HIGHLIGHTS OF THE COMPANIES (AMENDMENT) BILL,
2017
The Companies (Amendment)
Bill, 2017 is passed by
Lok Sabha and Rajya Sabha on 27th July 2017 and 19th December, 2017 respectively. It
shall come into force on getting the President’s assent.
The amendments under the Companies (Amendment) Bill, 2017,
are broadly aimed at:
· addressing difficulties
in implementation owing to stringent compliance requirements;
· facilitating ease of doing business in order
to promote growth with employment;
· Harmonisation with accounting standards, the
Securities and Exchange Board of India Act, 19 and
the regulations made
thereunder, and the Reserve Bank of India Act, 1934 and the regulations made
thereunder;
· rectifying omissions and
inconsistencies in the Act.
Highlights of Companies (Amendment) Bill, 2017 are given
hereunder:
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S. No
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Section No.
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Existing Provision
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Amendments as per Companies (Amendment) Bill, 2017
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Revised Provision
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Explanation
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AMENDMENTS TO
ADDRESS DIFFICULTIES IN IMPLEMENTATION
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A. Name Reservation / Approval
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1.
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Section 4(5)
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Section 4(5)(i)-
‘Upon receipt of an
application under sub-section (4), the Registrar may, on the basis of
information and documents furnished along with the application, reserve the
name for a period of sixty days from the date of the application.’
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In section 4 of the
principal Act, in sub-section (5), for clause (i), the following shall be
substituted, namely:-
“(i) Upon receipt of
an application under sub-section (4), the Registrar may, on the basis of
information and documents furnished along with the application, reserve the
name for a period of twenty days from the date of approval or such other
period as may be prescribed:
Provided that in case of an
application for reservation of name or for change of its name by an existing
company, the Registrar may reserve the name for a period of sixty days from the date of approval.”
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Revised
Section 4(5)(i)-
“Upon receipt of an
application under sub-section (4), the Registrar may, on the basis of
information and documents furnished along with the application, reserve the
name for a period of twenty days from the date of approval or such other
period as may be prescribed:
Provided that in case
of an application for reservation of name or for change of its name by an
existing company, the Registrar may reserve the name for a period of sixty days from the date of approval.”
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The period for
reservation of name is substituted from ‘sixty days from the date of the
application’ to ‘twenty days from the date of approval or such other period
as may be prescribed’.
There were concerns
that the period of sixty days for reservation of name should be from date of
approval and not from the date of application. This concern is addressed
however, considering the fact that a changed process for centralised
processing of name reservation/approval has already been implemented; the
period of name reservation is proposed to be reduced to twenty days from
sixty days. The specified period for name reservation would be taken from the
date of approval and not from the date of application.
A provision for
existing companies is also provided.
In case of an application for reservation of name or for change of its
name by an existing company, the Registrar may reserve the name for a period
of sixty days from the date of approval.
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B. Registered Office of Company
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2.
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Section 12(1) & (4)
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Section
12(1)-
‘A company shall, on and from the
fifteenth day of its incorporation and at all times thereafter, have a
registered office capable of receiving and acknowledging all communications
and notices as may be addressed to it.’
Section
12(4)-
‘Notice of every change of the
situation of the registered office, verified in the manner prescribed, after
the date of incorporation of the company, shall be given to the Registrar
within fifteen days of the change, who shall record the same.’
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In
section 12 of the principal Act,—
In sub-section (1), for the words
"on and from the fifteenth day of its incorporation", the words
" within thirty days of its incorporation" shall be substituted;
In sub-section (4), for the words
"within fifteen days", the words "within thirty days"
shall be substituted.
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Revised
Section 12(1)-
“A company shall, within thirty days of its incorporation and at all times
thereafter, have a registered office capable of receiving and acknowledging
all communications and notices as may be addressed to it.”
Revised
Section 12(4)-
“Notice of every change of the
situation of the registered office, verified in the manner prescribed, after
the date of incorporation of the company, shall be given to the Registrar within thirty days of the change, who
shall record the same.”
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Section 12(1) required that a company
shall, on and from the fifteenth day of its incorporation, and at all times
thereafter, have a registered office. This does not allow a company to have
its registered office immediately on incorporation, or earlier than the
fifteenth day of its incorporation, whereas a company could have its office
from the day of its incorporation. The amendment provides for a company to
have its registered office within 30 days of its incorporation.
The time period for giving notice of
change of situation of registered office is increased from 15 days to 30
days.
There were difficulties in filing the
prescribed form for change of the registered office of a company with the
Registrar. The concern was that the period of fifteen days is too short as
certain documents like lease deeds, rent agreements and other related
documents are required to be submitted besides various approvals that may
have to be obtained. Accordingly to address the concerns, the period is
increased to thirty days.
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C. Effect of
number of members falling below the minimum requirement
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3.
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Section 3A
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After section 3 of the principal Act,
the following section shall be inserted, namely:—
“3A. If at any time the number of
members of a company is reduced, in the case of a public company, below
seven, in the case of a private company, below two, and the company carries
on business for more than six months while the number of members is so
reduced, every person who is a member of the company during the time that it
so carries on business after those six months and is cognisant of the fact
that it is carrying on business with less than seven members or two members,
as the case may be, shall be severally liable for the payment of the whole
debts of the company contracted during that time, and may be severally sued
therefore.”
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Section
3A-
“3A. If at any time the number of
members of a company is reduced, in the case of a public company, below
seven, in the case of a private company, below two, and the company carries
on business for more than six months while the number of members is so
reduced, every person who is a member of the company during the time that it
so carries on business after those six months and is cognisant of the fact
that it is carrying on business with less than seven members or two members,
as the case may be, shall be severally liable for the payment of the whole
debts of the company contracted during that time, and may be severally sued
therefore.”
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Section 3(1) of the Act provides for
the minimum number of persons required for formation of a company.
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.
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D. Deposit
Insurance
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4.
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Section 73
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Section
73(2)(d)-
‘(d) providing such deposit insurance
in such manner and to such extent as may be prescribed.’
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In section 73 of the principal Act, in
sub-section (2),—
clause (d) shall be omitted;
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The requirement to have deposit
insurance is omitted.
Considering the fact that none of the
insurance companies are offering insurance products for covering company
deposit default risks, the requirement to have deposit insurance is omitted.
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E. Financial
Statements
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5.
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Section
129(3)
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Section 129(3)-
‘Where a company has one or more subsidiaries, it shall, in
addition to financial statements provided under sub-section (2), prepare a
consolidated financial statement of the company and of all the subsidiaries
in the same form and manner as that of its own which shall also be laid
before the annual general meeting of the company along with the laying of its
financial statement under sub-section (2):
Provided that the company shall also attach along with its
financial statement, a separate statement containing the salient features of
the financial statement of its subsidiary or subsidiaries in such form as may
be prescribed:
Provided further that
the Central Government may provide for the consolidation of accounts of
companies in such manner as may be prescribed.
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In section 129 of the principal Act,
for sub-section (3), the following sub-section shall be substituted, namely:—
"(3) Where a company has one or
more subsidiaries or associate companies, it shall, in addition to financial
statements provided under sub-section (2), prepare a consolidated financial
statement of the company and of all the subsidiaries and associate companies
in the same form and manner as that of its own and in accordance with applicable
accounting standards, which shall also be laid before the annual general
meeting of the company along with the laying of its financial statement under
sub-section (2):
Provided that the company shall also
attach along with its financial statement, a separate statement containing
the salient features of the financial statement of its subsidiary or
subsidiaries and associate company or companies in such form as may be
prescribed:
Provided
further that the Central Government may provide for the consolidation of
accounts of companies in such manner as may be prescribed.”
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Revised
Section 129(3)-
"Where a company has one or more
subsidiaries or associate companies, it shall, in addition to financial
statements provided under sub-section (2), prepare a consolidated financial
statement of the company and of all the subsidiaries and associate companies
in the same form and manner as that of its own and in accordance with
applicable accounting standards, which
shall also be laid before the annual general meeting of the company along
with the laying of its financial statement under sub-section (2):
Provided that the company shall also
attach along with its financial statement, a separate statement containing
the salient features of the financial statement of its subsidiary or
subsidiaries and associate company or companies in such form as may be
prescribed:
Provided further that the Central Government
may provide for the consolidation of accounts of companies in such manner as
may be prescribed."
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While preparing the consolidated
financial statements, the main concern was whether to include associate
companies or not. After the amendment
the concern gets addressed as the term “associate companies” is inserted in
addition to the subsidiaries.
The consolidated financial statement
of the company, its subsidiaries and associates should be in accordance with
the applicable accounting standards.
Clarification is proposed to be added by stating separate standalone financial
statements and Consolidated Financial
Statements of all subsidiaries and associate companies as per applicable Accounting Standards and
laying both before the Annual General Meeting.
New requirement for listed company to place on its website, separate audited
accounts of its each subsidiary is proposed.
In respect of foreign subsidiary if audit of accounts is not prescribed as per
law of the country, then unaudited
accounts is to be placed before AGM & considered for consolidation.
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F. Reopening
of Accounts of Companies
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6.
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Section 130(3)
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’
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In section 130 of the principal Act,—
after
sub-section (2), the following sub-section shall be inserted, namely:—
“(3)
No order shall be made under sub-section (1) in respect of re-opening of
books of account relating to a period earlier than eight financial years
immediately preceding the current financial year:
Provided
that where a direction has been issued by the Central Government under the
proviso to sub-section (5) of section 128 for keeping of books of account for
a period longer than eight years, the books of account may be ordered to be
re-opened within such longer period.”
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Section
130(3)-
No order shall be made under sub-section
(1) in respect of re-opening of books of account relating to a period earlier
than eight financial years immediately preceding the current financial year:
Provided that where a direction has
been issued by the Central Government under the proviso to sub-section (5) of
section 128 for keeping of books of account for a period longer than eight
years, the books of account may be ordered to be re-opened within such longer
period.
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Re-opening of books of accounts is
limited to earlier 8 financial years immediately preceding the current
financial year.
A company shall not reopen its books
of accounts and not recast its financial statements unless an application is
made by the Central Government, Income Tax Authority, SEBI and any other
regulatory authority
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G. Financial
Statement, Board’s Report. Etc.
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7.
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Section
134(1), (3)
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Section 134(1)-
‘The financial
statement, including consolidated financial statement, if any, shall be
approved by the Board of Directors before they are signed on behalf of the
Board at least by the chairperson of the company where he is authorised by
the Board or by two directors out of which one shall be managing director and
the Chief Executive Officer, if he is a director in the company, the Chief
Financial Officer and the company secretary of the company, wherever they are
appointed, or in the case of a One Person Company, only by one director, for
submission to the auditor for his report thereon.’
Section 134(3)(a)-
‘(a) the extract of
the annual return as provided under sub-section (3) of section 92.’
Section 134(3)(p)-
‘(p) in case of a
listed company and every other public company having such paid-up share
capital as may be prescribed, a statement indicating the manner in which
formal annual evaluation has been made by the Board of its own performance
and that of its committees and individual directors.’
Section 134(3)(q)-
‘(q) such other
matters as may be prescribed.’
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In section 134 of the principal Act,—
For
sub-section (1), the following sub-section shall be
substituted, namely:—
"(1) The financial statement,
including consolidated financial statement, if any, shall be approved by the
Board of Directors before they are signed on behalf of the Board by the
chairperson of the company where he is authorised by the Board or by two
directors out of which one shall be managing director, if any, and the Chief
Executive Officer, the Chief Financial Officer and the company secretary of
the company, wherever they are appointed, or in the case of One Person
Company, only by one director, for submission to the auditor for his report
thereon."
In
sub-section (3),—
(i)
for
clause (a), the following clause shall be substituted,
namely:—
"(a) the web address, if any,
where annual return referred to in sub-section (3) of section 92 has been
placed;"
(ii)
in
clause (p), for the words "annual evaluation has been
made by the Board of its own performance and that of its committees and
individual directors", the words "annual evaluation of the
performance of the Board, its Committees and of individual directors has been
made" shall be substituted;
(iii)
after
clause (q), the following provisos shall be inserted,
namely:—
"Provided that where disclosures
referred to in this sub-section have been included in the financial
statements, such disclosures shall be referred to instead of being repeated
in the Board's report:
Provided further that where the policy
referred to in clause (e) or clause (o) is made available on company's
website, if any, it shall be sufficient compliance of the requirements under
such clauses if the salient features of the policy and any change therein are
specified in brief in the Board's report and the web-address is indicated
therein at which the complete policy is available."
