Companies Amendment Act 2017 : BRIEF SUMMARY
The Companies Amendment Act 2017, introduced in Lok Sabha on 16 March, 2016 as The Companies (Amendment) Bill, 2016 was referred to the Standing Committee on Finance on 12 April, 2016. The Committee after hearing the views of the representatives of the Chambers of Commerce and Industry as well as professional bodies adopted its report on 30th November, 2016. The Government after considering the suggestions of the Committee and also the experience gained by it, gave notice of amendments as approved by the Cabinet to the Lok Sabha. The Companies (Amendment) Bill, 2017 passed by Lok Sabha on July 27, 2017, received the assent of Rajya Sabha on December 19, 2017.
The major amendments proposed include simplification of the private placement process, rationalization of provisions related to loan to directors, omission of provisions relating to forward dealing and insider trading, doing away with the requirement of approval of the Central Government for managerial remuneration above prescribed limits, aligning disclosure requirements in the prospectus with the regulations to be made by SEBI, providing for maintenance of register of significant beneficial owners and filing of returns in this regard to the ROC and removal of requirement for annual ratification of appointment or continuance of auditor.
The major official amendments subsequently introduced include continuing with the provisions relating to layers of subsidiaries, continuing with the earlier provisions with respect of memorandum, making offence for contravention of provisions relating to deposits as non-compoundable, requiring attaching of financial statement of associate companies, stringent additional fees of Rs 100 per day in case of delay in filing of annual return and financial statement etc.
This Article aims to provide an overview of the section wise amendments proposed in the Companies Act, 2013.
Companies Amendment Act 2017 : Key Highlights |
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| 1. | Start-Ups | · For company registration, instead of affidavits, declarations will be required;
· In case of incorporation, name reserved by the Registrar of Companies (“ROC”) shall be valid for 20 days from date of the approval instead of 60 days from the date of application, as currently provided. · Sweat Equity Shares can be issued at any time. Currently it can be issued after one year from commencement of business; · Partnership or LLP with 2 members (currently 7) can convert into a company |
| 2. | Ease of doing business | · In addition to Directors & Key Managerial Personnel, any employee can also authenticate documents;
· Officers not more than one level below the directors who are in whole time employment, can be designated as KMP; · Annual General meeting of unlisted company can be held anywhere in India; · Wholly Owned Subsidiary (WOS) of foreign company can hold EGM outside India; · No Central Government approval for payment of remuneration in excess of 11% of net profits. |
| 3. | Funding | · 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; · An amount being not less than 20% of the amount of deposits, maturing during the following financial year 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. Currently at least 15% of such amount is required to be deposited and that is also of amount of deposits maturing during a financial year and the financial year next following; · Requirement of providing deposit insurance is proposed to be 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 |
| 4. | Directors | · Requirement related to resident director eased i.e. “stay in India for a total period of not less than 182 days during the financial year”. Currently it is calculated in reference to previous calendar year;
· Central Government can provide any other number to be treated as DIN; · Maximum number of directorship for any person will not include dormant company; · Requirement of filing form DIR-11 (filing of a copy of resignation to ROC by director itself) made optional; · Where a director incurs any of disqualifications under section 164 (2) due to default of filing of financial statements 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. |
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Companies Amendment Act 2017 : Key Highlights |
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| 5. | CSR | · Eligibility for doing CSR to be determined based on preceding “Financial Year” instead of “three preceding Financial Years”;
· Where a company is not required to appoint an independent director, it shall have in its Corporate Social Responsibility Committee, two or more directors. |
| 6. | Auditors | · Annual rectification of appointment of auditors by members is proposed to be omitted;
· Criminal liability in case of fraud proposed to be limited to partner(s) will not include firm |
| 7. | Disclosures | · Abstract version of annual return form for OPC & Small Company will be prescribed;
· It is proposed to omit the requirement of MGT-9 i.e. extract of annual return, which forms 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; · Disclosures which have been provided in the financial statement shall not be required to be reproduced in the Board report again; · Where key policies related to remuneration etc., are uploaded on the website, if any of a company, then instead of exact text of such policies, key feature of such policies along with its web link shall be disclosed in Board report; · Disclosure by promoters and top ten shareholders with respect to 2% change in shareholding in a listed company is proposed to be omitted. |
| 8. | Additional fee, penalty and compounding | · In case of delay in filing document, fact or information required to be submitted under section 92 (Annual Return) or 137 (Copy of financial statement to be filed with registrar), after expiry of the prescribed period then instead of slab wise additional fees, a flat additional fee as may be prescribed which shall not be less than Rs. 100 per day is required to be paid. Different amounts can be prescribed for different class of companies;
· 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 in the relevant section, the company and the officers of the company who are in default, shall, without prejudice to the liability for the payment of fee and additional fee, be liable for the penalty or punishment provided under this Act for such failure or default; · Tribunal can now also compound offences those punishable with fine or imprisonment. Currently, such offences can be compounded only by Special Court. |
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Companies Amendment Act 2017 : Section Wise Amendments |
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| S. No. | SECTION | AMENDMENT |
| 1 | Section 2(6)- Definition of
‘associate company’ |
· Change in explanation of the term ‘significant influence’ under the
definition of Associate Company has been proposed.
