Sharadhasc Emailer

 

Hi Folks

Yet other major changes to the Companies Act, 2013 !!
Lok Sabha has passed the Companies Amendment Bill, 2016 which aims at ease of doing business, strengthening corporate governance standards and imposing strict action against defaulting companies.
In order to draw your focused attention to some of these major changes and few other important updates, I choose to keep the editorial short this time☺.
Should you wish to refer to any of our older issues of LexSpeak, do visit our Resource Centre at sharadasc.com

Warm Regards

Companies Amendment Bill, 2016 (the Bill) was introduced in Lok Sabha on 16th March, 2016 and Lok Sabha passed the bill on July 27, 2017. Most of the amendments proposed in the bill are broadly aimed at addressing difficulties in implementation of provisions of Companies Act, 2013.
Highlights
  • Name reservation valid for 20 days from the date of approval of name. Earlier it was valid for 60 days from date of application. In case of change of name, validity is for 60 days from the date of approval.
  • Simplification of Private Placement process.
  • Independent directors to have pecuniary interest up to 10% of their income. The amount may be modified by the Central Government.
  • Issue of Sweat equity shares to be allowed at any time after registration of the Company.
  • MGT -9 (Annual Return extract) need not be attached to the Board’s Report.
  • AGM of unlisted company may be held at any place in India provided all the members give their consent.
  • EGM of wholly owned subsidiary of foreign company can be held outside India.
  • Consolidation of the accounts of a joint venture no longer required.
  • Annual ratification of auditors to be done away with. This means auditors have to secure 5 year tenure instead of year on year ratification.
  • CEO must sign financial statement though he is not in the Board.
  • In case a director incurs any of the disqualifications, he shall cease to vacate office in all other companies other than the defaulting company.
  • Rationalisation of provisions related to loan to directors.
  • The requirement related to restriction on voting by relatives in the general meeting shall not apply to a company in which 90% or more members in numbers are relatives of promoters or related parties. Non- ratification shall be voidable at the option of the Board or shareholders, as the case may be.
  • Approval of the Central Government shall not be required at the time of the payment of remuneration exceeding 11% of the net profits of the company. Shareholder approval will be sufficient.
  • No approval required from the Central Government, if managerial remuneration exceeds the prescribed limits.
  • Concept of forward dealing and insider trading omitted.
  • Disclosure requirements in the prospectus to be aligned with the regulations to be made by SEBI.
MCA notification dt. 13th June, 2017 exempted certain private companies from reporting the adequacy of financial controls systems in place and its operative effectiveness in its Auditors’ report.
Clarification has been given now that such exemption shall be applicable for those audit reports in respect of financial years commencing on or after 1st April, 2016, made on or after the date of the said notification.
  • Within the same State
    • Newspaper publication is no longer required.
    • Serving individual notice to debenture holders, depositors, and creditors have been dispensed with.
    • Additional documents, resolutions & declarations required
  • From one State or Union Territory to another State
    • Filing Notice of Extra Ordinary General Meeting, copy of Special Resolution and NOC received from the RBI (in case of a registered NBFC) has been done away with.
Detailed Procedural changes have been given in the Notification.

 

The ‘appointed date’ for electing to pay taxes under Composition was earlier fixed as June 22, 2017. This date has been amended to 16th August 2017.
CBDT has clarified that Tax need not be deducted at source on the service tax component of the invoice / bill received from the vendor and it has extended this position to GST as well meaning that no Income Tax is to be deducted on the GST component of an invoice.
Under Section 92C or 92CA of the Income Tax Act, 1961, the ‘Arms Length Price’ shall be subject to ‘Safe Harbour Rules’. Section 92B empowers the CBDT to make rules for Safe Harbour. Rules 10TA to 10TG cover the Rules related to safe harbour and form 3CEFA is the application form prescribed for opting for the safe harbour rules. The said form has been amended to add more information related under ‘Eligible International Transaction’.
Note: The contents of this Newsletter are only a summary and has not dealt with any issue in detail. Any action taken or proposed to be taken must be in consultation with professionals and not merely based on the articles / news updates. S. C. Sharada & Associates disclaims all liability on action taken without professional advice.

S. C. Sharada & Associates, Company Secretaries. #405, 7th Cross, IV Block, Koramangala, Bangalore – 560 034
sharadasc.com Phone : +91 80 25534374 , +91 80 25536618 Email: [email protected]
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