After
sub-section (3), the following sub-section shall be inserted, namely:—
"(3A) The Central Government may
prescribe an abridged Board's report, for the purpose of compliance with this
section by a One Person Company or small company."
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Revised
Section 134(1)-
“The financial statement, including
consolidated financial statement, if any, shall be approved by the Board of
Directors before they are signed on behalf of the Board by the chairperson of
the company where he is authorised by the Board or by two directors out of
which one shall be managing director, if any, and the Chief Executive
Officer, the Chief Financial Officer and the company secretary of the
company, wherever they are appointed, or in the case of One Person Company,
only by one director, for submission to the auditor for his report thereon.”
Revised Section
134(3)(a)-
“(a)
the web address, if any, where annual return referred to in sub-section (3)
of section 92 has been placed;”
Revised Section 134(3)(p)-
“(p) in case of a
listed company and every other public company having such paid-up share
capital as may be prescribed, a statement indicating the manner in which
formal annual
evaluation of the performance of the Board, its Committees and of individual
directors has been made.”
Proviso to Revised Section 134(3)-
“Provided that where
disclosures referred to in this sub-section have been included in the
financial statements, such disclosures shall be referred to instead of being
repeated in the Board's report:
Provided
further that where the policy referred to in clause (e) or clause (o) is made
available on company's website, if any, it shall be sufficient compliance of
the requirements under such clauses if the salient features of the policy and
any change therein are specified in brief in the Board's report and the
web-address is indicated therein at which the complete policy is available.”
Section 134(3A)-
“(3A) The Central Government may
prescribe an abridged Board's report, for the purpose of compliance with this
section by a One Person Company or small company.”
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(a) Chief
Executive Officer whether appointed as director or not shall sign the
financial statement. Before amendment, provisions of section 134 required
that, amongst others, the financial statement shall be signed by the Chief
Executive Officer, if he is a director in the company. The amendment provides
that the Chief Executive Officer shall sign the financial statements
irrespective of the fact whether he is a director or not because Chief
Executive Officer is a Key Managerial Personnel, and is responsible for the
overall management of the company.
Further, since the appointment of a managing director is not mandatory
for all companies, it is proposed to insert the words “if any”, after the
words “managing director”. [Section 134]
(b) The
Requirement of having extract of Annual return (Form MGT-9) has been done
away with by placing the copy of annual return on website of the company (if
any) and the web address/ link
disclosed in the Board’s Report.
Alignment of provisions of sections 134
(3)(p), 178(2) and schedule IV with respect to performance evaluation of
directors.
Sections 134(3)(p) provides for
performance evaluation by the Board. Section 178 (2) provides that the
Nomination & Remuneration Committee shall carry out evaluation of every
director’s performance. Schedule IV provides that: a) the independent
directors shall review the performance of non-independent directors, the
Board as a whole and the Chairperson of the Company; b) the performance
evaluation of independent directors shall be done by the entire board of
directors, excluding the director being evaluated.
With this amendment, the provisions of
the sections are harmonised. Amendment in sub section (2) of section 178
provide that the Nomination & Remuneration Committee shall specify the
manner for effective evaluation of performance of Board, its committees and
individual directors to be carried out either by the Board, by the Nomination
and Remuneration Committee or by an independent external agency and review
its implementation and compliance.
(c) The
Central Government is empowered to prescribe an abridged Board’s Report for
One Person Company and Small Company.
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H. Corporate
Social Responsibility
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8.
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Section 135
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Section 135(1)-
‘Every company having
net worth of rupees five hundred crore or more, or turnover of rupees one
thousand crore or more or a net profit of rupees five crore or more during
any financial year shall constitute a Corporate Social Responsibility
Committee of the Board consisting of three or more directors, out of which at
least one director shall be an independent director.’
Section 135(3)(a)-
‘(a) formulate and recommend to the
Board, a Corporate Social Responsibility Policy which shall indicate the
activities to be undertaken by the company as specified in Schedule VII.’
Explanation to Section 135(5)-
‘For the purposes of this section
“average net profit” shall be calculated in accordance with the provisions of
section 198.’
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In section 135 of the principal Act,—
In
sub-section (1),—
(a)
for the words "any financial
year", the words" the immediately preceding financial year" shall
be substituted;
(b)
the following proviso shall be
inserted, namely:—
"Provided that where a company is
not required to appoint an independent director under sub-section (4) of
section 149, it shall have in its Corporate Social Responsibility Committee
two or more directors."
In
sub-section (3), in
clause (a),
for the words and figures "as
specified in Schedule VII", the words and figures "in areas or
subject, specified in Schedule VII" shall be substituted;
In
sub-section (5),
for the Explanation, the following
Explanation shall be substituted, namely:—
“Explanation.—For the purposes of this
section "net profit" shall not include such sums as may be
prescribed, and shall be calculated in accordance with the provisions of
section 198.”
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Revised Section 135(1)-
“Every company having net worth of rupees five
hundred crore or more, or turnover of rupees one thousand crore or more or a
net profit of rupees five crore or more during the immediately preceding financial year shall constitute a
Corporate Social Responsibility Committee of the Board consisting of three or
more directors, out of which at least one director shall be an independent
director.
Provided that where a company is not required to
appoint an independent director under sub-section (4) of section 149, it
shall have in its Corporate Social Responsibility Committee two or more
directors.”
Revised
Section 135(3)(a)-
“(a) formulate and recommend to the
Board, a Corporate Social Responsibility Policy which shall indicate the
activities to be undertaken by the company in areas or subject, specified in Schedule VII.”
Revised
Explanation to Section 135(5)
“For the purposes of this section
"net profit" shall not include such sums as may be prescribed, and
shall be calculated in accordance with the provisions of section 198.”
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The
provisions relating to Corporate Social Responsibility are amended to bring more
clarity in the existing provisions.
(i) Section 135 is applicable to
companies which falls within the threshold of the specified net worth or turnover or net profit and are
required to constitute the CSR Committee in any financial year. The words
“any financial year” are replaced by the words ‘immediately preceding
financial year’.
Amendment to Section 135 of
the Act allows composition of CSR committee with two or more directors in
case the company is not required to appoint Independent Director under section 149(4).
Rule 5(1) of CSR Policy Rules,
2014, permits unlisted companies to have the Committee without Independent
Directors, where they are not required to appoint Independent Directors.
Likewise this rule provides for some relaxation for private companies and
foreign companies.
So, in case of companies where
Independent Directors are not required to be appointed as per Rule 5(1), it
was not clear as to how many minimum directors are required in CSR Committee.
With the amendment, it is clarified that in case of such companies, the CSR
Committee may be formed with two or more Directors.
(ii)
The Companies (Amendment) Bill, 2017
seeks to modify sub-section (3) of the section to refer to areas or
subjects as provided in Schedule VII within which CSR activities could be
taken up by an eligible company.
Schedule
VII indicates the broad areas of activities for spending as CSR. Accordingly,
for liberal interpretation and to bring more clarity, instead of providing
that CSR policy has to indicate the activities to be undertaken by the
company as specified in Schedule VII, it should indicate the activities to be
undertaken in areas or subjects
specified in Schedule VII.
(iii)
CSR Rules define the term, ‘net
profit’. The Rules also provide for calculation of net profit for the
purposes of foreign company. However, explanation to Section 135(5) provides
that for the purpose of this provision, the ‘average net profit’ shall be
calculated in accordance with Section 198.
Accordingly,
there was disharmony in the Act and the Rules. The High Level CSR Committee had also recommended in para 4.16 of the
Report that for the term “average
net profit” as provided in Explanation
below Section 135(5) to be replaced
with the words “net profit”, to
bring harmony.
Further, the manner of calculation of ‘net
profits’ of a foreign company, is provided under the CSR Rules, while
referring to Section 381. As it is substantive issue, it should form part of
the Act.
Accordingly, the explanation is substituted to
address both the issues.
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I.
Right of Member to Copies of Audited Financial Statement
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9.
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Section 136(1)-
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Section 136(1)-
‘Without prejudice to the provisions
of section 101, a copy of the financial statements, including consolidated
financial statements, if any, auditor’s report and every other document
required by law to be annexed or attached to the financial statements, which
are to be laid before a company in its general meeting, shall be sent to
every member of the company, to every trustee for the debenture-holder of any
debentures issued by the company, and to all persons other than such member
or trustee, being the person so entitled, not less than twenty-one days
before the date of the meeting.
Provided that in the case of a listed
company, the provisions of this sub-section shall be deemed to be complied
with, if the copies of the documents are made available for inspection at its
registered office during working hours for a period of twenty-one days before
the date of the meeting and a statement containing the salient features of
such documents in the prescribed form or copies of the documents, as the
company may deem fit, is sent to every member of the company and to every
trustee for the holders of any debentures issued by the company not less than
twenty-one days before the date of the meeting unless the shareholders ask
for full financial statements:
Provided further that the Central
Government may prescribe the manner of circulation of financial statements of
companies having such net worth and turnover as may be prescribed:
Provided also that a listed company
shall also place its financial statements including consolidated financial
statements, if any, and all other documents required to be attached
thereto, on its website, which is
maintained by or on behalf of the company:
Provided also that every company
having a subsidiary or subsidiaries shall,—
(a)
place separate audited accounts in
respect of each of its subsidiary on its website, if any;
(b)
provide a copy of separate audited
financial statements in respect of each of its subsidiary, to any shareholder
of the company who asks for it.
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In section 136 of the principal Act,—
(i)
in sub-section (1),—
a.
the words and figures "Without
prejudice to the provisions of section 101," shall be omitted;
b.
in the first proviso, for the words
"Provided that", the following shall be substituted, namely:—
"Provided that if the copies of
the documents are sent less than twenty-one days before the date of the
meeting, they shall, notwithstanding that fact, be deemed to have been duly
sent 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.”
Provided further that";
c.
in the second proviso, for the words
"Provided further", the words, "Provided also" be
substituted;
d.
for the fourth proviso, the following
provisos shall be substituted, namely:—
'Provided also that every listed
company having a subsidiary or
subsidiaries shall place separate audited accounts in respect of each
of
subsidiary on its website, if any:
Provided also that a listed company
which has a subsidiary incorporated outside India (herein referred to as
"foreign subsidiary")—
(a)
where such foreign subsidiary is
statutorily required to prepare consolidated financial statement under any
law of the country of its incorporation, the requirement of this proviso
shall be met if consolidated financial statement of such foreign subsidiary
is placed on the website of the listed company;
(b)
where such foreign subsidiary is not
required to get its financial statement audited under any law of the country
of its incorporation and which does not get such financial statement audited,
the holding Indian 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."
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Revised
Section 136(1)-
“A copy of the financial statements,
including consolidated financial statements, if any, auditor’s report and
every other document required by law to be annexed or attached to the
financial statements, which are to be laid before a company in its general
meeting, shall be sent to every member of the company, to every trustee for
the debenture-holder of any debentures issued by the company, and to all
persons other than such member or trustee, being the person so entitled, not
less than twenty-one days before the date of the meeting.
Provided
that if the copies of the documents are sent less than twenty-one days before
the date of the meeting, they shall, notwithstanding that fact, be deemed to
have been duly sent 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:
Provided
further
that in the case of a listed company, the provisions of this sub-section
shall be deemed to be complied with, if the copies of the documents are made
available for inspection at its registered office during working hours for a
period of twenty-one days before the date of the meeting and a statement
containing the salient features of such documents in the prescribed form or
copies of the documents, as the company may deem fit, is sent to every member
of the company and to every trustee for the holders of any debentures issued
by the company not less than twenty-one days before the date of the meeting
unless the shareholders ask for full financial statements:
Provided
also
that the Central Government may prescribe the manner of circulation of
financial statements of companies having such net worth and turnover as may
be prescribed:
Provided also that a listed company
shall also place its financial statements including consolidated financial
statements, if any, and all other documents required to be attached thereto,
on its website, which is maintained by or on behalf of the company:
Provided
also that a listed company which has a subsidiary incorporated outside India
(herein referred to as "foreign subsidiary")—
(a) where such foreign subsidiary is
statutorily required to prepare consolidated financial statement under any
law of the country of its incorporation, the requirement of this proviso
shall be met if consolidated financial statement of such foreign subsidiary
is placed on the website of the listed company;
(b) where such foreign subsidiary is not
required to get its financial statement audited under any law of the country
of its incorporation and which does not get such financial statement audited,
the holding Indian 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.”
|
Amendment to sub-section (1) of
section 136 to provide that copies of audited financial statements and other
documents may be sent at shorter notice if ninety five percent of members
entitled to vote at the meeting agree for the same.