Significant influence is proposed to mean control of atleast 20% of the voting power or control or participation in business decision under an agreement.
Currently the Act provides for control of at least 20% total share capital.
· Further the term ‘Joint Venture’ has also been defined to mean a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. |
| 2 | Section 2(28)- Definition of
‘cost accountant’ |
Change in definition of ‘cost accountant’ is proposed.
“Cost Accountant” means a person who is a member of the Institute of Cost and Works Accountants of India and who holds a valid certificate of practice. |
| 3 | Section 2(30)- Definition of
‘Debenture’ |
Under the definition of the term “debenture”, it is proposed to exclude instruments referred to in Chapter III-D of the Reserve Bank of India Act 1934 and such other instruments prescribed by the Central Government in consultation with the RBI. |
| 4 | Section 2(41)- Definition of
‘Financial year’ |
It is proposed that associate company of a company incorporated outside India can also apply to the Tribunal for a different financial year. |
| 5 | Section 2(46)- Definition of
‘Holding Company’ |
It is proposed that for the purpose of definition of the term ‘holding
company’, the expression “company” will include any body corporate. |
| 6 | Section 2(49)- Definition of
‘Interested director’ |
It is proposed to delete the definition of the term ‘Interested director’. |
| 7 | Section 2(51)- Definition of
‘Key Managerial Personnel’ |
Under the definition of the term “Key Managerial Personnel”, such other officer not more than one level below the directors who is in whole time employment and designated as KMP by the Board, is proposed to be included. |
| 8 | Section 2(57)- Definition of
‘net worth’ |
It is proposed to include the debit or credit balance of profit and loss account in the calculation of net worth. |
| 9 | Section 2(71)- Definition of
‘public company’ |
Including the word ‘and’ in the definition for more clarity is proposed to clarify that a public company must satisfy both the conditions mentioned in the sub-section. |
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Companies Amendment Act 2017 : Section Wise Amendments |
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| S. No. | SECTION | AMENDMENT |
| 10 | Section 2(72)- Definition of
‘public financial institution’ |
It is proposed that the Central Government may notify other institution which has been established or constituted by or under any Central or State Act other than the Companies Act, 2013 or previous Company Law after consultation with the RBI as “public financial institution”. |
| 11 | Section 2(76)- Definition of
‘Related Party’ |
Following two amendments are proposed:
· Instead of only a company, anybody corporate which is holding, subsidiary or an associate company of such company or a subsidiary of a holding company to which it is also a subsidiary or an investing company or venture of the Company, shall be considered as a related party.
· “An investing company or the venturer of the company” will mean a body corporate whose investment in the company would result in the company becoming an associate company of the body corporate. |
| 12 | Section 2(85)- Definition of
‘small company’ |
· It is proposed to increase the maximum paid-up share capital amount which can be prescribed for the purpose of determining a company as a small company from five crore rupees to ten crore rupees and prescribed turnover amount from twenty crore rupees to one hundred crore rupees.
· Further turnover should be as per profit and loss account for the immediately preceding financial year and not as per its last financial year. |
| 13 | Section 2(87)- Definition of
‘subsidiary company’ |
It is proposed that a company will be treated as subsidiary in case the holding company exercises or controls more than one-half of the total voting power either at its own or together with one or more of its subsidiary companies. Currently the Act provides for exercise or control of more than half of the total share capital. |
| 14 | Section 2(91)- Definition of
‘Turnover’ |
It is proposed to change the definition of turnover to mean the gross amount of revenue recognised in the profit and loss account from the sale, supply, or distribution of goods or on account of services rendered, or both, by a company during a financial year. |
| 15 | Section 3A- Members severally liable certain cases | It is proposed to insert a new section regarding liability of members in case number of members is reduced from statutory minimum, i.e. seven in the case of public company or two in case of a private company.
