keeping registers in any other place in India (Earlier advance notice needs to be filed with ROC) Central Government may prescribe certain particulars in the return, register or index referred in this section not be available for inspection or for taking extract or copies. Annual General Meeting of Unlisted Company may be held at any place in India if consent is received in advance by all the members of the Company (Earlier AGM of all the Companies shall be held in city / town / village where Registered Office of the Company situated) Extra - Ordinary General Meeting Section 100 Extra Ordinary General Meeting of the company, except for the wholly owned foreign subsidiary, may be held at any place within India (Earlier no such exemption to Wholly owned Foreign Subsidiary was not provided) Postal Ballot Section 110 Items to be transacted only by means of Postal Ballot, may be transacted at a General Meeting of the company which are required to provide remote e-voting facility to their members under section 108 of Companies Act, 2013 (Earlier no such relief was provided)

14 4 General Meeting Notice of meeting Section 101 The Company may hold its general meeting(s) at shorter notice provided consent is received from: Meeting Annual General Meeting Extra Ordinary General Meeting Criteria >= 95% of the members entitled to vote exercisable at the Meeting If company has share capital If company does not have share capital >= 95% of the paid up share capital having voting right >= 95 % of the total voting power exercisable at the Meeting (Earlier consent of >= 95% of the Members entitled to vote at such Meeting was required) No Restriction on Companies to invest w.r.t. no. of layers on investment Companies (Earlier investment upto two layers was allowed) Loan and Investment Section 186 Company can provide loan / guarantee / security in respect of a loan to employee of the Company without any restriction (Earlier no such relief was given) No requirement of Special Resolution in case loan / guarantee / security to its Wholly Owned Subsidiary Company or a Joint Venture Company OR acquisition is made by a Holding Company in its Wholly Owned Subsidiary Company even if transaction exceeds the limit specified (Earlier No such exemption was provided)

15 5 Financial Statements Financial Year Section 2(41) Associate company of a company incorporated outside India can also apply to the Tribunal for a different financial year (Earlier only Holding and Subsidiary Company was permitted to apply to Tribunal) Net Worth Section 2(57) Debit or Credit Balance of Profit and Loss Account shall be considered while calculating Net Worth of the Company (Earlier no such provision was there) Turnover Section 2(91) Aggregate value of the Gross Amount of Revenue recognised in the profit and loss account shall be considered as Turnover (instead of value of the realisation of amount made) Financial Statements Section 129 Financial Statements for Joint Ventures shall not be Consolidated with the Financial Statements of the Company (Earlier Consolidation of Financial Statements of Joint Venture also needs be done) Salient Features of Associate Company and Joint Venture in Form AOC 1 need not be disclosed (Earlier Salient Features of Associate Company and Joint Venture need to be disclosed)

16 5 Financial Statements Re - opening of Accounts Section 130 Tribunal shall give notice to concerned person w.r.t. re-opening of accounts and shall also take into consideration the representation made by such person (Earlier no such authority to concerned person was given) The order for re opening of Accounts can be made only up to 8 FYs preceding the current FY unless a specific direction from the Central Government is made in this regard (earlier accounts can be re opened for any Financial Year by person authorised under this Section) Copies of Financial Statement Section 136 Financial Statements of the Company may be sent to concerned person(s) in less than 21 days from the date of the Meeting provided consent of >= 95% of the Members entitled to vote is received in this respect (Earlier Financial Statements are to be sent atleast 21 days from the date of Meeting) Audited / Unaudited Financial Statements of Foreign Subsidiary, as the case may be, shall also be placed on the Website of the Company in English Language (Earlier no such specific provision for Foreign Subsidiary was provided under the Act) Filing of Financial Statements Section 137 In case, Foreign Subsidiary is not required to get its Financial Statements audited under the law of the Country in which it is incorporated, Unaudited Financial Statements, in English Language, of such Foreign subsidiary along with a declaration to this effect, shall be filed by the Holding Company (Earlier no such exemption to Foreign Subsidiary was allowed)