Section 101 of the Act provides that
the consent of members holding at least ninety-five percent of the voting
power be obtained to call a general meeting at a notice shorter than
twenty-one days.
For circulation of annual accounts to
members, the MCA had clarified by way of a circular dated 21st July 2015 that
the shorter notice period would also apply to the circulation of annual
accounts.
It is now provided in the Amendment
Bill itself.
The Amendment Bill also mandates a
Company having subsidiary/ subsidiaries, to provide a copy of separate
audited/unaudited financial statements of its subsidiary/subsidiaries to any
member of the Company who asks for it.
|
|
J.
Ratification of Auditors
|
|||||
|
10.
|
Section 139
|
First
Proviso to Section 139(1)-
‘Provided that the company shall place
the matter relating to such appointment for ratification by members at every
annual general meeting.’
|
In section 139 of the principal Act,
in sub-section (1), the first proviso shall be omitted.
|
|
The first proviso to section 139(1)
requires that the matter relating to appointment of auditor be placed for ratification
by the members in each AGM.
The requirement related to annual
ratification of appointment of auditors by members is omitted.
Provision of ratification was
defeating the objective of giving five year term to the auditors. Further
there was no clarity in case the shareholders choose not to ratify the
auditor’s appointment as per Section 139 (1).
Further, in case the shareholders take
decision not to ratify any appointment during the period of five-years, as
this would be similar to removal of the auditor and provisions of Section
140(1) should come into play. Whereas, explanation to Rule 3 of Companies
(Audit and Auditors) Rules, 2014, provides for such a situation and requires
that the Board shall appoint another individual or firm as the auditor (s)
after following the procedure laid down in this behalf under the Act.
Accordingly, this is an inconsistency
in these two provisions, wherein removal would require a special resolution
and approval of the Central Government while removal through non-ratification
would need only a Board resolution.
Accordingly, to remove the
inconsistency, the omission of the provisions with respect to ratification is
provided.
|
|
AMENDMENTS
TO FACILITATE EASE OF DOING BUSINESS
|
|||||
|
A. ‘Self
Declaration’ to replace ‘Affidavit’
|
|||||
|
11.
|
Section 7-
|
Section
7(1)(c)-
‘(c) an affidavit from each of the
subscribers to the memorandum and from persons named as the first directors,
if any, in the articles that he is not convicted of any offence in connection
with the promotion, formation or management of any company, or that he has
not been found guilty of any fraud or misfeasance or of any breach of duty to
any company under this Act or any previous company law during the preceding
five years and that all the documents filed with the Registrar for
registration of the company contain information that is correct and complete
and true to the best of his knowledge and belief.’
|
In section 7 of the principal Act, in
sub-section (1), in item (c), for the words "an affidavit", the
words "a declaration" shall be substituted.
|
Revised
Section 7(1)(c)-
“(c) a declaration from each of the subscribers to the memorandum and
from persons named as the first directors, if any, in the articles that he is
not convicted of any offence in connection with the promotion, formation or
management of any company, or that he has not been found guilty of any fraud
or misfeasance or of any breach of duty to any company under this Act or any
previous company law during the preceding five years and that all the documents
filed with the Registrar for registration of the company contain information
that is correct and complete and true to the best of his knowledge and
belief.”
|
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.
|
|
B. Disclosures
under Board’s Report
|
|||||
|
12.
|
Section 92(1)
|
Section
92(1)-
‘Every company shall prepare a return
(hereinafter referred to as the annual return) in the prescribed form
containing the particulars as they stood on the close of the financial year
regarding—
(a)
its registered office, principal
business activities, particulars of its holding, subsidiary and associate
companies;
(b)
its shares, debentures and other
securities and shareholding pattern;
(c)
its indebtedness;
(d)
its members and debenture-holders
along with changes therein since the close of the previous financial year;
(e)
its promoters, directors, key
managerial personnel along with changes therein since the close of the
previous financial year;
(f)
meetings of members or a class
thereof, Board and its various committees along with attendance details;
(g)
remuneration of directors and key
managerial personnel;
(h)
penalty or punishment imposed on the
company, its directors or officers and details of compounding of offences and
appeals made against such penalty or punishment;
(i)
matters relating to certification of
compliances, disclosures as may be prescribed;
(j)
details, as may be prescribed, in
respect of shares held by or on behalf of the Foreign Institutional Investors
indicating their names, addresses, countries of incorporation, registration
and percentage of shareholding held by them; and
(k)
such other matters as may be
prescribed,
and signed by a director and the
company secretary, or where there is no company secretary, by a company
secretary in practice:
Provided that in relation to One
Person Company and small company, the annual return shall be signed by the
company secretary, or where there is no company secretary, by the director of
the company.’
|
In section 92 of the principal Act,—
(i) in sub-section (1),—
(a)
clause (c) shall be omitted;
(b)
in clause (j), the words
"indicating their names, addresses, countries of
incorporation,
registration and percentage of shareholding held by them" shall be
omitted;
(c)
after the proviso, the following
proviso shall be inserted, namely:—
"Provided further that the
Central Government may prescribe abridged form of annual return for One
Person Company, small company and such other class or classes of companies as
may be prescribed.”
|
Revised
Section 92(1)-
“Every company shall prepare a return
(hereinafter referred to as the annual return) in the prescribed form
containing the particulars as they stood on the close of the financial year
regarding—
(a)
its registered office, principal
business activities, particulars of its holding, subsidiary and associate
companies;
(b)
its shares, debentures and other
securities and shareholding pattern;
(c)
its members and debenture-holders
along with changes therein since the close of the previous financial year;
(d)
its promoters, directors, key
managerial personnel along with changes therein since the close of the
previous financial year;
(e)
meetings of members or a class
thereof, Board and its various committees along with attendance details;
(f)
remuneration of directors and key
managerial personnel;
(g)
penalty or punishment imposed on the
company, its directors or officers and details of compounding of offences and
appeals made against such penalty or punishment;
(h)
matters relating to certification of
compliances, disclosures as may be prescribed;
(i)
details, as may be prescribed, in
respect of shares held by or on behalf of the Foreign Institutional
Investors; and
(j)
such other matters as may be
prescribed,
and signed by a director and the
company secretary, or where there is no company secretary, by a company
secretary in practice:
Provided that in relation to One
Person Company, small company and such other class or classes of companies as
may be prescribed, the annual return shall be signed by the company
secretary, or where there is no company secretary, by the director of the
company.
Provided
further that the Central Government may prescribe abridged form of annual
return for One Person Company, small company and such other class or classes
of companies as may be prescribed.”
|
With a view to facilitate ease of
doing business and for reducing the burden of One Person Company and Small
Company, the Central Government is empowered to prescribe an abridged form of
Annual Return.
Indebtedness omitted.
Mandatory to
place the entire annual return on website and by providing its link in
Board’s Report.
Likely to reduce certain unproductive efforts.
Preparation of annual return well before approval of
accounts & holding of annual general meeting is mandatory
Provision needs to be prescribed for companies not
having website.
A mandatory requirement for Chief Executive Officer to sign the Financial Statement even if
he is not director in the Company.
|
|
13.
|
Section 92(3)
|
Section
92(3)-
‘An extract of the annual return in
such form as may be prescribed shall form part of the Board's report.’
|
In section 92 of the principal Act,—
For sub-section (3), the following
sub-section shall be substituted, namely:—
"(3) Every company shall place a
copy of the annual return on the website of the company, if any, and the
web-link of such annual return shall be disclosed in the Board's
report."
|
Revised
Section 92(3)-
"Every company shall place a copy
of the annual return on the website of the company, if any, and the web-link
of such annual return shall be disclosed in the Board's report."
|
The requirement to file extract of
Annual Return is omitted.
Section 92(3) mandated the filing of
an extract of the annual return as a part of the Board’s report.
Most of the information in the extract
is also required to be specified in financial statement or is available on
the website of the company leading to duplication of information being
reported to the shareholders.
Accordingly, this requirement is
omitted. It is also provided that web address/weblink of the information may
be provided in the Board’s Report.
In case the disclosures as required
under section 134 (3) are appearing elsewhere in financial statement, instead
of repeating the same, it is provided that reference of such disclosure may
be given. This will reduce the burden of companies in preparing bulky Board’s
Report and the amount of paper work.
Similarly, it is also provided that
the policies of companies if uploaded on the websites, instead of providing
the complete policy, only its salient features and web address/weblink be
given.
|
|
C. General
Meetings
|
|||||
|
14.
|
Section100(1)
|
Section 100(1)-
‘The Board may, whenever it deems fit,
call an extraordinary general meeting of the company.’
|
In section 100 of the principal Act,
in sub-section (1), the following proviso shall be inserted, namely:—
“Provided that an extraordinary
general meeting of the company, other than of the wholly owned subsidiary of
a company incorporated outside India, shall be held at a place within India.”
|
Proviso
to Section 100(1)-
“Provided that an extraordinary
general meeting of the company, other than of the wholly owned subsidiary of
a company incorporated outside India, shall be held at a place within India.”
|
The wholly owned subsidiary of a
company incorporated outside India is now allowed to hold its extra ordinary
general meeting outside India.
Being a substantive provision, the
explanation to Rule 18(3) be deleted and an explanation be incorporated at
the end of Section 100 mandating that EGM shall be held only in India, as
well as provide for exemptions to wholly owned subsidiaries of companies
incorporated outside India.
Proposal to allow the unlisted company to hold its AGM anywhere in India if consented by all members in writing
or in electronic mode.
Likely to save the time and energy of many
companies.
For holding of EGM a proviso is proposed to be added
to restrict the companies to hold EGM
at any place in India.
WOS of companies incorporated outside India can hold EGM at any place in the world.
|
|
15.
|
Section 110(1)
|
Section
110(1)-
‘Notwithstanding anything contained in
this Act, a company—
(a)
shall, in respect of such items of
business as the Central Government may, by notification, declare to be
transacted only by means of postal ballot; and
(b)
may, in respect of any item of
business, other than ordinary business and any business in respect of which
directors or auditors have a right to be heard at any meeting, transact by
means of postal ballot,
in such manner as may be prescribed,
instead of transacting such business at a general meeting.’
|
In section 110 of the principal Act,
in sub-section (1), the following proviso shall be inserted, namely:—
"Provided that any item of
business required to be transacted by means of postal ballot under clause
(a), may be transacted at a general meeting by a company which is required to
provide the facility to members to vote by electronic means under section
108, in the manner provided in that section."
|
Proviso
to Section 110(1)-
“Provided that any item of business
required to be transacted by means of postal ballot under clause (a), may be
transacted at a general meeting by a company which is required to provide the
facility to members to vote by electronic means under section 108, in the
manner provided in that section.”
|
The items required to be passed
mandatorily by postal ballot may now be transacted at a general meeting where
the facility of electronic voting is provided by the company.
The mandatory requirement of a postal
ballot was no longer relevant for companies which are required to conduct
voting using electronic means, as this mode equally provides for that no
shareholder is deprived of his right to vote on resolutions in case he cannot
attend the AGM/general meeting.