This section was there in the Companies Act 1956 but was missing from the Companies Act 2013. |
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Companies Amendment Act 2017 : Section Wise Amendments |
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| S. No. | SECTION | AMENDMENT |
| 16 | Section 4- Memorandum | · It is proposed that in case of incorporation, name reserved by the RoC shall be valid for 20 days from date of the approval or such other period as may be prescribed instead of 60 days from the date of application, as currently 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. |
| 17 | Section 7- Incorporation of company | At the time of incorporation of the company, declaration by each
subscriber will be required to be attached instead of an affidavit, as currently provided. |
| 18 | Section 12- Registered office of company | · It is proposed that the company shall within 30 of its incorporation have registered office instead of current requirement to have registered office on and from the fifteenth day of its incorporation.
· It is proposed that notice of every change of the situation of the registered office, shall be given to the Registrar within 30 days instead of 15 days, as currently provided. |
| 19 | Section 21- Authentication of documents, proceedings and contracts | Apart from KMP and any officer of the company, it is proposed that an employee can also be authorized to authenticate documents on behalf of the company. |
| 20 | Section 26- Matters to be stated in Prospectus | Instead of detailed list of contents of the Prospectus, it is proposed that the prospectus shall state such information and set out such reports on financial information as may be specified by SEBI in consultation with the Central Government.
Till the time SEBI specifies the information and reports on financial information, the regulations made by it under the SEBI Act, 1992, in respect of such financial information or reports on financial information shall apply. |
| 21 | Section 35- Civil liability for Mis-statements in prospectus | It is proposed to amend section 35 of the Act to relieve the Director, promoter etc. from any civil liability if such person(s) has relied on a misleading statement made by an expert and he had reasonable ground to believe and did up to the time of the issue of the prospectus 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 it. |
| 22 | Section 42- Private placement | Though the entire section is proposed to be substituted but major changes proposed are: –
· Return of allotment has to be filed within 15 days instead of 30 days. |
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Companies Amendment Act 2017 : Section Wise Amendments |
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| S. No. | SECTION | AMENDMENT |
| · 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. |
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| 23 | Section 47- Voting rights | Since a member who is a related party cannot vote on a resolution to be passed under section 188 of the Companies Act 2013, it is proposed to clarify that the right of every member holding equity shares to vote on all resolutions placed before the meeting would be subject to sub-section (1) of section 188of the Act. |
| 24 | Section 53- Prohibition on issue of shares at discount | · It is proposed to replace the words “discounted price” with the word
“discount”.
· Further it is proposed to allow companies to 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 scheme in accordance with any guidelines or directions or regulations specified by Reserve Bank of India under the Banking Regulation Act, 1949 or the Reserve Bank of India Act 1934. |
| 25 | Section 54- Issue of Sweat Equity Shares | It is proposed to allow issue of sweat equity shares at any time after registration of the company. Currently such shares can be issued only after the expiry of one year from the date of commencement of business. |
| 26 | Section 62- Further issue of share capital | · It is proposed to bring the requirement of compliance with section 42 in respect of the preferential offer in the section itself. Currently the applicability of section 42 is provided by the rules.
· It is proposed that right issue offer letter can be sent through courier also. |
| 27 | Section 73- Prohibition on acceptance of deposits from public | · It is proposed that an amount being not less than 20% of the amount of deposits, maturing during the following financial year 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.
Currently atleast 15% of such amount is required to be deposited and that is also of amount of deposits maturing during a financial year and the financial year next following.
· Further it is proposed to omit the requirement of providing deposit insurance. |
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Companies Amendment Act 2017 : Section Wise Amendments |
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| S. No. | SECTION | AMENDMENT |
| · It is also proposed that 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. |
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| 28 | Section 74- Repayment of Deposits, etc., accepted before commencement of this act | Where any amount of deposit or part thereof or interest thereof remains unpaid on the commencement of the Companies Act 2013, it is proposed that such amount shall be repaid within 3 years from the date of commencement or before the expiry of the period for which the deposit was accepted, whichever is earlier. Currently the amount was to be repaid within 1 year or before the expiry of the period for which the deposit was accepted, whichever is earlier. |
| 29 | Section 76A- Punishment for Contravention of Section 73 or Section 76 | · It is proposed to change the penalty from a fine not less than rupees one crore to rupees one crore or twice the amount of deposits accepted by the company, whichever is lower.