17 6 Deposits Acceptance of Deposits Section 73 20% of the amount of deposits maturing during the Financial Year shall be deposited in a separate Bank Account as Deposit Repayment Reserve Account on or before 30 th April each year (Instead of deposit of 15% of deposits maturing during the Financial Year and the Financial year following next) No requirement of Deposit Insurance. Company can take deposits after 5 years of making the default good (Earlier no such relief was provided) Repayment of deposits accepted before commencement of this Act Section 74 Repayment of Deposits taken by the Company before 1 st April, 2014 can be made within 3 years OR on or before expiry of period for which such deposit was accepted, Whichever is earlier (Earlier Repayment was to be done with 1 year or the due date for such payment) Renewal of such deposits is also allowed (Earlier no such renewal was specifically allowed) Punishment for Contravention Section 76A Minimum penalty, in case Company fails to comply with Section 73 / 76, shall be Rs. 1 Crore OR twice the amount of deposits accepted, whichever is lower (Earlier minimum penalty for such contravention was Rs. 1 Crore)

18 1. 7 DIRECTORS Charges Duty to register charges Section 77 Central Government in consultation with RBI may notify certain Charges which are exempted from provisions of this Chapter. Application for registration of charges Section 78 Satisfaction of Charges Section 82 The person in whose favour the Charge is created may apply to the Registrar for registration of such charge after the expiry of 30 days from the date of Agreement (Earlier clarity w.r.t. time within which such person can file was not provided) Intimation to ROC for Satisfaction of Charges, Form CHG-4, may be filed with ROC after the period of 30 days from the date of Satisfaction upto 300 days of such Satisfaction with such additional fees as may be levied (Earlier Company needs to condone such delay)

19 8 Shares Matters to be stated in prospectus Section 26 Civil Liability for Mis - Statements in Prospectus Section 35 Prospectus shall state such information and set out such reports on Financial Information as may be specified by SEBI (Earlier Section 26 extensively contains the details which are to be included in the Prospectus) Exemption to any person(s) from civil liability under this Section, if such person(s) has relied on a misleading statement made by an expert and he had reasonable ground to believe that the person making the statement was competent to make it and that the said person had given the consent required and had not withdrawn that consent before delivery of prospectus (Earlier no such relief was provided) Issue of Shares at Discount Section 53 Further issue of share capital Section 62 Company may issue Shares at discount to its Creditors pursuant to conversion of its Debt into Equity in pursuance of any Statutory Resolution Plan or Debt Restructuring Scheme in accordance with guidelines or regulations of RBI (Earlier no such action was allowed) In case of further issue of Shares u/s 62(1)(c), provisions of Chapter III of the Act shall also be complied with (Earlier no such clarity was provided in the Act) Offer Letter w.r.t. Right Issue may be dispatched through courier or any other mode having proof of delivery (Earlier no such mode was allowed)

20 1. 8 DIRECTORS Shares Board of Directors of the Company shall identify select group of persons ( Identified Person ) to whom private placement is proposed (New provision) Private Placement Section 42 Name and Address of the Identified persons shall be recorded by the Company (New Provision) New Format Private Placement Offer cum application may be issued by the Government (Earlier separate Form in PAS-4 and PAS-5 was there) Private Placement Offer and application do not carry right of renunciation (Earlier no such restriction was imposed) Subscription money can only be paid by the person to whom application is issued by the Company (Earlier no such specific requirement was there) Return of Allotment, PAS-3, shall be filed within 15 days from the date of allotment (Instead of 30 days) Company cannot utilized the monies until Return of Allotment (Form PAS-3) has been filed with ROC (Earlier no such restriction was there) Company may make more than one issue at any time if consolidated identified persons do not exceed 200 (Earlier only one issue at a time was allowed) If Company defaults in filling Return of Allotment, PAS-3, (i.e. after 15 days) Company, Promoters and Directors shall be liable for penalty of Rs. 1,000 per day subject to maximum of Rs. 25 Lacs (New Provision) If Company contravene any provision of Section 42 Company, Promoters and Directors shall be liable to penalty of amount raised subject to maximum of Rs. 2 Crores (Instead of Minimum penalty of Rs. 2 Crores)