The impact would be-
·
Enable maximum
shareholders to participate in the meeting and discussions and then vote
electronically
•
Saving the cost of
conducting postal ballot & general meeting.
|
|
16.
|
Section 160
|
Section
160(1)-
‘A person who is not a retiring
director in terms of section 152 shall, subject to the provisions of this
Act, be eligible for appointment to the office of a director at any general
meeting, if he, or some member intending to propose him as a director, has,
not less than fourteen days before the meeting, left at the registered office
of the company, a notice in writing under his hand signifying his candidature
as a director or, as the case may be, the intention of such member to propose
him as a candidate for that office, along with the deposit of one lakh rupees
or such higher amount as may be prescribed which shall be refunded to such
person or, as the case may be, to the member, if the person proposed gets elected
as a director or gets more than twenty-five per cent. of total valid votes
cast either on show of hands or on poll on such resolution.’
|
In section 160 of the principal Act,
in sub-section (1), the following proviso shall be inserted, namely:—
"Provided that requirements of
deposit of amount shall not apply in case of appointment of an independent
director or a director recommended by the Nomination and Remuneration
Committee, if any, constituted under sub-section (1) of section 178 or a
director recommended by the Board of Directors of the Company, in the case of
a company not required to constitute Nomination and Remuneration Committee."
|
Proviso to Section
160(1)-
“Provided that requirements of deposit
of amount shall not apply in case of appointment of an independent director
or a director recommended by the Nomination and Remuneration Committee, if
any, constituted under sub-section (1) of section 178 or a director
recommended by the Board of Directors of the Company, in the case of a
company not required to constitute Nomination and Remuneration Committee.”
|
The requirement of deposit of rupees
one 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.
The requirements under Section 160
need to be complied with for reappointment of Independent Directors, which is
unreasonable as such appointments will be recommended by the Board. Similar
is the case for other persons recommended by the Nomination and Remuneration
Committee, as also by the Board, to be considered for appointment.
Accordingly, in case of appointment of Independent Directors and Directors
recommended by the Nomination and Remuneration Committee, the requirements of
Section 160 has been dispensed with.
|
|
D. Disclosures
to Registrar
|
|||||
|
17.
|
Section 93
|
Section
93-
‘Every listed company shall file a
return in the prescribed form with the Registrar with respect to change in
the number of shares held by promoters and top ten shareholders of such
company, within fifteen days of such change.’
|
Section 93 of the principal Act shall
be omitted.
|
|
Section 93 has been omitted which
requires every listed company to file a return with the Registrar with
respect to change in number of shares held by promoters and top ten
shareholders of such company.
This information is also required to
be filed with Stock Exchanges/SEBI, it would lead to duplication of
reporting. This was leading to an increase in the amount of filings being
made under the Act.
|
|
18.
|
Section 94(1)
|
First
Proviso to Section 94(1)-
Provided that such registers or copies
of return may also be kept at any other place in India in which more than
one-tenth of the total number of members entered in the register of members
reside, if approved by a special resolution passed at a general meeting of
the company and the Registrar has been given a copy of the proposed special
resolution in advance:
|
In section 94 of the principal Act,—
In sub-section (1), in the first
proviso, the words "and the Registrar has been given a copy of the
proposed special resolution in advance" shall be omitted;
|
Revised
First Proviso to Section 94(1)-
Provided that such registers or copies
of return may also be kept at any other place in India in which more than
one-tenth of the total number of members entered in the register of members
reside, if approved by a special resolution passed at a general meeting of
the company:
|
The requirement of filing with
Register a copy of special resolution in advance in respect of members
approval for keeping register/returns at any other place in India then
registered office under section 94 has been omitted.
Filing of advance copy of proposed
special resolution did not serve any purpose, particularly because the
special resolution was in any case to be filed as per the requirements of
Section 117(3)(a).
|
|
E.
Participation through video-conferencing
|
|||||
|
19.
|
Section 173(2)
|
Section 173(2)-
‘The participation of directors in a
meeting of the Board may be either in person or through video conferencing or
other audio visual means, as may be prescribed, which are capable of
recording and recognising the participation of the directors and of recording
and storing the proceedings of such meetings along with date and time:
Provided that the Central Government
may, by notification, specify such matters which shall not be dealt with in a
meeting through video conferencing or other audio visual means.’
|
In section 173 of the principal Act,
in sub-section (2), after the first proviso, the following proviso shall be
inserted, namely:—
"Provided further that where
there is quorum in a meeting through physical presence of directors, any
other director may participate through video conferencing or other audio
visual means in such meeting on any matter specified under the first
proviso."
|
Second
Proviso to Section 173(2)-
“Provided further that where there is
quorum in a meeting through physical presence of directors, any other
director may participate through video conferencing or other audio visual
means in such meeting on any matter specified under the first proviso.”
|
The directors are allowed to
participate on certain items which were restricted at Board meetings through
video conferencing or other audio visual means if there is quorum through
physical presence of directors.
Rule 4 of the Companies (Meetings of
Board and its Powers) Rules, 2014 specifies matters which shall not be dealt
with in any meeting held through video conferencing or other audio-visual
means. This requirement completely banned participation in these specified
matters of the Board meetings through video conferencing, which unnecessarily
restricts wider participation even if the necessary quorum as specified in
Section 174 is physically present. Accordingly, flexibility is provided to
allow participation of Directors through video conferencing, subject to such
participation not being counted for the purpose of quorum.
The difference between holding of meeting through VC
and participation of directors in a meeting through VC is clearly identified
through this proposal.
In respect of participation of director through Video Conferencing (VC) in a Board
meeting considering the specified business, clarity is proposed to be
provided that if the physical quorum is present, then the other directors may
participate through VC.
This will provide relief to non resident directors
to participate in the discussion and voting on important matters like
approval of financial statements etc. without traveling to the place of
meeting.
|
|
HARMONISATION
|
|||||
|
A. Disclosures
in the Prospectus
|
|||||
|
20.
|
Section 26
|
Section
26(1)-
‘Every prospectus issued by or on
behalf of a public company either with reference to its formation or
subsequently, or by or on behalf of any person who is or has been engaged or
interested in the formation of a public company, shall be dated and signed
and shall—.
(a)
state the following information,
namely:—
(i) names
and addresses of the registered office of the company, company secretary,
Chief Financial Officer, auditors, legal advisers, bankers, trustees, if any,
underwriters and such other persons as may be prescribed;
(ii) dates
of the opening and closing of the issue, and declaration about the issue of
allotment letters and refunds within the prescribed time;
(iii) a
statement by the Board of Directors about the separate bank account where all
monies received out of the issue are to be transferred and disclosure of
details of all monies including utilised and unutilised monies out of the
previous issue in the prescribed manner;
(iv) details
about underwriting of the issue;
(v) consent
of the directors, auditors, bankers to the issue, expert's opinion, if any,
and of such other persons, as may be prescribed;
(vi) the
authority for the issue and the details of the resolution passed therefore;
(vii)
procedure and time schedule for
allotment and issue of securities;
(viii) capital
structure of the company in the prescribed manner;
(ix) main
objects of public offer, terms of the present issue and such other
particulars as may be prescribed;
(x) main
objects and present business of the company and its location, schedule of
implementation of the project;
(xi) particulars
relating to—
(A)
management perception of risk factors
specific to the project;
(B)
gestation period of the project;
(C)
extent of progress made in the
project;
(D)
deadlines for completion of the
project; and
(E)
any litigation or legal action pending
or taken by a Government Department or a statutory body during the last five
years immediately preceding the year of the issue of prospectus against the
promoter of the company;
(xii) minimum
subscription, amount payable by way of premium, issue of shares otherwise
than on cash;
(xiii) details
of directors including their appointments and remuneration, and such
particulars of the nature and extent of their interests in the company as may
be prescribed; and
(xiv) disclosures
in such manner as may be prescribed about sources of promoter's contribution;
(b)
set out the following reports for the
purposes of the financial information, namely:—
(i) reports
by the auditors of the company with respect to its profits and losses and
assets and liabilities and such other matters as may be prescribed;
(ii) reports
relating to profits and losses for each of the five financial years
immediately preceding the financial year of the issue of prospectus including
such reports of its subsidiaries and in such manner as may be prescribed:
Provided that in case of a company
with respect to which a period of five years has not elapsed from the date of
incorporation, the prospectus shall set out in such manner as may be
prescribed, the reports relating to profits and losses for each of the
financial years immediately preceding the financial year of the issue of
prospectus including such reports of its subsidiaries;
(iii)
reports made in the prescribed manner
by the auditors upon the profits and losses of the business of the company
for each of the five financial years immediately preceding issue and assets
and liabilities of its business on the last date to which the accounts of the
business were made up, being a date not more than one hundred and eighty days
before the issue of the prospectus:
Provided that in case of a company
with respect to which a period of five years has not elapsed from the date of
incorporation, the prospectus shall set out in the prescribed manner, the
reports made by the auditors upon the profits and losses of the business of
the company for all financial years from the date of its incorporation, and
assets and liabilities of its business on the last date before the issue of
prospectus; and
(iv) reports
about the business or transaction to which the proceeds of the securities are
to be applied directly or indirectly.
(c)
make a declaration about the
compliance of the provisions of this Act and a statement to the effect that
nothing in the prospectus is contrary to the provisions of this Act, the
Securities Contracts (Regulation) Act, 1956 (42 of 1956) and the Securities
and Exchange Board of India Act, 1992 (15 of 1992) and the rules and
regulations made thereunder; and
(d)
state such other matters and set out
such other reports, as may be prescribed.’
|
In section 26 of the principal Act, in
sub-section (1),—
(i)
after the words "signed and
shall", the following shall be inserted, namely:—
"state such information and set
out such reports on financial information as may be specified by the
Securities and Exchange Board in consultation with the Central Government:
Provided that until the Securities and
Exchange Board specifies the information and reports on financial information
under this sub-section, the regulations made by the Securities and Exchange
Board under the Securities and Exchange Board of India Act, 1992, in respect
of such financial information or reports on financial information shall
apply."
(ii)
the clauses (a), (b) and (d) shall be
omitted.
|
Revised
Section 26(1)-
‘Every prospectus issued by or on
behalf of a public company either with reference to its formation or
subsequently, or by or on behalf of any person who is or has been engaged or
interested in the formation of a public company, shall be dated and signed
and shall-
(a)
state such information and set out
such reports on financial information as may be specified by the Securities
and Exchange Board in consultation with the Central Government:
Provided that until the Securities and
Exchange Board specifies the information and reports on financial information
under this sub-section, the regulations made by the Securities and Exchange Board
under the Securities and Exchange Board of India Act, 1992, in respect of
such financial information or reports on financial information shall apply.
(b)
make a declaration about the
compliance of the provisions of this Act and a statement to the effect that
nothing in the prospectus is contrary to the provisions of this Act, the
Securities Contracts (Regulation) Act, 1956 (42 of 1956) and the Securities
and Exchange Board of India Act, 1992 (15 of 1992) and the rules and
regulations made thereunder; and
|
Disclosures in the prospectus required
under the Companies Act, 2013 and the Securities and Exchange Board of India
Act, 1992 and the Regulations made thereunder are aligned by omitting the
information, reports and declarations required in the Companies Act, 2013.
After the amendment, the information and reports required may be specified by
the Securities and Exchange Board of India in consultation with the Central
Government.
|
|
21.
|
Section 194 & 195
|
Section
194 and 195 of the principal Act shall be omitted.
Since SEBI Regulations are comprehensive
and cover the provisions, sections relating to prohibition on forward
dealings in securities of company and insider trading of securities by
director or key managerial personnel are deleted.
|
|||
|
B.
Rationalising Penal Provisions
|
|||||
|
Penalties:
The Act aims
to provide for a regime of offences and penalties which is commensurate to
the gravity of the offence.
Quantum of penalty is
being levied taking into consideration the size of company, nature of
business, injury to public interest, nature and gravity of default,
repetition of default, etc.
·
Section
76A provides for penal provisions with regard to defaulting company with
respect to repayment of the amount of deposit and the interest due.
Amendment Act relaxes the minimum penalty of a company by
linking this with the amount of deposits accepted, accordingly, the minimum
fine is as rupees one crore or twice the amount of deposit accepted by the
company, whichever is lower. Further every officer of the company who is in
default shall be punishable with imprisonment which may extend to seven years
and with fine which shall not be less than twenty-five lakh rupees. Maximum
penalty remains unchanged.