· Further it is proposed that an officer of the company who is in default shall be punishable with imprisonment and fine. Earlier it was imprisonment or fine. In the process, the offence has been made non-compoundable. |
| 30 | Section 77- Duty to register charges, etc. | It is proposed that this section shall not apply to certain charges, as may be prescribed by the Central Government in consultation with the Reserve Bank of India. |
| 31 | Section 78- Application for Registration of charge | It is proposed that the person in whose favour the charge has been created can file the charge on the expiry of 30days from the creation of charge where a company fails to file so. Currently the charge holder can register the charge only in case the company fails to do so within the period specified under section 77, which is 300 days. |
| 32 | Section 82- Company to report satisfaction of charge | Timeline for filing of satisfaction of charge is proposed to be increased to 300 days on payment of additional fee. |
| 33 | Section 89- Declaration in respect of beneficial interest in any share | · As per the current law, return of beneficial interest declaration can also be filed on payment of additional fee within 270 days from the date by which it should have been filed. It is proposed to do away with the time limit of 270 days and the return can be filed at any time on payment of prescribed additional fee.
· For the purpose of declaration of beneficial interest, it is proposed that beneficial interest in a share includes, 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 |
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Companies Amendment Act 2017 : Section Wise Amendments |
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| S. No. | SECTION | AMENDMENT |
| (ii) receive or participate in any dividend or other distribution in respect of such share. | ||
| 34 | Companies Amendment Act 2017
Section 90- Investigation of beneficial ownership of shares in certain cases |
The provisions are proposed to be revamped. Key changes proposed are as under:
· Every individual, who acting alone or together, or through one or more persons or trust, including a trust and persons resident outside India, holds beneficial interests, of not less than twenty-five per cent. or such other percentage as may be prescribed, in shares of a company or the right to exercise, or the actual exercising of significant influence or control as defined in clause (27) of section 2, over the company shall make a declaration to the company. The Central Government may however, prescribe class(es) of persons who shall not be required to make declaration.
· Every company shall maintain a register of the interest declared by individuals as aforesaid and such register shall be open to inspection of members.
· Every company shall file a return of significant beneficial owners of the company and changes therein with the Registrar.
· Obligation is cast on the company to give notice, in the prescribed manner, to any person whom the company knows or has reasonable cause to believe to be a significant beneficial owner of the company who is not registered as a significant beneficial owner with the company as required under this section.
· In case information asked is not provided, the Company shall apply to the Tribunal for an order directing that the shares in question be subject to restrictions with regard to transfer of interest, suspension of all rights attached to the shares.
· Stringent penalties have been provided for default of this section including liability for fraud u/s 447. |
| 35 | Companies Amendment Act 2017
Section 92- Annual Return |
· It is proposed to 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. |
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Companies Amendment Act 2017 : Section Wise Amendments |
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| S. No. | SECTION | AMENDMENT |
| · The Central Government may prescribe abridged form of annual return for One Person Company (‘OPC’), Small Company and such other class or classes of companies as may be prescribed.
· It is also proposed to omit the requirement related to disclosing indebtedness and details with respect to name, address, country of incorporation etc. of FII in the annual return of the company.
· Time limit of 270 days within which annual return could be filed on payment of additional fee has been done away with. It is proposed that a company can file the annual return with ROC at any time on payment of prescribed additional fee. |
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| 36 | Companies Amendment Act 2017
Section 93- Return to be filed with Registrar in case Promoters’ stake changes |
It is proposed to omit section 93 relating to return to be filed with respect
to changes in promoters’ and top ten shareholders’ stake. |
| 37 | Companies Amendment Act 2017
Section 94- Place of keeping and inspection of registers, returns, etc. |
· It is proposed to omit the requirement of filing of special resolution in advance with the Registrar of Companies for keeping of the registers and returns at a place other than the registered office of the company.