21 1. 8 DIRECTORS Shares Declaration in respect of Beneficial Interest Section 89 Register of Significant Beneficial Owners Section 90 Beneficial Interest in a Share includes interest, directly or indirectly, through any contract, arrangement or otherwise, the right or entitlement of a person alone or together with any other person to (i) exercise or cause to be exercised any or all of the rights attached to such share; or (ii) receive or participate in any dividend or other distribution in respect of such share (Earlier no such definition of Beneficial Interest was defined) Every individual, alone or together, including a trust and persons resident outside India, holds >= 25% in shares / right to exercise / actual exercising of significant influence / control as defined in section 2(27), over the company shall make a declaration to the company. Maintain Register of the interest declared by individuals as aforesaid and such register shall be open to inspection of members on payment of prescribed fees. File a return of Significant Beneficial Owners of the company and changes therein with the Registrar. Company shall give notice to any person whom the company knows / has reasonable cause to believe to be a significant beneficial owner of the company and such person shall provide information within 30 days of receipt of notice. If the person fails to provide information / information is not satisfactory, Company shall apply to Tribunal within 15 days of the expiry of period specified in the Notice. Tribunal may within 60 days of application make order restricting the rights attached with the Shares If person fails to make declaration, fine > Rs. 1 Lac upto Rs. 50 Lacs. If Company fails to maintain register / file return, Company and Officer in default with fine > Rs. 10 Lacs upto Rs. 50 Lacs. If Continuing default, further fine of Rs. 1,000 per day.

22 9 Punishment Factors for determining level of Punishment Section 446A Lesser Penalties for OPC or Small Companies Section 446B The Court / Special Court while deciding the amount of fine or imprisonment shall have regard to (i) size of the company; (ii) Nature of business carried on by the company; (iii) Injury to public interest; (iv) Nature of the default; and (v) Repetition of the default (New Provision inserted) In case OPC or Small Company fails to comply with the provisions of section 92(5) or section 117(2)(c) or section 137(3), such company and officer in default shall be punishable with fine or imprisonment <= 1/2 of the fine or imprisonment of the minimum or maximum fine or imprisonment or specified in such sections (New Provision inserted) Any person who is found to be guilty of Fraud in which:- Punishment for Fraud Section 447 Amount of Fraud >= Rs. 10 lacs or 1% of turnover, whichever is lower Amount of Fraud < Rs. 10 lacs or 1% of turnover, whichever is lower AND does not involve Public Interest Imprisonment: Min. 6 months - Max 10 years AND Fine: Min: amount involved in the fraud - Max: 3 times the amount involved in the fraud Imprisonment: Max 5 years OR Fine: Max: Rs. 20 Lacs OR Both (Earlier no such relief was provided for lesser amount of fraud involved)

23 9 Punishment Additional Fees for Filling E-Forms has been revised as: Fees for Filings Section 403 Filling of Form under Section 89, 92, 117, 121, 137 and 157 Other Sections Period of Filling Within 270 days from the expiry of the period so provided in these Sections Additional Fees Normal Additional Fees upto 270 days After expiry of 270 days Higher Additional Fees after expiry of such period Within the period in the relevant Section Higher Additional Fees after expiry of such period In case, where there is default on two or more occasions in filing under Section 89, 92, 117, 121, 137 or 157, it may, without prejudice to any other legal action or liability, be submitted on payment of minimum twice the additional fee as provided above or such higher additional fees as may be prescribed. Note: Section 89: Declaration in respect of Beneficial Interest (Form MGT-6) Section 92: Annual Return (Form MGT-7) Section 117: Resolutions and Agreements to be filed (Form MGT-14) Section 121: Report on Annual General Meeting (Form MGT-15) Section 137: Copy of Financial Statement to be filed (Form AOC-4) Section 157: Company to inform DIN to Registrar (Form DIR-3B & 3C)

24 10 Miscellaneous In relation to Associate Company, Significant Influence means 20% of voting right or control (instead of 20% of total Share Capital) Associate Company Section 2(6) Joint Venture w.r.t. Associate Company means a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement (New Provision) Holding Company Section 2(46) Body Corporate can also be considered as Holding Company (Earlier only Company as per Act shall be considered as Holding Company) Interested Director Section 2(49) Small Company Section 2(85) Sub Section related to Interested Director has been omitted. The limit for determining small company has been increased as follows : The paid-up share capital shall be 10 crores (instead of 5 crores); The turnover shall be 100 Crores (instead of 20 crores). Further, clarity has been provided that Turnover shall be calculated as per Profit and Loss Account for the Immediately preceding Financial Year.