·
In case of
professional or other misconduct on the part of the auditor, the NFRA has the
power to make an order for imposing penalty, for individual auditors and for
firm of auditors.
|
|||||
|
OTHER
IMPORTANT PROVISIONS
|
|||||
|
22.
|
Section 153
|
Section
153
‘Every individual intending to be
appointed as director of a company shall make an application for allotment of
Director Identification Number to the Central Government in such form and
manner and along with such fees as may be prescribed.’
|
In section 153 of the principal Act,
the following proviso shall be inserted, namely:—
“Provided that the Central Government
may prescribe any identification number which shall be treated as Director
Identification Number for the purposes of this Act and in case any individual
holds or acquires such identification number, the requirement of this section
shall not apply or apply in such manner as may be prescribed.”
|
Proviso
to Section 153-
“Provided that the Central Government
may prescribe any identification number which shall be treated as Director
Identification Number for the purposes of this Act and in case any individual
holds or acquires such identification number, the requirement of this section
shall not apply or apply in such manner as may be prescribed.”
|
The Central Government is now
empowered to recognise any other universally accepted identification number
as an identification document similar to director identification number.
|
|
23.
|
Section 185-
|
For section 185 of the principal Act,
the following section shall be substituted, namely:—
“185.(1) No company shall, directly or
indirectly, advance any loan, including any loan represented by a book debt
to, or give any guarantee or provide any security in connection with any loan
taken by,—
(a) any
director of company, or of a company which is its holding company or any
partner or relative of any such director; or
(b) any
firm in which any such director or relative is a partner.
(2) A company may advance any loan
including any loan represented by a book debt, or give any guarantee or
provide any security in connection with any loan taken by any person in whom
any of the director of the company is interested, subject to the condition
that—
(a) a special resolution is passed by
the company in general meeting:
Provided that the explanatory
statement to the notice for the relevant general meeting shall disclose the
full particulars of the loans given, or guarantee given or security provided
and the purpose for which the loan or guarantee or
security is proposed to be utilised by
the recipient of the loan or guarantee or security and any other relevant
fact; and
(b) the loans are utilised by the
borrowing company for its principal business activities.
Explanation.—For the purposes of this
sub-section, the expression "any person in whom any of the director of
the company is interested" means—
(a)
any private company of which any such
director is a director or member;
(b)
any body corporate at a general
meeting of which not less than twenty-five per cent. of the total voting
power may be exercised or controlled by any such director, or by two or more
such directors, together; or
(c)
any body corporate, the Board of
directors, managing director or manager, whereof is accustomed to act in
accordance with the directions or instructions of the Board, or of any
director or directors, of the lending company.
(3) Nothing contained in sub-sections
(1) and (2) shall apply to—
(a)
the giving of any loan to a managing
or whole-time director—
(i) as
a part of the conditions of service extended by the company to all its
employees; or
(ii) pursuant
to any scheme approved by the members by a special resolution; or
(b)
a company which in the ordinary course
of its business provides loans or gives guarantees or securities for the due
repayment of any loan and in respect of such loans an interest is charged at
a rate not less than the rate of prevailing yield of one year, three year,
five year or ten year Government security closest to the tenor of the loan;
or
(c)
any loan made by a holding company to
its wholly owned subsidiary company or any guarantee given or security
provided by a holding company in respect of any loan made to its wholly owned
subsidiary company; or
(d)
any guarantee given or security
provided by a holding company in respect of loan made by any bank or
financial institution to its subsidiary company:
Provided that the loans made under
clauses (c) and (d) are utilised by the subsidiary company for its principal
business activities.
(4) If any loan is advanced or a
guarantee or security is given or provided or utilised in contravention of
the provisions of this section,-
(i)
the company shall be punishable with
fine which shall not be less than five lakh rupees but which may extend to
twenty-five lakh rupees,
(ii)
every officer of the company who is in
default shall be punishable with imprisonment for a term which may extend to
six months or with fine which shall not be less than five lakh rupees but
which may extend to twenty-five lakh rupees; and
(iii)
the director or the other person to
whom any loan is advanced or guarantee or security is given or provided in
connection with any loan taken by him or the other person, shall be
punishable with imprisonment which may extend to six months or with fine
which shall not be less than five lakh rupees but which may extend to
twenty-five lakh rupees, or with both.”
|
To address the difficulties being
faced in genuine transactions due to the complete embargo on providing loans
to subsidiaries with common directors, the companies are permitted to give
loans to entities in which directors are interested after passing special
resolution and adhering to disclosure requirements. This would give big
relief to the companies.
Granting of loan, guarantee or security (referred as
assistance) is nicely categorized as prohibited,
conditional and exempted.
The prohibition
is proposed to be made applicable for assistance to director or his partner
or relative or a firm in which such director or relative is a partner or to
holding company of the company.
The conditional
assistance is possible to any person in whom the director is
interested (other than prohibited categories). Company has to pass a special
resolution & explanatory statement to the notice should disclose all the
facts & particulars.
If the borrower is a Company then loan should be
utilized for its principal business activity.
The exempted
categories are loan to MD/ WTD as a part of service condition or
scheme and loans by companies in their ordinary course of business by
charging interest as per tenure and loan, guarantee or security by holding
company to its WOS and guarantee or security by holding company to its subsidiary
company with a condition to use it for its principal activity.
In the list of offenses under this section specific offence of contravention in utilization of loan
is proposed to be added.
|
||
|
A. Significant
beneficial owner
|
|||||
|
24.
|
Section 89
|
Section
89(6)-
‘Where any declaration under this
section is made to a company, the company shall make a note of such
declaration in the register concerned and shall file, within thirty days from
the date of receipt of declaration by it, a return in the prescribed form
with the Registrar in respect of such declaration with such fees or
additional fees as may be prescribed, within the time specified under section
403.’
Section
89(7)-
‘If a company, required to file a
return under sub-section (6), fails to do so before the expiry of the time
specified under the first proviso to sub-section (1) of section 403, the
company and every officer of the company who is in default shall be
punishable with fine which shall not be less than five hundred rupees but
which may extend to one thousand rupees and where the failure is a continuing
one, with a further fine which may extend to one thousand rupees for every
day after the first during which the failure continues.’
|
In section 89 of the principal Act,
(i) In
sub-section (6), the words and figures, “within the time specified under
section 403” shall be omitted;
(ii) In
sub-section (7), for the words and figures, “under the first proviso to
sub-section (1) of section 403”, the word “therein”, shall be substituted;
(iii)
after sub-section (9), the following
sub-section shall be inserted, namely:—
"(10) For the purposes of this
section and section 90, 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
(ii)
receive or participate in any dividend
or other distribution in respect of such share."
|
Revised
Section 89(6)-
‘Where any declaration under this
section is made to a company, the company shall make a note of such
declaration in the register concerned and shall file, within thirty days from
the date of receipt of declaration by it, a return in the prescribed form
with the Registrar in respect of such declaration with such fees or additional
fees as may be prescribed.’
Revised
Section 89(7)-
‘If a company, required to file a
return under sub-section (6), fails to do so before the expiry of the time
specified therein, the company and
every officer of the company who is in default shall be punishable with fine
which shall not be less than five hundred rupees but which may extend to one
thousand rupees and where the failure is a continuing one, with a further
fine which may extend to one thousand rupees for every day after the first
during which the failure continues.’
Revised
Section 89(10)-
“For the purposes of this section and
section 90, 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
(ii)
receive or participate in any dividend
or other distribution in respect of such share."
|
Definition of the term beneficial interest in shares, is linked with the right or
entitlement of a person to exercise rights attached to shares or to
participate or receive the dividend or other distributions relating to
shares.
The Bill seeks to amend section 89 of
the Act to explain the term "beneficial interest in a share”
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 receive or participate in any
dividend or other distribution in respect of such share.
(ii)
Section 89 of the Companies Act, 2013
deals with the concept of beneficial interest in a share which obligates
every person acquiring/holding beneficial interest in a share as well as the
legal owner to make a declaration to the company in respect of such beneficial
interest. In view of the absence of a definition of beneficial interest in a
share in a company, the term has been defined.
Complex structures and chains of
corporate vehicles are used to hide the real owner behind the transactions
made using these structures. Realising this, obligation on a company to
collect information on beneficial ownership and to maintain a separate
register on beneficial ownership is required under the section.
|
|
25.
|
Section 90
|
For section 90 of the principal Act,
the following section shall be substituted, namely:—
“90. (1) 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
(herein referred to as "significant beneficial owner"), shall make
a declaration to the company, specifying the nature of his interest and other
particulars, in such manner and within such period of acquisition of the
beneficial interest or rights and any change thereof, as may be prescribed:
Provided that the Central Government
may prescribe a class or classes of persons who shall not be required to make
declaration under this sub-section.
(2) Every company shall maintain a
register of the interest declared by individuals under sub-section (1) and
changes therein which shall include the name of individual, his date of
birth, address, details of ownership in the company and such other details as
may be prescribed.
(3) The register maintained under
sub-section (2) shall be open to inspection by any member of the company on
payment of such fees as may be prescribed.
(4) Every company shall file a return
of significant beneficial owners of the company and changes therein with the
Registrar containing names, addresses and other details as may be prescribed
within such time, in such form and manner as may be prescribed.
(5) A company shall give notice, in
the prescribed manner, to any person (whether or not a member of the company)
whom the company knows or has reasonable cause to believe—
(a)
to be a significant beneficial owner
of the company;
(b)
to be having knowledge of the identity
of a significant beneficial owner or another person likely to have such
knowledge; or
(c)
to have been a significant beneficial
owner of the company at any time during the three years immediately preceding
the date on which the notice is issued, and who is not registered as a
significant beneficial owner with the company as required under this section.
(6) The information required by the
notice under sub-section (5) shall be given by the concerned person within a
period not exceeding thirty days of the date of the notice.
(7) The company shall,—
(a)
where that person fails to give the
company the information required by the notice within the time specified
therein; or
(b)
where the information given is not
satisfactory, apply to the Tribunal within a period of fifteen days of the
expiry of the period specified in the notice, 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 and such other
matters as may be prescribed.
(8) On any application made under
sub-section (7), the Tribunal may, after giving an opportunity of being heard
to the parties concerned, make such order restricting the rights attached
with the shares within a period of sixty days of receipt of application or
such other period as may be prescribed.
(9) The company or the person
aggrieved by the order of the Tribunal may make an application to the
Tribunal for relaxation or lifting of the restrictions placed under sub-section
(8).
(10) If any person fails to make a
declaration as required under sub-section (1), he shall be punishable with
fine which shall not be less than one lakh rupees but which may extend to ten
lakh rupees and where the failure is a continuing one, with a further fine
which may extend to one thousand rupees for every day after the first during which
the failure continues.
(11) If a company, required to
maintain register under sub-section (2) and file the information under
sub-section (4), fails to do so or denies inspection as provided therein, the
company and every officer of the company who is in default shall be punishable
with fine which shall not be less than ten lakh rupees but which may extend to
fifty lakh rupees and where the failure is a continuing one, with a further
fine which may extend to one thousand rupees for every day after the first
during which the failure continues.
(12) If any person wilfully furnishes
any false or incorrect information or suppresses any material information of
which he is aware in the declaration made under this section, he shall be
liable to action under section 447.”
|
A declaration is required to be given
to the company by the person who is a significant beneficial owner.
“Significant beneficial owner” includes 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 percentage as may be prescribed in shares of a
company or the right to exercise, or the actual exercising of significant
influence or control under clause (27) of section 2 over the company.
•
New terminology of significant
beneficial ownership, in line with the international governance standards and
OECD principals.
•
Would be applicable to each and every company
•
Every individual
shareholder holding beneficial interest either alone or together or through
one or more persons or trust including non residents of not less than 25% in the shares of
the Company or the right to exercise, or actual exercising of significant
influence or control over the company is
required to make a declaration about influence and his nature of interest etc
•
Company
has to register such individuals as Significant Beneficial Owners.
•
Company to file periodic
return.
•
Power
has also given to the company to enquire into the significant beneficial
ownership by giving a notice to an individual.