· Further it is proposed that certain prescribed particulars in the return, register or index referred to in this section shall not be available for inspection or for taking extracts or copies. |
| 38 | Companies Amendment Act 2017
Section 96- Annual General Meeting |
It is proposed that Annual General Meeting (‘AGM’) of unlisted company may be held at anyplace in India if consent is given is writing or by electronic mode by all the members in advance. |
| 39 | Companies Amendment Act 2017
Section 100- Calling of Extraordinary General Meeting |
It is proposed that Extraordinary General Meeting (‘EGM’) of wholly owned subsidiary of a company incorporated outside India can be held outside India. A company other than wholly owned subsidiary of a company incorporated outside India must hold EGM at a place within India. |
| 40 | Companies Amendment Act 2017
Section 101- Notice of meeting |
· It is proposed that a general meeting may be held at a shorter notice if in case of an Annual General Meeting consent in writing or by electronic mode is given by not less than 95% of the members entitled to vote and in case of other general meetings consent is given by majority in number of members entitled to vote and who represent not less than 95% of paid-up share capital (in case of company having share capital) or total voting power exercisable at the meeting (in case of company not having share capital). |
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Companies Amendment Act 2017 : Section Wise Amendments |
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| S. No. | SECTION | AMENDMENT |
| Where any member of a company is entitled to vote only on some resolution or resolutions to be moved at a meeting and not on the others, then his vote with respect to shorter notice shall only be counted for the purpose of the resolution on which he can vote.
· Currently for calling both AGM and EGM at shorter notice, consent of 95% of members entitled to vote at the meeting is required. |
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| 41 | Companies Amendment Act 2017
Section 110- Postal Ballot |
It is proposed to allow companies which are mandatorily required to provide electronic voting facility, to transact items in general meetings , which are mandatorily required to be transacted through postal ballot. |
| 42 | Companies Amendment Act 2017
Section 117- Resolutions and Agreements to be filed |
· It is proposed to provide exemption to banking companies from filing resolutions with respect to grant of loans, giving of guarantee or providing of security in respect of loans in the ordinary course of its business.
· It is proposed to omit clause (e) of sub-section (3) of the section as the requirement under the clause is already covered in clause (a).
· The minimum fine for non-filing under this section for company and officer in default is proposed to be reduced from rupees five lakh to one lakh rupees and from rupees one lakh to rupees fifty thousand.
· Time limit of 270 days within which resolutions and agreements could be filed on payment of additional fee has been done away with. It is proposed that a company can file the resolutions and agreements with ROC at any time on payment of prescribed additional fee. |
| 43 |
Companies Amendment Act 2017 Section 121- Report on annual general meeting |
Time limit of 270 days within which report on annual general meeting could be filed on payment of additional fee has been done away with. It is proposed that a company can file the report on annual general meeting with ROC at any time on payment of prescribed additional fee |
| 44 | Companies Amendment Act 2017
Section 123- Declaration of dividend |
· It is proposed that in computing profits any amount representing unrealized gains, notional gains or revaluation of assets and any change in carrying of an asset or of a liability on measurement of the asset or the liability at fair value shall be excluded
· In the case of inadequate or absence of profits, dividend can be declared out of accumulated profits earned by the company in previous years and transferred by the company to free reserves (instead of reserves). |
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Companies Amendment Act 2017 : Section Wise Amendments |
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| S. No. | SECTION | AMENDMENT |
| · It is also proposed that the Board of Directors of a company may declare interim dividend during any financial year or at any time during the period from closure of financial year till holding of the annual general meeting out of the surplus in the profit and loss account or out of profits of the financial year for which such interim dividend is sought to be declared or out of profits generated in the financial year till the quarter preceding the date of declaration of the interim dividend.
In case the company has incurred loss during the current financial year up to the end of the quarter immediately preceding the date of declaration of interim dividend, such interim dividend shall not be declared at a rate higher than the average dividends declared by the company during immediately preceding three financial years. |
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| 45 | Companies Amendment Act 2017
Section 129- Financial Statement |
· The explanation providing that subsidiary includes associate company and joint venture has been deleted. The section has been amended to provide for consolidation of the accounts of associate companies in addition to its subsidiaries in the same form and manner as that of its own in accordance with applicable accounting standards.
· The company shall also attach along with its financial statement, a separate statement containing the salient features of the subsidiary and associate companies. |
| 46 |
Companies Amendment Act 2017 Section 130- Re-opening of accounts on court’s or tribunal’s orders |
· It is proposed that in addition to authorities already specified, any other person concerned shall be given notice before passing an order for re-opening of accounts and the court or the Tribunal shall also take into consideration the representations made by the other person.