25 10 Miscellaneous Subsidiary Company Section 2(87) Control of more than one - half of the Total Voting Power (instead of Total Share Capital) shall be considered for determining Holding Subsidiary relationship. Restriction on number of layers of subsidiaries for all class of Companies has been removed. Members Severally Liable Section 3A Memorandum of Association Section 4 Registered Office Section 12 In case, members of the Company are reduced below min requirement AND Company carries its Business for > 6 Months, every member who is cognizant of both the facts shall be severally liable for the payment of whole debts contracted during that period (New Provision) Name shall be reserved for a period of 20 days from date of the approval (instead of 60 days from date of application). Objects of a company could state that the company could engage in any lawful act or activity or business without giving any specific objects. Company may adopt model Memorandum of Association applicable to such Company. New Incorporated Company shall have its registered office within 30 days (instead of 15 days) from the date of incorporation. Notice of every change of the situation of registered office of the company (Form INC-22) to be filed with ROC within 30 days (instead of 15 days) from the date of such change.

26 10 Miscellaneous Authentication of Documents Section 21 Board may authorise any employee of the Company to authenticate any document or proceedings or Contracts made by or on behalf of the Company (Earlier such power was not given to Employees of the Company) Issue of Sweat Equity Shares Section 54 Company can issue Sweat Equity Shares even if 1 year has not completed since commencement of Business of the Company (Earlier atleast 1 year shall be elapsed since the date on which the Company had commenced Business) Return to be filed in case Promoters stake changes Section 93 Inspector s Report Section 223 Return w.r.t. Change in Number of Shared held by Promoters and Top 10 Shareholders, Form MGT-10, not required to be filed with ROC (Earlier such return needs to be filled within 15 days of such change) Inspector s Report under Chapter XIV may be obtained by Member, Creditor or any other person whose interest are likely to be affected (Earlier such report can be obtained by any person)

27 10 Miscellaneous Valuation by Registered Valuer Section 247 The valuer appointed shall not undertake Valuation of Assets if he is directly / indirectly interested during a period of 3 years prior to appointment as valuer OR 3 years after valuation of assets was conducted by him (Earlier interest during or after the valuation of Assets was considered) Companies capable of being registered Section 336 Partnership Firms / LLP / Societies etc. may be registered as Private Company under this Act with 2 or more members (Earlier atleast 7 members was required for registration) Applicability of Provision on Foreign Company Section 384 Nidhi Company Section 406 Section 135 w.r.t. Corporate Social Responsibility shall also apply to foreign Company with such exceptions as rules may specify (New Provision) In addition to Nidhi Company, Mutual Benefit Society can also be registered under Chapter XXVI of the Act. Central Government shall specify that any provision of the Act is not applicable / applicable with such exceptions, on Companies registered under this Section.

28 Our Insight The much-awaited Companies (Amendment) Bill, 2017 finally saw the light of the day on January 3, 2018, when it received assent by the President. The Moving away from the phrase of the License Raj to the spirit of Ease of doing business, the major changes introduced by the Companies (Amendment) Act, 2013 are aimed at : Addressing difficulties in implementation owing to stringent compliance requirements ; Facilitating ease of doing business in order to promote growth with employment; Harmonization with accounting standards, the Securities and Exchange Board of India Act, 1992 and the regulations made thereunder, and the Reserve Bank of India Act, 1934 and the regulations made thereunder; Rectifying omissions and inconsistencies/ambiguities in the Act; Simplifying compliance requirements for the Companies; Provide for stringent penalties to punish the defaulting Companies. The reforms are indeed a helping aid to improve India s Industrial productivity and job creation, besides boosting the country s investment environment through simplified and clear laws being implemented uniformly.

29 Landline: (022) Mobile: Fax: (022) Corporate Office : Mumbai , Keshava Premises, Bandra Kurla Complex, Bandra (East), Mumbai Branch Offices at: Ahmedabad I Surat Let s Take It Forward. Progress with Values Associate Offices at: Chandigarh I Jaipur I Jodhpur I Nagpur Website: mahavir.lunawat@pantomathgroup.com abhinav.agarwal@pantomathgroup.com Online Initiatives: Disclaimer All data and information is provided for informational purposes only and is not intended for any factual use. It should not be considered as binding / statutory provisions. Neither Pantomath Capital Advisors nor any of its group company, directors, or employs shall be liable for any of the data or content provided for any actions taken in reliance thereon.