•
Upon non compliance of
provisions of this section, tribunal on application by Company can pass an
order for placing restrictions
on rights attached to such shares.
|
||
|
B. Re-opening of Accounts
|
|||||
|
26.
|
Section 130
|
Proviso
to Section 130(1)-
‘Provided that the court or the
Tribunal, as the case may be, shall give notice to the Central Government,
the Income-tax authorities, the Securities and Exchange Board or any other
statutory regulatory body or authority concerned and shall take into
consideration the representations, if any, made by that Government or the
authorities, Securities and Exchange Board or the body or authority concerned
before passing any order under this section.’
Section
130(2)-
Without prejudice to the provisions
contained in this Act the accounts so revised or re-cast under sub-section
(1) shall be final.
|
In section 130 of the principal Act,—
In sub-section (1), in the proviso,—
(a) after
the words "regulatory body or authorities concerned", the words
"or any other person concerned" shall be inserted;
(b) after
the words "the body or authority concerned", the words "or the
other person concerned" shall be inserted;’
(ii) after sub-section (2), the
following sub-section shall be inserted, namely:—
"(3) No order shall be made under
sub-section (1) in respect of re-opening of books of account relating to a
period earlier than eight financial years immediately preceding the current
financial year:
Provided that where a direction has
been issued by the Central Government under the proviso to sub-section (5) of
section 128 for keeping of books of account for a period longer than eight
years, the books of account may be ordered to be re-opened within such longer
period."
|
Revised
Proviso to Section 130(1)-
Provided that the court or the
Tribunal, as the case may be, shall give notice to the Central Government,
the Income-tax authorities, the Securities and Exchange Board or any other
statutory regulatory body or authority concerned or any other person concerned and shall take into consideration the
representations, if any, made by that Government or the authorities,
Securities and Exchange Board or the body or authority concerned or the other person concerned before
passing any order under this section.”
Section
130(3)-
“(3) No order shall be made under
sub-section (1) in respect of re-opening of books of account relating to a
period earlier than eight financial years immediately preceding the current
financial year:
Provided that where a direction has
been issued by the Central Government under the proviso to sub-section (5) of
section 128 for keeping of books of account for a period longer than eight
years, the books of account may be ordered to be re-opened within such longer
period.”
|
In the interest of the principle of
natural justice, other concerned parties, like a company or the
Auditor/Chartered Accountant of the company should also be given an
opportunity to present their point of view. Accordingly, in the provision
relating to re-opening of accounts, before passing an order, the Tribunal is
now required to serve a notice to ‘any other person concerned’ also, who may
submit their concerns in the form of representations, before passing of order
for re-opening of accounts by Court or Tribunal.
|
|
C. Managerial
Remuneration
|
|||||
|
27.
|
Section 197(1)
|
First Proviso to Section 197(1)-
‘Provided
that the company in general meeting may, with the approval of the Central
Government, authorise the payment of remuneration exceeding eleven per cent.
of the net profits of the company, subject to the provisions of Schedule V.’
Second Proviso to Section 197(1)-
‘Provided
further that, except with the approval of the company in general meeting.
(i) the
remuneration payable to any one managing director; or whole-time director or
manager shall not exceed five per cent. of the net profits of the company and
if there is more than one such director remuneration shall not exceed ten per
cent. of the net profits to all such directors and manager taken together;
(ii) the
remuneration payable to directors who are neither managing directors nor
whole-time directors shall not exceed,—
(A)
one per cent. of the net profits of
the company, if there is a managing or whole-time director or manager;
(B) three
per cent. of the net profits in any other case.’
|
In
section 197 of the principal Act,—
In
sub-section (1),—
(i)
in the first proviso, the words
"with the approval of the Central Government," shall be omitted
(ii)
in the second proviso, after the words
"general meeting,", the words "by a special resolution,"
shall be inserted;
(iii)
after the second proviso, the
following proviso shall be inserted, namely:—
"Provided
also that, where any term loan of any bank or public financial institution is
subsisting or the company has defaulted in payment of dues to non-convertible
debenture holders or any other secured creditor, the prior approval of the
bank or public financial institution concerned or the non-convertible
debenture holders or other secured creditor, as the case may be, shall be
obtained by the company before obtaining the approval in the general meeting."
|
Revised First Proviso to Section
197(1)-
“Provided
that the company in general meeting may, with the approval of the Central
Government, authorise the payment of remuneration exceeding eleven per cent.
of the net profits of the company, subject to the provisions of Schedule V:”
Revised Second Proviso to Section
197(1)-
“Provided
further that, except with the approval of the company in general meeting by a special resolution,—
(i)
the remuneration payable to any one
managing director; or whole-time director or manager shall not exceed five
per cent. of the net profits of the company and if there is more than one
such director remuneration shall not exceed ten per cent. of the net profits
to all such directors and manager taken together;
(ii) the
remuneration payable to directors who are neither managing directors nor
whole-time directors shall not exceed,—
(A)
one per cent. of the net profits of
the company, if there is a managing or whole-time director or manager;
(B) three
per cent. of the net profits in any other case.
Third Proviso to Section 197(1)-
“Provided
also that, where the company has defaulted in payment of dues to any bank or
public financial institution or non-convertible debenture holders or any
other secured creditor, the prior approval of the bank or public financial
institution concerned or the non-convertible debenture holders or other
secured creditor, as the case may be, shall be obtained by the company before
obtaining the approval in the general meeting.”
|
The
Companies (Amendment) Bill, 2017 seeks amendment to Section 197.
The
requirement of approval of the Central Government for Managerial Remuneration,
above the prescribed limits are replaced by approval through special
resolution by shareholders in general meeting.
No CG approval for
public companies for payment of
remuneration to managing director even exceeding 11% of net profits
Approval of the central government would be needed only for variance to the conditions
specified in part I of Schedule V for the appointment of MD/ WTD;
For payment of remuneration exceeding limits or for waiver of recovery
of excess remuneration, prior
approval of banks, financial institutions, non convertible debenture holders
or secured creditors is proposed.
Director should repay the excess remuneration to the Company within a
maximum period to 2 years.
Duty casted on auditors- Report payment of remuneration in conformity
with the provisions of the Act and disclose any excess remuneration
|
|
D.
Foreign Company
|
|||||
|
28.
|
Section 379
|
Section 379-
‘Where
not less than fifty per cent. of the paid-up share capital, whether equity or
preference or partly equity and partly preference, of a foreign company is
held by one or more citizens of India or by one or more companies or bodies
corporate incorporated in India, or by one or more citizens of India and one
or more companies or bodies corporate incorporated in India, whether singly
or in the aggregate, such company shall comply with the provisions of this
Chapter and such other provisions of this Act as may be prescribed with regard
to the business carried on by it in India as if it were a company
incorporated in India.’
|
Section
379 of the principal Act shall be renumbered as sub-section (2) thereof and
before sub-section (2) as so renumbered, the following sub-section shall be
inserted, namely:—
"(1)
Sections 380 to 386 (both inclusive)and sections 392 and 393 shall apply to all
foreign companies:
Provided
that the Central Government may, by Order published in the Official Gazette,
exempt any class of foreign companies, specified in the Order, from any of
the provisions of sections 380 to 386 and sections 392 and 393 and a copy of
every such order shall, as soon as may be after it is made, be laid before
both Houses of Parliament."
|
Revised Section 379-
“(1) Sections 380
to 386 (both inclusive)and sections 392 and 393 shall apply to all foreign
companies:
Provided
that the Central Government may, by Order published in the Official Gazette,
exempt any class of foreign companies, specified in the Order, from any of
the provisions of sections 380 to 386 and sections 392 and 393 and a copy of
every such order shall, as soon as may be after it is made, be laid before
both Houses of Parliament.
(2) Where not
less than fifty per cent. of the paid-up share capital, whether equity or
preference or partly equity and partly preference, of a foreign company is
held by one or more citizens of India or by one or more companies or bodies
corporate incorporated in India, or by one or more citizens of India and one
or more companies or bodies corporate incorporated in India, whether singly
or in the aggregate, such company shall comply with the provisions of this
Chapter and such other provisions of this Act as may be prescribed with
regard to the business carried on by it in India as if it were a company
incorporated in India.”
|
Foreign
companies having incidental transactions through electronic mode are exempted
from registering and compliance regime under the Act.
As
provided under section 591(1) of the Companies Act, 1956, it is proposed to
clearly provide that the remaining body corporate as covered within the
definition of foreign company would need to comply with the provisions of
Chapter XXII, as applicable.
Clarity is proposed to be provided about applicability of the Act to Foreign Companies.
Due to disconnect between the definition of foreign company Sec 2(42)
and Sec 379, there is confusion about applicability of the Act to the Branch,
Liaison or Project Offices established by foreign company in India.
By proposed insertion, it will be confirmed
that all such offices in India needs registration.
Applicability of CSR provisions is proposed to be added in Foreign
Companies chapter.
|
|
E.
Filing Fees
|
|||||
|
29.
|
Section 403
|
Provisos Section 403(1)-
‘Provided
that any document, fact or information may be submitted, filed, registered or
recorded, after the time specified in relevant provision for such submission,
filing, registering or recording, within a period of two hundred and seventy
days from the date by which it should have been submitted, filed, registered
or recorded, as the case may be, on payment of such additional fee as may be
prescribed.
Provided
further that any such document, fact or information may, without prejudice to
any other legal action or liability under the Act, be also submitted, filed,
registered or recorded, after the first time specified in first proviso on
payment of fee and additional fee specified under this section.’
|
In
section 403 of the principal Act,—
In
sub-section (1), for the first and second provisos, the following provisos
shall be substituted, namely:—
“Provided
that where any document, fact or information required to be submitted, filed,
registered or recorded, as the case may be, under section 92 to 137 is not
submitted, filed, registered or recorded, as the case may be, within the
period provided in those sections, without prejudice to any other legal
action or liability under this Act, it may be submitted, filed, registered or
recorded, as the case may be, after expiry of the period so provided in those
sections, on payment of such additional fee as may be prescribed, which shall
not be less than one hundred rupees per day and different amounts may be
prescribed for different classes of companies:
Provided
further that where the document, fact or information, as the case may be, in
cases other than referred to in the first proviso, is not submitted, filed,
registered or recorded, as the case may be, within the period provided in the
relevant section, it may, without prejudice to any other legal action or
liability under this Act, be submitted, filed, registered or recorded as the
case may be, on payment of such additional fee as may be prescribed and
different fees may be prescribed for different classes of companies:
Provided
also that where there is default on two or more occasions in submitting,
filing, registering or recording of the document, fact or information, it
may, without prejudice to any other legal action or liability under this Act,
be submitted, filed, registered or recorded, as the case may be, on payment
of a higher additional fee, as may be prescribed and which shall not be
lesser than twice the additional fee provided under the first or the second
proviso as applicable.”
|
Revised Provisos to Section 403(1)-
“Provided
that where any document, fact or information required to be submitted, filed,
registered or recorded, as the case may be, under section 92 to 137 is not
submitted, filed, registered or recorded, as the case may be, within the
period provided in those sections, without prejudice to any other legal
action or liability under this Act, it may be submitted, filed, registered or
recorded, as the case may be, after expiry of the period so provided in those
sections, on payment of such additional fee as may be prescribed, which shall
not be less than one hundred rupees per day and different amounts may be
prescribed for different classes of companies:
Provided
further that where the document, fact or information, as the case may be, in
cases other than referred to in the first proviso, is not submitted, filed,
registered or recorded, as the case may be, within the period provided in the
relevant section, it may, without prejudice to any other legal action or
liability under this Act, be submitted, filed, registered or recorded as the
case may be, on payment of such additional fee as may be prescribed and
different fees may be prescribed for different classes of companies:
Provided
also that where there is default on two or more occasions in submitting,
filing, registering or recording of the document, fact or information, it
may, without prejudice to any other legal action or liability under this Act,
be submitted, filed, registered or recorded, as the case may be, on payment
of a higher additional fee, as may be prescribed and which shall not be lesser
than twice the additional fee provided under the first or the second proviso
as applicable.”
|
Presently,
the objective to ensure enhancing the filings by providing for condonation of
delay, payment of higher fees is not really helping, so in order to make the
compliance requirement less onerous with the reasonable time period for all
companies and to avoid strict penalties, section 403 is being amended.