· It is also proposed that order for reopening of accounts can be made upto eight financial years preceding the current financial year unless there is a specific direction under section 128(5) from the Central Government that the books of accounts may be kept for longer period in which case the books of account may be ordered to be reopened for a longer period |
| 47 | Companies Amendment Act 2017
Section 132- Constitution of National Financial Reporting Authority |
· It is proposed to reduce the minimum fine in respect of professional or other misconduct from ten lakh rupees to five lakh rupees.
· It is proposed to omit the provisions regarding constitution of separate Appellate Authority under this section and appeal against any order of NFRA shall lie before the National Company Law Appellate Tribunal in the prescribed manner. |
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Companies Amendment Act 2017 : Section Wise Amendments |
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| S. No. | SECTION | AMENDMENT |
| 48 | Companies Amendment Act 2017
Section 134- Financial Statement, Board’s report, etc. |
· It is proposed that CEO whether appointed as a Director or not, will sign the financial statement, in case there is no chairperson of the Company. Currently CEO is required to sign, only if he is also acting as a director.
· In case of Board report, it is proposed that disclosures which have been provided in the financial statement shall not be required to be reproduced in the report again.
· It is proposed that in place of extract of the annual return, only the web address, if any, where annual return has been placed shall be mentioned
· It is proposed that instead of exact text of the policies, key feature of policies along with its web link shall be disclosed in Board report.
· In respect to performance evaluation, it is proposed to omit the responsibility of the Board for carrying the performance evaluation of Board, Directors and committee. It is now required to include in the Board’s report of listed companies and other prescribed public companies that annual evaluation of the performance of the Board, its Committees and of individual directors has been made.
· Central Government may prescribe abridged Board Report for small company and one-person company. |
| 49 | Companies Amendment Act 2017
Section 135- Corporate Social Responsibility |
· Eligibility criteria for the purpose of constituting the corporate social responsibility committee and incurring expenditure towards CSR is proposed to be calculated based on immediately preceding financial year. Currently this eligibility is decided based on preceding three financial years.
· Further it is proposed that where a company is not required to appoint an independent director, it shall have in its Corporate Social Responsibility Committee two or more directors.
· It also proposed to empower the Central Government to prescribe sums which shall not be included for calculating ‘net profit’ of a company under section 135. |
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Companies Amendment Act 2017 : Section Wise Amendments |
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| S. No. | SECTION | AMENDMENT |
| 50 | Companies Amendment Act 2017
Section 136- Right of member to copies of audited financial statement |
· It is proposed that copies of audited financial statements and other documents can be sent at shorter notice if it is so agreed by members-
(a) holding, if the company has a share capital, majority in number entitled to vote and who represent not less than ninety-five per cent. of such part of the paid-up share capital of the company as gives a right to vote at the meeting; or (b) having, if the company has no share capital, not less than ninety- five per cent. of the total voting power exercisable at the meeting. · It is proposed that only listed companies shall place on its website, if any the separate audited accounts of its subsidiary or subsidiaries. Currently all companies required to comply this.
· If the foreign subsidiary is statutorily required to prepare consolidated financial statement under any law of the country of its incorporation, it is proposed that the requirement of posting audited accounts of subsidiary shall be met if consolidated financial statement of such foreign subsidiary is placed on the website of the listed company.
· If the foreign subsidiary is not required to get its financial statement audited, it is proposed that the holding listed company may place such unaudited financial statement on its website and where such financial statement is in a language other than English, a translated copy of the financial statement in English shall also be placed on the website.
· It is proposed that every company having a subsidiary or subsidiaries shall provide a copy of separate audited or unaudited financial statements, as the case may be, as prepared in respect of each of its subsidiary to any member who asks for it. |
| 51 | Companies Amendment Act 2017 Section 137- Copy of Financial Statement to be filed with Registrar |
· It is proposed to allow the filing of unaudited financial statements of foreign subsidiary which is not required to get its accounts audited along with a declaration to that effect.
· Time limit of 270 days within which financial statement could be filed on payment of additional fee has been done away with under all the sub-sections. It is proposed that a company can file the financial statement with ROC at any time on payment of prescribed additional fee |
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