3 more provisos proposed to be added;
270 days shelter proposed to be removed;
Delayed filing fees likely to vary depending on number of defaults and
nature of form to be filed;
Additional filing fees structure proposed to be brought in line with
the LLP;
FS & Annual Return can be filed with delayed filing fees of Rs. 100/- per day (after prescribed
30/60 days), different amount may be specified for different classes of
companies;
For other forms – additional fees will be prescribed, different amount
may be specified for different classes of companies.
In case of subsequent 2 or more defaults in submission of forms,
higher fees may be prescribed
|
|
F.
PRIVATE PLACEMENT
|
|||||
|
30.
|
Section 42
|
For
section 42 of the principal Act, the following section shall be substituted,
namely:—
“(1)
A company may, subject to the provisions of this section, make a private
placement of securities.
(2)
A private placement shall be made only to a select group of persons who have
been identified by the Board (herein referred to as "identified
persons"), whose number shall not exceed fifty or such higher number as
may be prescribed [excluding the qualified institutional buyers and employees
of the company being offered securities under a scheme of employees stock
option in terms of provisions of clause (b) of subsection (1) of section 62],
in a financial year subject to such conditions as may be prescribed.
(3)
A company making private placement shall issue private placement offer and
application in such form and manner as may be prescribed to identified
persons, whose names and addresses are recorded by the company in such manner
as may be prescribed:
Provided
that the private placement offer and application shall not carry any right of
renunciation.
Explanation
I.—"private placement" means any offer or invitation to subscribe
or issue of securities to a select group of persons by a company (other than
by way of public offer) through private placement offer-cum-application,
which satisfies the conditions specified in this section.
Explanation
II.—"qualified institutional buyer" means the qualified
institutional buyer as defined in the Securities and Exchange Board of India
(Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended
from time to time, made under the Securities and Exchange Board of India Act,
1992.
Explanation
III.—If a company, listed or unlisted, makes an offer to allot or invites
subscription, or allots, or enters into an agreement to allot, securities to
more than the prescribed number of persons, whether the payment for the
securities has been received or not or whether the company intends to list its
securities or not on any recognised stock exchange in or outside India, the
same shall be deemed to be an offer to the public and shall accordingly be
governed by the provisions of Part I of this Chapter.
(4)
Every identified person willing to subscribe to the private placement issue
shall apply in the private placement and application issued to such person
alongwith subscription money paid either by cheque or demand draft or other
banking channel and not by cash:
Provided
that a company shall not utilise monies raised through private placement
unless allotment is made and the return of allotment is filed with the
Registrar in accordance with sub-section (8).
(5)
No fresh offer or invitation under this section shall be made unless the
allotments with respect to any offer or invitation made earlier have been
completed or that offer or invitation has been withdrawn or abandoned by the
company:
Provided
that, subject to the maximum number of identified persons under subsection
(2), a company may, at any time, make more than one issue of securities to
such class of identified persons as may be prescribed.
(6)
A company making an offer or invitation under this section shall allot its
securities within sixty days from the date of receipt of the application
money for such securities and if the company is not able to allot the
securities within that period, it shall repay the application money to the
subscribers within fifteen days from the expiry of sixty days and if the
company fails to repay the application money within the aforesaid period, it
shall be liable to repay that money with interest at the rate of twelve per
cent. per annum from the expiry of the sixtieth day:
Provided
that monies received on application under this section shall be kept in a
separate bank account in a scheduled bank and shall not be utilised for any
purpose other than—
(a)
for adjustment against allotment of securities; or
(b)
for the repayment of monies where the company is unable to allot securities.
(7)
No company issuing securities under this section shall release any public
advertisements or utilise any media, marketing or distribution channels or
agents to inform the public at large about such an issue.
(8)
A company making any allotment of securities under this section, shall file
with the Registrar a return of allotment within fifteen days from the date of
the allotment in such manner as may be prescribed, including a complete list
of all allottees, with their full names, addresses, number of securities
allotted and such other relevant information as may be prescribed.
(9)
If a company defaults in filing the return of allotment within the period
prescribed under sub-section (8), the company, its promoters and directors
shall be liable to a penalty for each default of one thousand rupees for each
day during which such default continues but not exceeding twenty-five lakh
rupees.
(10)
Subject to sub-section (11), if a company makes an offer or accepts monies in
contravention of this section, the company, its promoters and directors shall
be liable for a penalty which may extend to the amount raised through the
private placement or two crore rupees, whichever is lower, and the company
shall also refund all monies with interest as specified in sub-section (6) to
subscribers within a period of thirty days of the order imposing the penalty.
(11)
Notwithstanding anything contained in sub-section (9) and sub-section (10),
any private placement issue not made in compliance of the provisions of the
subsection (2) shall be deemed to be a public offer and all the provisions of
this Act and the Securities Contracts (Regulation) Act, 1956 and Securities
and Exchange Board of India Act, 1992 shall be applicable.”
|
The
Private Placement process is simplified by doing away with separate offer
letter details to be kept by company and reducing number of filings to Registrar.
In
order to ensure that investor gets adequate information about the company
which is making private placement, the disclosures made under Explanatory
Statement referred to in Rule 13(2)(d) of Companies (Share Capital and
Debenture) Rules, 2014, embodied in the Private Placement Application Form.
There would be ease in the private placement offer related
documentation to enable quick access to funds.
Change in definition of private placement is proposed to cover all
securities offer and invitations other than right.
There is condensed format of private
placement offer letter and application form likely to be
introduced
The Companies would be allowed
to make offer of multiple security
instruments simultaneously.
Restriction on utilization of subscription money before making actual allotment and additionally
before filing the allotment return to the registrar. Since contract is
concluding on allotment and return filing is just a post conclusion
compliance, there may be difficulty in compliance.
The penalty provisions for raising of capital are proposed to be
rationalized by linking it to the amount involved in the issue ( twice the
amount involved or 2 crores whichever is lower).
Period for filing return of return of allotment is proposed to be
reduced to 15 days.
|
||
|
G.
DEFINITIONS
|
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|
31.
|
Section 2(6)
|
Associate company
Explanation to Section 2(6)-
‘Explanation—
For the purposes of this clause, “significant influence" means control
of at least twenty per cent of total share capital, or of business decisions
under an agreement.’
|
In
section 2 of the Companies Act, 2013 in clause (6), for the Explanation, the
following Explanation shall be substituted, namely:—
'Explanation.—For
the purpose of this clause—
(a) the expression "significant
influence" means control of at least twenty per cent. of total voting
power, or control of or participation in business decisions under an
agreement;
(b) the expression "joint
venture" means a joint arrangement whereby the parties that have joint
control of the arrangement have rights to the net assets of the arrangement.'
|
Revised Explanation to Section 2(6)-
“Explanation.—For
the purpose of this clause—
(a)
the expression "significant
influence" means control of at least twenty per cent. of total voting
power, or control of or participation in business decisions under an
agreement;
(b)
the expression "joint
venture" means a joint arrangement whereby the parties that have joint
control of the arrangement have rights to the net assets of the arrangement.”
|
The
Bill substitutes the explanation of the term ‘significant influence’ under
the definition of an associate company in Section 2(6) 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.
The Impact would be -
•
Total
voting power defined in 2(89) to be referred
•
Control
through total voting power only &
not just by holding capital
•
Agreement
is essential element to establish control through participation
•
Term JV
clarified – covers all partner of JV
•
Definition
crucial in view of consolidation of accounts, RPT, disclosures provisions
etc.
|
|
32.
|
Section 2(28)
|
Section 2(28)-
"cost
accountant" means a cost accountant as defined in clause (b) of
sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 (23
of 1959);
|
In
section 2 of the Companies Act, 2013 for clause (28), the following clause
shall be substituted, namely:—
“(28)
"Cost Accountant" means a cost accountant as defined in clause (b) of
sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 and who
holds a valid certificate of practice under sub-section (1) of section 6 of
that Act;”
|
Revised Section 2(28)-
"Cost
Accountant" means a cost accountant as defined in clause (b) of
sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 and who
holds a valid certificate of practice under sub-section (1) of section 6 of
that Act;
|
Change
in definition of ‘cost accountant’ is proposed.
|
|
33.
|
Section 2(30)
|
Section 2(30)-
"Debenture"
includes debenture stock, bonds or any other instrument of a company
evidencing a debt, whether constituting a charge on the assets of the company
or not.
|
In Section
2 in clause (30), the following proviso shall be inserted, namely:—
"Provided
that—
(a)
the instruments referred to in Chapter
III-D of the Reserve Bank of India Act, 1934; and
(b)
such other instrument, as may be
prescribed by the Central Government in consultation with Reserve Bank of
India, issued by a company,
shall
not be treated as debenture."
|
Proviso to Section 2(30)-
“Provided
that—
(a)
the instruments referred to in Chapter
III-D of the Reserve Bank of India Act, 1934; and
(b)
such other instrument, as may be
prescribed by the Central Government in consultation with Reserve Bank of
India, issued by a company,
shall
not be treated as 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.
|
|
34.
|
Section 2(41)
|
Financial year
First Proviso to Section 2(41)-
‘Provided
that on an application made by a company or body corporate, which is a
holding company or a subsidiary of a company incorporated outside India and
is required to follow a different financial year for consolidation of its
accounts outside India, the Tribunal may, if it is satisfied, allow any
period as its financial year, whether or not that period is a year.’
|
In
Section 2 in clause (41), in the first proviso, after the word
"subsidiary", the words "or associate company" shall be
inserted.
|
Revised First Proviso to Section
2(41)-
“Provided
that on an application made by a company or body corporate, which is a
holding company or a subsidiary or
associate company of a company incorporated outside India and is required
to follow a different financial year for consolidation of its accounts
outside India, the Tribunal may, if it is satisfied, allow any period as its
financial year, whether or not that period is a year.”
|
It
is proposed that associate company of a company incorporated outside India
can also apply to the Tribunal for a different financial year.
|
|
35.
|
Section 2(46)
|
Section 2(46)-
"Holding
company", in relation to one or more other companies, means a company of
which such companies are subsidiary companies.
|
In
Section 2 in clause (46), the following Explanation shall be inserted,
namely:—
“Explanation.—For
the purposes of this clause, the expression "company" includes any body
corporate;”
|
Explanation to Section 2(46)-
“Explanation.—For
the purposes of this clause, the expression "company" includes any body
corporate;”
|
It
is proposed that for the purpose of definition of the term ‘holding company’,
the expression "company" will include any body corporate.
The Impact would be-
• Under current provisions body corporate is not
covered as “holding”
• LLP could also be covered as holding?
• Status of its holding body corporate whether public
or private needs to be checked – to ensure subsidiary status
• Stricter compliances for deemed public subsidiaries
• All such companies will automatically be out of the
definition of Small Company.
• The strategies for
consolidation, RPT, disclosures, Inter-corporate loans needs to be
reviewed
|
|
36.
|
Section 2(49)
|
Section 2(49)-
“interested
director” means a director who is in any way, whether by himself or through
any of his relatives or firm, body corporate or other association of individuals
in which he or any of his relatives is a partner, director or a member,
interested in a contract or arrangement, or proposed contract or arrangement,
entered into or to be entered into by or on behalf of a company;
|
In
Section 2, clause (49) shall be omitted;
|
|
Definition
of the term is proposed to be omitted.
|
|
37.
|
Section 2(51)
|
Section 2(51)-
“Key
managerial personnel” in relation to a company, means—
(i) the
Chief Executive Officer or the managing director or the manager;
(ii) the
company secretary;
(iii)
the whole-time director;
(iv)
the Chief Financial Officer; and
such
other officer as may be prescribed.
|
In
Section 2 in clause (51),—
(a) in
sub-clause (iv), the word "and" shall be omitted;
(b) for
sub-clause (v), the following sub-clauses shall be substituted, namely:—
“(v)
such other officer, not more than one level below the directors who is in
whole-time employment, designated as key managerial personnel by the Board;
and
(vi)
such other officer as may be prescribed;”
|
Revised Section 2(51)-
“Key
managerial personnel" in relation to a company, means—
(i) the
Chief Executive Officer or the managing director or the manager;
(ii) the
company secretary;
(iii)
the whole-time director;
(iv)
the Chief Financial Officer;
(v)
such
other officer, not more than one level below the directors who is in whole-time
employment, designated as key managerial personnel by the Board; and
(vi) such other officer as may be
prescribed;”
|
Under
the definition of the term “Key Managerial Personnel”, the following is
proposed to be 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”
|
|
38.
|
Section 2(57)
|
Section 2(57)-
“Net
worth” means the aggregate value of the paid-up share capital and all
reserves created out of the profits and securities premium account, after
deducting the aggregate value of the accumulated losses, deferred expenditure
and miscellaneous expenditure not written off, as per the audited balance
sheet, but does not include reserves created out of revaluation of assets,
write-back of depreciation and amalgamation.
|
In
Section 2 in clause (57), for the words "and securities premium
account", the words ", securities premium account and debit or
credit balance of profit and loss account," shall be substituted.
|
Revised Section 2(57)-
“Net
worth” means the aggregate value of the paid-up share capital and all
reserves created out of the profits, securities
premium account and debit or credit balance of profit and loss account,
after deducting the aggregate value of the accumulated losses, deferred
expenditure and miscellaneous expenditure not written off, as per the audited
balance sheet, but does not include reserves created out of revaluation of
assets, write-back of depreciation and amalgamation.
|
It
is proposed to include the debit or credit balance of profit and loss account
in the calculation of net worth.
The Impact would be-
•
Anomaly
plugged
•
Net worth
referred in identifying eligibility of co for accepting public deposit, CSR
applicability, Cost audit applicability, restrictions on board power (180).
|
|
39.
|
Section 2(71)
|
Clause (a) of Section 2(71)-
‘(a)
is not a private company;’
|
In
Section 2 in clause (71), in sub-clause (a), after the word
"company;", the word "and" shall be inserted;
|
Revised Clause (a) of Section 2(71)-
“(a)
is not a private company; and”
|
To
bring more clarity, the word ‘and’ is proposed between the two items (a) and
(b).
|
|
40.
|
Section 2(72)
|
Clause (A) of Proviso to Section
2(72)-
‘(A)
it has been established or constituted by or under any Central or State Act;
or’
|
In Section
2 in clause (72), in the proviso, in clause (A), after the words “State Act”,
the words “other than this Act or the previous company law” shall be
inserted;’
|
Revised Clause (A) of Proviso to Section
2(72)-
“(A)
it has been established or constituted by or under any Central or State Act other than this Act or the previous
company law; or”
|
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”
|
|
41.
|
Section 2(76)(viii)
|
Section 2(76)(viii)-
‘(viii)
any company which is—
(A)
a holding, subsidiary or an associate
company of such company; or
(B)
a subsidiary of a holding company to
which it is also a subsidiary.’
|
In
Section 2 in clause (76), for sub-clause (viii), the following sub-clause
shall be substituted, namely:—
“(viii)
any body corporate which is—
A.
a holding, subsidiary or an associate
company of such company;
B.
a subsidiary of a holding company to
which it is also a subsidiary; or
C.
an investing company or the venturer
of the company;
Explanation.—
For the purpose of this clause, “the investing company or the venturer of a
company” means a body corporate whose investment in the company would result
in the company becoming an associate company of the body corporate.”
|
Revised Section 2(76)(viii)-
“(viii)
any body corporate which is—
A.
a holding, subsidiary or an associate
company of such company;
B.
a subsidiary of a holding company to
which it is also a subsidiary; or
C.
an investing company or the venturer
of the company;
Explanation.—
For the purpose of this clause, “the investing company or the venturer of a
company” means a body corporate whose investment in the company would result
in the company becoming an associate company of the body corporate.”
|
The
Bill expands the prevailing definition to include “an investing company or
the venture of a company” in Section 2(76).
The
impact would be:
•
Linked
with the concept of venture capital & PE
•
Investment
in assets, shares, land, JV, HR, technology likely to get covered.
•
Explanation
says BC investment resulting in formation of associate relationship. – While
Definition of Associate restricts only to Companies
|
|
42.
|
Section 2(85)
|
Section 2(85)-
“Small
company” means a company, other than a public company,—
(i)
paid-up share capital of which does
not exceed fifty lakh rupees or such higher amount as may be prescribed which
shall not be more than five crore rupees; and
(ii)
turnover of which as per its last
profit and loss account does not exceed two crore rupees or such higher
amount as may be prescribed which shall not be more than twenty crore rupees.
|
In
Section 2 in clause (85)—
(a) in
sub-clause (i), for the words "five crore rupees", the words
"ten crore rupees" shall be substituted;
(b) in
sub-clause (ii),—
(A)
for the words "as per its last
profit and loss account", the words "as per profit and loss account
for the immediately preceding financial year" shall be substituted;
(B)
for the words "twenty crore
rupees", the words "one hundred crore rupees" shall be
substituted;
|
Revised Section 2(85)-
“Small
Company means a company, other than a public company,—
(i) paid-up
share capital of which does not exceed fifty lakh rupees or such higher
amount as may be prescribed which shall not be more than ten crore rupees; and
(ii) turnover
of which as per profit and loss
account for the immediately preceding financial year does not exceed two
crore rupees or such higher amount as may be prescribed which shall not be
more than one hundred crore rupees.”
|
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.
|
|
43.
|
Section 2(87)
|
Clause (ii) to Section 2(87)-
‘(ii)
exercises or controls more than one-half of the total share capital either at
its own or together with one or more of its subsidiary companies.’
|
In
Section 2 in clause (87), in sub-clause (ii), for the words “total share
capital”, the words “total voting power” shall be substituted.
|
Revised Clause (ii) to Section 2(87)-
“(ii)
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.”
|
Bill
provides that in Section 2(87), a subsidiary company or subsidiary – in
relation to any other company (the holding company) – means a company where
the holding company controls the composition of the Board of Directors or
exercises or controls more than one-half of the total voting power either on
its own or together with one or more of its subsidiary companies. Currently,
the 2013 Act provides for the exercise or control of more than half of the
total share capital.
The Impact would be
• Replacement of share capital parameter to “total
voting power” – narrowed down the applicability
• Bodies corporates carrying voting capital or board
of directors in their constitution can only be subsidiaries – LLP ruled out
|
|
44.
|
Section 2(91)
|
Section 2(91)-
"turnover"
means the aggregate value of the realisation of amount made from the sale,
supply or distribution of goods or on account of services rendered, or both,
by the company during a financial year;
|
In
Section 2 for clause (91), the following clause shall be substituted,
namely:—
“(91)
"turnover" means 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;”
|
Revised Section 2(91)-
“turnover
means 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;
|
The
definition of turnover is proposed to be substituted.
The Impact would be
• Value realization of sales etc replaced with revenue recognized in p & l
account
• Turnover concept referred in small company,
certification of AR, Secretarial Audit, Applicability of Cost Audit, CSR,
Woman Director etc.
|
|
H.
Fraud
|
|||||
|
45.
|
Section 447
|
Section 447-
‘Without
prejudice to any liability including repayment of any debt under this Act or
any other law for the time being in force, any person who is found to be
guilty of fraud, shall be punishable with imprisonment for a term which shall
not be less than six months but which may extend to ten years and shall also
be liable to fine which shall not be less than the amount involved in the
fraud, but which may extend to three times the amount involved in the fraud.
Provided
that where the fraud in question involves public interest, the term of
imprisonment shall not be less than three years.’
|
In
section 447 of the principal Act,—
(i)
after the words "guilty of
fraud", the words "involving an amount of at least ten lakh rupees
or one percent. of the turnover of the company, whichever is lower"
shall be inserted;
(ii)
after the proviso, the following
proviso shall be inserted, namely:—
“Provided
further that where the fraud involves an amount less than ten lakh rupees or
one per cent. of the turnover of the company, whichever is lower, and does
not involve public interest, any person guilty of such fraud shall be
punishable with imprisonment for a term which may extend to five years or
with fine which may extend to twenty lakh rupees or with both.”
|
Revised Section 447-
“Without
prejudice to any liability including repayment of any debt under this Act or
any other law for the time being in force, any person who is found to be
guilty of fraud involving an amount of
at least ten lakh rupees or one percent. of the turnover of the company,
whichever is lower, shall be punishable with imprisonment for a term
which shall not be less than six months but which may extend to ten years and
shall also be liable to fine which shall not be less than the amount involved
in the fraud, but which may extend to three times the amount involved in the
fraud.
Provided
that where the fraud in question involves public interest, the term of
imprisonment shall not be less than three years.
Provided further that where the fraud
involves an amount less than ten lakh rupees or one per cent. of the turnover
of the company, whichever is lower, and does not involve public interest, any
person guilty of such fraud shall be punishable with imprisonment for a term
which may extend to five years or with fine which may extend to twenty lakh
rupees or with both.”
|
Frauds
involving an amount less than Rs.10 lakhs or one percent of the turnover of
the company, whichever is less and does not involve public interest, shall be
punishable with imprisonment or fine or both.
The
existing provision has a potential of being misused and may also have a
negative impact on attracting professionals in the post of directors etc.
and, therefore, recommends that only frauds, which involve at least an amount
of rupees ten lakh or one percent of the turnover of the company, whichever
is lower, may be punishable under Section 447 (and non-compoundable). Frauds
below the limits, which do not involve public interest, may be given a
differential treatment and compoundable since the cost of prosecution may
exceed the quantum involved.
|
|
I.
Deposits Repayment Reserve Account
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46.
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Section 73
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Section 73(2)(c)-
‘(c)
depositing such sum which shall not be less than fifteen per cent of the
amount of its deposits maturing during a financial year and the financial
year next following, and kept in a scheduled bank in a separate bank account
to be called as deposit repayment reserve account.’
Section 73(2)(d)-
‘(d)
providing such deposit insurance in such manner and to such extent as may be
prescribed.’
Section 73(2)(e)-
‘(e)
certifying that the company has not committed any default in the repayment of
deposits accepted either before or after the commencement of this Act or
payment of interest on such deposits.’
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In
section 73 of the principal Act, in sub-section (2),—
(i)
for clause (c), the following clause
shall be substituted, namely:—
"(c)
depositing, on or before the 30th day of April each year, such sum which
shall not be less than twenty per cent. of the amount of its deposits
maturing during the following financial year and kept in a scheduled bank in
a separate bank account to be called deposit repayment reserve account;"
(ii)
clause (d) shall be omitted;
(iii)
in clause (e), for the words
"such deposits;", the following shall be substituted, namely:—
“such
deposits and where a default had occurred, the company made good the default
and a period of five years had lapsed since the date of making good the
default;”
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Revised Section 73(2)(c)-
“(c)
depositing such sum which shall not be less than fifteen per cent of the
amount of its deposits maturing during a financial year and the financial
year next following, and kept in a scheduled bank in a separate bank account
to be called as deposit repayment reserve account.”
Revised Section 73(2)(e)-
“(e)
certifying that the company has not committed any default in the repayment of
deposits accepted either before or after the commencement of this Act or
payment of interest on such deposits
and where a default had occurred, the company made good the default and a
period of five years had lapsed since the date of making good the default;”
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• Maintenance of Deposit Repayment Reserve for Public Deposits is proposed to be
changed to 20% of the amounts maturing during the next year in place of 15%.
This will strike the perfect balance between security and liquidity and will
reduce the cost of borrowings.
• Condition of deposit
insurance for public deposits is
proposed to be removed permanently.
• In case of defaulting co.-Permanent ban from raising deposits to be reduced to a period of
5 years from the date of making
default good.
• The penalty
prescribed for deposit relating to defaults is proposed to be revised
to a maximum figure of twice the
amount of deposits accepted.
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J.
Selection of members of the Tribunal
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47.
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The
Constitution of Selection Committee are aligned with Supreme Court
directions. The members of tribunal and Appellate Tribunal shall be appointed
on recommendation of selection committee. In case of equality of votes in a
meeting of selection committee, the chairperson shall have a casting vote.
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DISCLAIMER:
The information given in this document has been made on the basis of the
provisions stated in the Companies (Amendment) Bill, 2017 and Companies Act,
2013. It is based on the analysis and interpretation of applicable laws as on
date. Under no circumstances whatsoever, the blogger shall be responsible for any
loss, claim, liability, damage(s) resulting from the use, omission or inability
to use the information provided in the document.
CS Diwakar Agrawal
